Last month, Corporate Insight attended the 2018 Society of Insurance Research National Conference in New Orleans. Robert Mozeika from Munich RE set the stage in his keynote address when he asserted that the “industry is ripe for change” thanks to the large quantities of data that insurers are collecting. He positioned data as the “new oil,” a statement supported by the fact that many insurers now employ more data scientists than underwriters.
Here are three additional P&C insurance takeaways from a fantastic three days in the Big Easy:
- Insurers must react to rising consumer expectations
Loyalty from Millennials is up for grabs; they want to see innovation from their insurer, which impacts their choice of carrier. The industry is shifting from a “protect and repair” approach to a “predict and prevent” mindset to meet rising demand. Examples include Liberty Mutual’s Total Home Score, Neos’ connected home and Travelers’ partnership with Amazon to create the Quantum Home 2.0. Further, customers are looking for more than just traditional offerings from their insurers and demanding supplementary services and risk mitigation. Many (45%) reported that they would be willing to switch carriers to benefit from better value-added services.
- Artificial intelligence will play a significant role in shaping the future of the industry
AI was a dominant topic at the SIR conference as several speakers unpacked how developing technology will impact the insurance industry. Gartner’s Predicts 2018: AI and the Future of Work report, which identifies 2022 as a key turning point for AI-impacted employment, was frequently cited, specifically the statistic that in 2022 one in five workers engaged in mostly nonroutine tasks will rely on AI to do a job. Each speaker offered a unique take, but the overarching message highlighted the opportunity that AI provides insurers who combine the strengths of machine learning with human feedback and guidance at key intervals.
- Mileage is very predictive when it comes to claims ratio
In light of an intense focus on AI and how other technological developments will impact the industry, it was reassuring to learn that a traditional data point like mileage continues to be extremely predictive when it comes to claims ratio. Dave Grove of Ohio Mutual, Don Hendriks of Carfax and Matthew Moore of the Highway Loss Data Institute presented a compelling case for insurers to seek a comprehensive understanding of mileage through numerous factors such as territory, age, gender and vehicle make and model. They argued that a failure to identify and rate higher risk vehicles represents a major source of unmanaged loss costs. Importantly, they noted that self-reported mileage is unreliable, but verified mileage data yields several advantages including improved segmentation, equity to all policyholders and accurate data for increasing productivity.
- Corporate Insighthttps://corporateinsight.com/author/glywa/
- Corporate Insighthttps://corporateinsight.com/author/glywa/
- Corporate Insighthttps://corporateinsight.com/author/glywa/
- Corporate Insighthttps://corporateinsight.com/author/glywa/
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