Insurers and insurance providers in the U.S. continue to see a number of key trends that are reshaping the way industry professionals analyze risk.
The ongoing and lasting effects of the pandemic, lifestyle changes, technological innovations and the needs created by climate change, demand an instant and constant picture of risks and exposures across an insurance provider’s entire portfolio. In an ever-changing, turbulent global economy, the insurance industry will increasingly harness data to meet the growing expectations and demands of increasingly switched-on consumers.
1. Utilizing data to better manage risk associated with extreme weather events
Extreme weather events in 2021 resulted in annual insured losses from natural catastrophes of an estimated $105 billion, according to a
This is where the evolution of
Take the example of an approaching storm. Critical geospatial data, including near-real-time data on flood warnings and the related tools that predict and visualize at-risk areas, are now being used in tandem with insurance providers’ own customer data to forewarn individual commercial property, homeowners and vehicle owners as events occur. In turn, policyholders can take preventative measures to minimize harm to themselves and their belongings.
This upfront knowledge via data streams allows insurers to mobilize emergency recovery teams as well as expediently begin the claims process, which is critical when you consider that 50% of all home insurance losses in the U.S. are weather-driven, according to the
2. Changing driving patterns, behavior through advanced safety features
It’s not just the weather that is challenging insurance risk specialists. COVID-19 and stay at home orders across the globe led to changes in driving patterns early in the pandemic, with a reduction in traffic volume meaning fewer accidents and consequently low claims volumes over the course of 2020. Alarmingly, as driving patterns returned to normal in 2021 and more claims were filed, claims severity remained abnormally high. In fact, through Q3 2021, the U.S. saw
Insurance professionals can keep pace with
Driving behavior data is now available at the point of quote and at renewal all within an insurer’s workflow and will only grow from here thanks to data from connected vehicles and other aftermarket
3. Handling COVID-19-based risk now and into the future
It’s no secret the pandemic has shifted the way many of us work, and with the virtual workforce growing around the world, new risks have arisen in home and commercial property insurance. The U.S. home insurance industry’s respite in 2019, which saw decreases in loss cost and frequency, was short-lived. Loss cost and frequency across all perils rose again in 2020, in line with an upward trend over the last six years, according to the Home Trends report.
Working from home has become permanent for many people, and workspaces will need to adapt to a more transient workforce. Again, this shift in working patterns is creating changes in insurance risk that are demanding deeper insights related to the person, the property and the peril ––from highly granular property characteristics data to industry contributed claims insights related to the person and the property.
We also need to consider how the commute for many people has now become a quick walk to a home office space. As mentioned, telematics and connected car data mean insurance professionals can offer a more personalized, usage-driven policy based on when and how a person is driving, providing a fair policy outcome for insurer and driver and can be vital peace of mind for both.
Finally, the pandemic has also made people think about their own mortality. This has an obvious impact on the demand for life insurance as people invest in policies that can be a financial lifeline for their family. The use of behavioral and medical data such as credit attributes, driving violations, prescription history and medical diagnosis are all critical in the swift and accurate risk assessment of a life insurance policy. With the global life insurance industry being hit with 5.5 billion reported COVID-19 claims in the first half of
4. Using the right data at the right time in the right place
The past two years have demonstrated how quickly things can change and how the insurance market can no longer rely on assumptions and patterns of the past to forecast future claims outcomes. Insurance providers are entering a new era in insurance risk assessment.
Many traditional underwriting data points were disrupted, consumer shopping behavior changed, and customers needed to be serviced in a more virtual way.
With the total cost of insurance fraud estimated to be more than
At the same time, the industry is embracing opportunities to share data through market-wide contributory databases as well as new uses of contributory data through predictive attributes or predictive models. Whether that’s policy history, quoting activity or claims – market-wide data can help fill important gaps in knowledge about new customers to help ensure they are offered the right products at a price that reflects their individual risk.
5. The ‘holy grail’ of the single customer view – and the benefits for both insurer and consumer
With the insurance industry facing risks on so many levels, the reliance on data has never been as great as it is now. It would be easy to be overwhelmed by data in this market. So, what is the secret to using accurate data?
We are seeing that a
It then comes down to using insurance-specific data to enrich customer data – data that has been viewed through the lens of the underwriter, pricing manager and claims professional. It needs to be injected at the right points in the customer journey, helping smooth the customer experience, such as knowing they had been a previous customer. Used insightfully, it has the promise to make the customer application and onboarding process swifter and help alleviate considerable stress from a claim, helping win over tomorrow’s consumers and making insurance something people really value and appreciate.
