January 19, 2023
What:
Why it matters: Many insurers won’t be able to pass these costs through to their policyholders easily. This means that changes to coverage constraints and limits will need to be implemented in order to protect profitability. How fast an insurer can get a product change implemented will significantly impact profitability as delays will simply lock in losses.
Read: January Renewals See Hardest Property Catastrophe Reinsurance Rates in Generation
What: In today’s economic conditions, companies must be able to adapt to changing market conditions in order to survive. One way insurers are doing this is by forming strategic partnerships with realtors and auto dealers. Many of these partnerships focus on referrals currently, but embedded insurance is the next step.
Why it matters: A lot of these partners have unique data, and there’s a huge opportunity for insurers to take advantage of that data in order to create better and more customized products.
Read: Realtor, Auto Dealer Partnerships Offer New Revenue Streams to P/C Insurers
What: Social inflation, which refers to the rise in liability loss costs beyond what would be expected from economic inflation alone, is causing friction between policyholders and their insurers due to a lack of understanding among consumers.
Why it matters: It’s difficult to avoid the frustration inherent in premium increases and especially the sharp increases that inflation and social inflation are causing. This frustration is likely to result in lower retention numbers for insurers, as long-term customers look elsewhere. However, by creating opportunities to mitigate these rate increases via loss control programs or smarter pricing, insurers can increase their retention rates and better weather this storm.
Read: CEO Viewpoint: Social Inflation Creating Friction Between Insurers, Policyholders
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