Corporate Insight recently attended the long awaited AIR 2021 National Conference in Amelia Island, Florida. After two days of presentations from industry leaders and insurance experts, AIR conference co-hosts Brian and Patrick Sullivan once again closed with their 20 Trends presentation.

A highly anticipated event among conference attendees, the Sullivans’ 20 Trends pull together market insights, data analysis and research to look at what’s next for auto insurers. Below are a few highlights from the AIR 2021 National Conference presentation:

COVID presents both challenges and opportunities for the auto insurance industry

Sullivan noted that, while COVID will remain a challenge for the world through 2022 at the least, auto insurers can take advantages of the opportunities of the new normal. Hybrid work is one such opportunity. As auto insurers have more remote opportunities than other industries, they can offer hybrid or fully-remote positions—a hiring advantage in the current competitive job market.

At the same time, carriers must find a way to foster the connections originally created via in-person interaction. Sullivan credited these in-person relationships as helping firms navigate the previous 18 months. While noting that video meetings can help with basic communication, he suggested that networking—even internal networking—functions best with in-person interactions. Auto insurers will be looking for a way to get the best of both worlds.

COVID also triggered a shift in the way many consumers view auto insurance. Suddenly, many realized they were paying for insurance on a car that was just sitting in their driveway. Insurers continue to face a stark knowledge gap among policyholders but have a crucial window to capitalize on increased consumer interest in more nuanced aspects of auto insurance. However, the lack of compelling tools and calculators offered by carriers in the P&C Insurance Monitor active coverage group could hinder insurers efforts to engage users through compelling digital offerings.

Telematics, UBI and Fairness

Sullivan noted that telematics programs and usage-based insurance (UBI) are finally here—although later than originally predicted. COVID encouraged adoption of these programs, as drivers under stay-at-home orders enjoyed lower rates that reflected their reduced driving habits. Firms also benefit from a better understanding of their risk portfolios.

While adoption is up, satisfaction with these programs varies. User research for our April 2021 P&C Report on telematics programs found that simple enrollment and installation processes—as well as whether users received a discount—factored into whether a customer has a positive experience with a telematics program. Despite the importance of discounts in user satisfaction, many firms currently struggle to update users on their projected or actual savings. One panelist who used State Farm’s Drive Safe & Safe program described it as “painless and easy” but that a lack of clarity and communication around any discounts rendered the program “pointless.”

I have had [State Farm’s Drive Safe & Save program] for about a year now and still have not received any details about any potential discount. The program was painless and easy but rendered literally pointless by the lack of clarity and communication about the discount.
– State Farm Panelist

Sullivan also noted issues of demographic fairness in telematics and UBI programs, which he admitted is only part of a larger conversation about the various rating factors, including credit-based insurance scores, that carriers traditionally rely on to price premiums. Drivers with lower incomes tend to live farther from their jobs and are more likely to work nights, leading to more miles of riskier nighttime driving. Firms needs to evaluate risk while still ensuring they do not penalize drivers based on income or demographic factors outside of their control.

This image shows screenshots from telematics apps from Allstate, Travelers and State Farm
Allstate, Travelers and State Farm Telematics Mobile App Screens

Technology will transform the industry

The Sullivans mentioned electric cars, the speed of data and risk-reducing technology—even something as simple as backup cameras—as examples of technology that already has or will transform the auto insurance industry. With New York State set to ban fossil fuel vehicle sales after 2034 and the Biden administration seeking to make half of the U.S. auto fleet electric by 2030, insurers will need to respond to increasingly electric fleets. This could be good news for the industry. Electric cars tend to be less expensive to repair, as they have fewer parts than their internal-combustion counterparts. Sullivan also cited the speed of data as another area to watch. With insurers having access to more data, and getting that data faster, they’ll have to make decisions faster. Firm’s decision-making processes may need to speed up to match the speed of information. Technology should also continue to make vehicles safer: the presentation mentioned that backup cameras have virtually eliminated drivers backing into things. Other impending advances, such as smart tires, could have similar effects.

Still, in order to truly capitalize on the pending wave of advances made possible by these new technologies, insurers will need to be decisive, aggressive and persistent, characteristics not normally associated with the P&C industry. For example, while many insurers offer policyholders a premium discount for owning smart home devices, few actually promote the technology on their websites or incentivize customers to install mutually beneficial devices such as water leak detectors or video doorbells. Insurers will need to be more aggressive in promoting the new technologies mentioned by the Sullivans in their closing presentation for the 2021 AIR National Conference.

For more on insurance, see our P&C Insights section here.

All Author Posts