PIR Conference 2023: Property insurers had a tough 2023 and need to manage policyholder expectations during difficult times

Corporate Insight recently attended the annual Property Insurance Report National Conference hosted by Risk Information in picturesque Dana Point, California. Leading property insurance industry executives gathered to network and discuss how current and emerging market developments will shape and influence the industry’s future. Beautifully situated—the PIR 2023 conference overlooked the Pacific Ocean surf—and ideally timed, sessions focused on brainstorming solutions to California’s deteriorating property insurance market, leveraging new technology and tools to minimize claims and inspiring property owners to better protect their homes from perils such as fire, flood and hail.

PIR Conference attendees reflected on a difficult 2023 for property insurers. The conference kicked off on the heels of A.M. Best’s announcement of credit downgrades for numerous P&C insurers and Swiss Re’s decision to lower its 2023 ROE estimate to 9.0% from 7.5%. With stats such as an industry underwriting loss of $22 billion in H1 2023 swirling in the back of their minds, many attendees speculated if the recent rate hikes would be enough given the continued occurrences of costly natural disasters. In the US, 2023 was the costliest year ever for severe convective storms according to the Insurance Information Institute, with losses on these events alone exceeding $50 billion.

In the first half of 2023, homeowners and commercial property claims costs increased by 36% and 30% respectively year over year, driven up by inflation and natural catastrophe losses

– Swiss Re

Other takeaways from the event include:

  • Insurers should “sweat the small stuff” to prevent future claims – Leman Porter, CEO of Frontline Insurance and Chin Ma, founder and president of Chrp Technologies walked attendees through how their two companies collaborate to help customers identify and correct potential infrastructure failures on a property that, if ignored, will ultimately turn into attritional losses for the insurer.
  • Lithium ion batteries power modern lives but represent a massive, underemphasized risk – Steve Kerber, VP and Executive Director of the Fire Research Institute presented eye-opening research on the explosive power of battery fires. Armed with detailed videos, Kerber helped the audience to understand the speed and power of this type of fire certainly inspired insurers to investigate yet another risk residing in their books.
  • Small hail does more damage to shingles than previously thought – Roy Wright, President and CEO of the IIBHS and Attila Toth, Founder and CEO of ZestyAI, brought to light yet another risk flying under insurers’ radars. Historically, insurers have focused their efforts and energy regarding hail risk on areas prone to storms with large hailstones with a diameter of 2” or more. New research from the IIBHS, however, reveals that while small hail may not tear shingle apart the way big hail does, small hail does significantly diminish the strength of roofing materials, shortening its life and setting the stage for trouble to come.

How can property insurers manage policyholder expectations in 2024?

Moving into 2024, property insurers face profitably challenges on several fronts. Within this landscape, a safe assumption is that premium rates will continue to rise, which of course raises a new challenge: keeping policyholders satisfied and educating them on shifting industry dynamics. Insurance carriers need to strike the ideal balance between curating a seamless renewal process and taking the time to educate a customer on their policy coverages and rates. CI’s P&C insurance research team performs competitive intelligence research on the digital policyholder experience through the eyes of the end-user. Over the course of the year, we instructed our panelists to record how their respective carriers communicated leading up to a policy renewal and published a report in November in which we examine the content and placement of renewal notifications, all well as the availability of communication delivery preference settings.

We found that although most insurers alert policyholders to an upcoming renewal in some way, not many truly spotlight the impending date with exemplary resources. Renewal messaging is inconsistent on policyholder sites as coverage set insurers lack consistent renewal messaging on the homepage, policy information section, document center or billing center. Going deeper, few insurers we covered incorporate robust educational resources into renewal messaging, as most opt to only include essential documents plus key policy and billing details.

Though most (82%) insurers in our report provided renewal documents on the policyholder site only slightly more than half (55%) prominently highlighted or promoted their existence

Some insurers, such as Farmers, did attempt to anticipate customer frustration and provide context for the policy rate increase. Still, Liberty Mutual is the only coverage set insurer with an interactive tool—on the policyholder site Your Renewal Policy page, an expandable Coverage Summary and Savings tile lists renewal coverages, costs and links to relevant public site coverage pages. At the bottom of this tile, plain text promotes the Compare to Current Policy tool. Users can click a gray toggle switch beside the bold text to enable the policy comparison mode, which turns the toggle switch to a teal color and prompts the appearance of a Current Cost column showing the costs of coverages on the current policy.

A screenshot showing Farmer's policy renewal page
Farmers Policyholder Site Home Policy Details Page – Renewal Policy View

Entering a new year, property insurers should strive to go the extra mile when it comes to customer education as they seek to face challenges head on. For more insights on P&C insurance and other financial services verticals, check out our Insights section. And learn more about how our P&C subscription research can help your firm.