Hurricanes, a pandemic and rapid technological changes are in store for the P&C insurance industry for the next quarter of 2020.
As claims are due to rise this fall, competition between insurers heats up. WaterStreet Company is here to help you keep up with shifting P&C insurance trends.
1. Hurricane Season
It’s no surprise to insurers when claims increase during hurricane season. Hurricanes are among the top reasons for home insurance claims, and fall 2020 is estimated to be an “extremely active” season according to the NOAA. As of August 5th, the Atlantic Basin is forecasted to see 24 named storms, five of which may lie between Category 3 and 5 for winds exceeding 111 miles per hour.
Disaster-prone areas, including Florida, may seek private flood insurance at higher rates. Windstorm premiums in Florida have risen as much as 33% while some locations are no longer eligible for coverage. Insurance companies covering these areas are remaining in business thanks to reinsurance, which covers claims payment in the case of a major storm. An estimated 2,851,642 single family homes are at risk from a Category 5 hurricane in Florida, followed by Louisiana with 843,349 and Texas with 563,024.
Bottom Line:
- The 2020 hurricane season is estimated to be “extremely active.”
- Homeowners are likely to seek private flood and wind insurance at higher rates each year.
- Florida is of the most concern with nearly three million at-risk homes in the case of a Category 5 hurricane.
2. InsurTech & Third-Party Integrations
Around the world, automation and technology are increasing competition between insurers. As of July, Amazon began selling auto insurance in India with customer benefits, including zero paperwork claim submission, a one year repair warranty and the option for instant cash settlements for low value claims.
Big InsurTech businesses disrupt insurance markets with never before seen offerings. These businesses benefit from better talent pools, intelligent AI for decision making, powerful financial backing and consumer trust with broad brand name recognition. Chatbots have become a common advantage for insurance companies seeking to automate and save employee time while offering customers a channel to immediately reach out for assistance.
New third-party integrations bring additional data into the insurer’s P&C insurance ecosystem for a multitude of creative cost-saving solutions. These integrations can assist underwriting decisions, allow seamless payment to multiple parties and help tailor plans to offer the best competitive pricing to the insured during the quoting process.
WaterStreet Company’s cloud-based P&C Insurance Solution is built with a robust API to allow any number of integrations, allowing our customers to easily adapt to dramatic market changes.
Bottom Line:
- Big InsurTech companies are able to capitalize on wealths of data and financial security while disrupting the insurance market around the world.
- Insurers are able to better craft plans with access to data, improving customer satisfaction by offering competitive pricing and unique benefits.
- Third-party integrations allow insurers to adapt to changing markets.
3. Effects of COVID-19
The COVID-19 pandemic has affected businesses across the country, and these disruptions are expected to continue through fall 2020. As most schools remain closed and employees continue working from home, the daily routines for insurance companies are affected as well. Essential employees remain on the front lines while many other jobs continue remotely.
Due to less travel and fewer cars on the road, the auto insurance industry currently observes lower accident rates. This may cause inaccuracies with forecasting 2021 insurance claims, as it is currently undetermined when school openings and work commutes will resume.
Home and rental insurance may also see new trends due to the coronavirus. One study by Pew Research Center found one-fifth of US adults have either moved or know someone who has moved due to the pandemic. Many of these adults are moving out of densely populated areas and into quieter neighborhoods, either buying homes or shifting their rent payment from small city apartments to larger rentals. This comes at a time when mortgage rates are low but with strong market demand, creating a seller’s market. However, there is also a strong dichotomy between Americans who have remained fully employed through the pandemic and many others who have struggled to make ends meet, including 30% of Americans who missed their housing payment in June and continue to see a bleak recovery.
Bottom Line:
- Working from home continues to affect employees of insurance companies across the country.
- Less car traffic results in fewer accidents, skewing predictions for the rate of claims leading into next year.
- While 22% of US adults have already moved in 2020 during a seller’s market and with low mortgage rates, 30% of Americans were unable to make their housing payment in June.
Reach out to WaterStreet Company today to request a consultation and demo.
