Over the past decade, the world has transformed, and the insurance industry has changed with it. Industry players who are not willing to evolve will unequivocally be disrupted as the momentum propels us all through this age of innovation.
As 2020 marks CoreLogic’s 10th anniversary, we’re reflecting on the insurance industry’s transformation over the last decade.
I did not even begin to realize that at the start of my career, this industry and all its nuances, peculiarities and intricacies would become my passion. Part of what drew me to the insurance industry, and what has kept me here well over two decades, was knowing how much of this industry was ready to be disrupted.
Here are three ways we’ve seen the industry transform over this past decade:
1) Digital modernization and the evolution of customer experience. With any disruption, all parties must adapt. Agents are now challenged to operate differently and to find ways to increase value for consumers in the face of fierce competition in the direct-to-consumer business models. Underwriters are becoming more tech-savvy and developing solutions to simplify the consumer experience. Claims officers are moving more of their capabilities from the field to the desk, as they face constant pressure to reduce loss adjustment costs and streamline the claims process for consumers. Emerging InsurTech carriers continue to push the boundaries by operating with a small physical or fully digital agency footprint, forcing established carriers to innovate.
The consumer experience has moved front and center as insurance interaction experiences begin to mimic all other digital interaction that consumers have grown accustomed to like Amazon, Uber and Airbnb. J.D. Power introduced consumer experience metrics for insurance quoting and claims management processes and AM Best has introduced a ranking for innovation.
A challenge in the shift to digital is the expectation of immediate gratification. As with nearly every aspect of our lives today, we all expect things to be instant, digital and easy to access. So, it becomes even more important to build a relationship with the customer by discussing their risk to help offset any extra time that may be necessary to complete the quote and perform a thorough analysis of their overall exposure.
2) Climate variability and advancement of catastrophic event management. Just a decade ago, private flood insurance was rarely thought about, but events like Hurricane Harvey in 2017 highlighted the need for private flood insurance, especially for homes outside of designated flood areas. For an accurate assessment of risk, the need for properly assessing the risk of a property itself—as opposed to the risk of a property centroid—is now available with high-resolution granular risk data.
Significant improvements have been made in catastrophe risk modeling for wildfire and flood—relatively new modeled perils— along with hurricane, earthquake and severe convective storms.
3) Progression from risk avoidance to risk management products. With so many new ways to predict and prevent, there are also new ways to protect. Parametric insurance for earthquakes, hail, home system failure, wind, flight delays, website failure, audit coverage and flood has become very important for independent agents. Independent agents can contract with with up-and-coming carriers to add these additional coverages to their current portfolio of offerings.
On the path to establishing a relationship as a trusted advisor, the advent of the Internet of Things (IoT) can help reduce the frequency and severity of claims. New technology has emerged, like water detection devices under sinks and next to water heaters, automatic shut-off valves that detect changes in pressure, doorbell monitors for theft deterrence and sound detection and temperature change detectors for your home. Technology continues to evolve with new devices to monitor every part of our homes and properties.
Through digital transformation, agents can more easily stay on top of regulatory modifications, which is critical as regulation regarding the assignment of benefits in certain states like Florida, wildfire coverage availability in California and no-fault mandates in Michigan are all facing changes.
In a short decade, the world has transformed, and our industry with it. There is no more status quo, no more doing business in a manner it was conducted for the last few hundred years. Industry players who are not willing to evolve will unequivocally be disrupted as the momentum propels us all through this age of innovation.
Mikhail Palatnik is executive of product management at CoreLogic.