May 27, 2022
Niche Success
GEICO has Stopped Selling Insurance Over the Phone in Some States
What: In 16 states, including New York and California, customers cannot purchase insurance over the phone from GEICO anymore, and instead have to use the GEICO app or website. Employees were told the change was due to increasing repair costs, used car prices, and the frequency of accidents.
Why it matters: Insurance companies don’t want to sell insurance the expensive way. Having a person sell insurance is simply the most expensive way to process the transaction today. It’s like “shrinkflation” for insurance; customers previously got this service with the policy, but now for the same price customers get a little less.
Insurtech News
Growth-Focus Could Cause Underwriting Problems for Insurtechs
What: Insurtechs achieved rapid growth out of the gate by focusing on the customer experience. However, they’re now facing the challenges resulting from inadequate underwriting: higher than expected claims and a declining loss ratio. The next generation of insurtechs are likely to focus on underwriting first to avoid these pitfalls.
Why it matters: Insurtechs aren’t the only ones facing loss ratio challenges; established carriers—especially in the homeowners and personal auto spaces—are also suffering. Inflation is a difficult risk for which to plan, and many carriers are adapting too slowly.
Read: To win insurtech 2.0, focus on underwriting before growth | TechCrunch
Industry Challenge
Cities Start Planning for a Future Dominated by Remote Work
What: A recent YouGov survey of finance workers found that only 13.9% of participants say the office is their primary workspace. This is a dramatic shift in both work behavior and employee expectations. This change is factoring into how major cities are planning for the future.
Why it matters: Human behavior has radically changed across the board in recent years. Traffic patterns, shopping behavior, and habits of all kinds have changed. Predictability is a cornerstone of insurance and city planning, but we’re seeing significant disruption to that predictability.
Read: Rise of Remote Work to Define Future of City of London
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