The P&C Insurance Industry has experienced 18-24 months of a hard market with some indicators of an upward trend going into 2021.
As insurers exit the hard market and shift into a soft market, there are key opportunities to leverage and stay a step ahead of competition.
WaterStreet Company offers cloud-based P&C Policy Administration Software for managing policies, claims administration, document management, billing, accounting and more.
What causes a hard insurance market?
A hard market is caused when insurers firm rates to reduce risk, often raising premiums and cutting loses on unprofitable products. This leads to an increase in demand and pushes policyholders to shop around for competitive pricing, eventually allowing the industry to fall back into a soft market.
The hard and soft markets are general cyclical phases that may not touch on all areas of the P&C Insurance Industry at once.
How to Leverage a Hard Market
1. Improve Risk Assessment in Underwriting
Underwriters are tasked with accurately assessing risk, but many standard score cards rely on dated information and unreliable practices, such as measuring a homeowners risk by ZIP code. Insurers should aim to arm underwriters with better contextual data in order to fairly assess risk and remain operable in mid to high risk markets.
Carriers, MGAs and other insurers must review their internal data capabilities. Without the software and storage to handle masses of unstructured Big Data, insurers will be unable to capitalize on advanced underwriting tactics.
WaterStreet Company solutions are built with a robust API, allowing our insurers to connect to any number of third-party solutions. These range from IoT integration providers for sharing data collected by the policyholder to self-inspection solutions for allowing the policyholder to upload documents directly to the insurer. Document management is at the center of our P&C Administration Suit, allowing insurers easy chronological access to all policyholder documents.
2. Craft New, Innovative Products
The P&C Insurance Industry is undergoing a technical revolution. Pressured to meet the needs of today’s modern auto and homeowners, insurers are pushed to bring next generation policies to market.
Sensor technology has never been more affordable, allowing policyholders to share usage-based information with insurers in exchange for personalized coverage. This trend includes both home and auto insurance, giving policyholders access to proving they are lower risk with IoT data generated through their personal daily use.
Many incumbent insurers are faced with a difficult but predictable challenge. Insurance systems designed in-house are often bootstrapped and unable to connect to cloud storage, which would allow incumbent insurers to bring a greater wealth of data into underwriting decisions. Disruptive, technology-first insurers have a significant advantage marketing to new segments of policyholders with the ability to realize the power behind a variety of third-party connections.
3. Enhance Customer Loyalty
When rates are hardened, customers consider seeking new insurers, especially in today’s economic climate. Insurers should consider the customer journey online shoppers experience when browsing for policies.
As the industry shifts out of the hard market, insurers can aim to improve growth tactics with irresistible loyalty rewards for existing policyholders. Safe driving discounts are a prime example of insurers reacting to the need for personalized, cost-saving policies for policyholders that also reduce risk for the insurer.
Amid the COVID-19 pandemic, the overall insurance industry has experienced reduced trust due to policy limitations. Business interruption insurance and travel insurance are under greater scrutiny, bringing a push for government regulation. Insurers must be aware of this context for 2021 with a priority on enhancing trust in their brands and meeting the needs of unique market segments to regain market share.
WaterStreet Company & Hard Markets
WaterStreet Company offers cloud-based solutions built with a robust API and Document Management at its core. This offers insurers a central repository of information within one unified solution for efficiency when managing policies.
As insurers develop new product lines and bring a variety of data into their systems, WaterStreet Company’s policy administration software supports growth across departments for improved underwriting, faster claims management, intelligent reporting and more.
Reach out to WaterStreet Company today to request a consultation and demo of our solutions.