September 2, 2021
Industry Challenge
Prices are on the rise for EPLI coverage ahead of expected COVID lawsuits
What: Around 3,000 covid-related employment lawsuits have been filed since the start of the pandemic — ranging from workplace safety to remote work. Liability insurers view this trend as the beginning of a wave of discrimination lawsuits as employees return to offices. Many insurers are limiting their exposure through additional restrictions and higher premiums.
Why it matters: EPLI coverage is often distributed as a reinsurance product to augment a carrier’s core offerings, and is a good example of product innovation. It has taken years for carriers to build EPLI into their offerings, and we’re now seeing its value, given the shifting employment landscape.
Read: Insurers Expect COVID-19 Liability Claims Against Employers as Employees Return
Industry Challenge
Increasing material and labor costs are driving up claim expenses
What: Material and labor prices have sharply increased due to the pandemic; 21% from July 2020 to July 2021. This rise is impacting the costs for restoration contractors significantly, which in turn drives up the cost for a claim. There is downward movement in the lumber futures market, which could indicate an easing of the upward material and labor prices trend.
Why it matters: Material and labor costs are often a leading indicator for inflation. Carriers that are prepared for the increase with quality cost management solutions and good preventative tools will fare better, and be able to keep premiums lower.
Read: Material, Labor Price Hikes Driving Increases in Claim Costs
Industry Challenge
Consumers are wary of AI and Big Data
What: Only 17% of consumers say they’re comfortable with their claims being reviewed exclusively by AI, and 60% would rather switch insurers than let AI review their claims. People are nervous about AI and big data, with 56% of people believing insurance companies shouldn’t be allowed to use big data.
Why it matters: AI is a poorly understood technology with a good amount of baggage, which is creating an uphill battle for adoption and acceptance. This survey highlights just how important messaging and framing are for AI and insurance; on the one hand almost everyone would like instant payment of their insurance claims, but consumers are reticent about having claims denied by a computer.
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