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July 7, 2022


12 to 24 months is the expected time to market for a new insurance product, and it takes an average of 3 to 6 months to update an existing product. Insurers often find themselves in a bind with that length of delay, locked into losses and selling new and renewing policies that aren’t profitable. 

To plan effectively, insurers need to accurately predict market conditions 18 months in the future. Recent history has shown this is a nearly impossible task for anyone, and has hit P&C and Homeowners insurers particularly hard. 

The good news is that innovation isn’t slow everywhere, and carriers are finding new ways to introduce product improvements to solve profitability problems. Underwriting rule enhancements, improved segmentation of risk on pricing, and rating plan restructuring are all product tools carriers can use to solve problems quickly.


What: S&P Global Market Intelligence has said that the calendar-year combined loss ratio for the property/casualty industry will eclipse 100 in 2022 for the first time since 2017, due to inflation, supply chain issues, and higher than expected severity.

Why it matters: We expect carriers to struggle with implementing changes to improve profitability sufficiently quickly. They will need to lean on underwriting processes, inflation index increases, product segmentation, and rate increases, but with a lead time of at least 3-6 months, it could get ugly.

Read: P/C Industry to Finish 2022 in the Red With Combined Ratio Over 100: S&P


What: Policygenius recently reviewed 8,698 active Homeowners Insurance policies quoted for renewal from May 2021 to May 2022, and found that the average rate increase is almost 15% compared to an inflation rate over the same time period of about 8.6%. One driver of this increase is a shortage in labor and materials that is increasing severity for claims. 

Why it matters: For years insurers have competed on pricing by reducing estimated values for properties, and now we’re seeing the ramifications of that strategy. In the long run, smart home technologies have the potential to lower claims severity and resulting costs. However, adoption is currently lacking. 

Read: Home Insurance Prices Increase Faster Than Inflation Rate: Policygenius

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What: In what some insurance industry leaders are calling a meltdown for Florida’s Property and Casualty insurance market, Avatar became the second Florida insurer to face insolvency this year and the 6th in the past 30 months. 

Why it matters: It’s tough to price the risk in Florida because there’s a highly variable and skewed risk profile. Companies can have great loss ratios for years, but major events can cause losses that can end the companies that didn’t set prices appropriately.

Read: 10 Emerging Risks to Watch

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