Annual Insurance Review 2018

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The excitement of the holidays and anticipation of the new year keep most of us busy as we wind our way through December. Festivities, traveling and making plans for the upcoming year take up most of our time. But before we put a period on 2018, let’s look back and reflect on the news, insights, and victories of the past year.  

2018 has been a time of change in the insurance industry. Technology disrupted the business on almost every level, natural disasters had their way with the property and casualty market, legislation trickled down, and insurance responded to social changes driven by Millennials and the Sharing economy.

It was an exciting year for insurance agents. Here’s a quick roundup of the insurance highlights from 2018.

Hurricanes and natural disasters cost insurers’ billions

Natural disasters made major headlines in 2018. California saw the worst wildfires in the state’s history. Several parts of the country suffered catastrophic flooding. Hurricane Michael devastated the Florida panhandle and wreaked havoc on the Southeast. All told, September had the highest loss ratio of the year due to natural disasters.

A study by global insurance leader Allianz finds insured losses from natural catastrophes has grown eightfold since the 1970s. The study points to increasing population density and rising property values as the main underpinnings of the increase.

As natural disasters become increasingly common and costly, insurance agents have a growing responsibility to help educate their customers about disaster risk and ensure they are properly prepared.

National Flood Insurance Program

2018 was not a good year for the National Flood Insurance Program (NFIP). News surfaced that the nation’s flood maps underestimated flood risk for many areas in the country. Homeowners who had taken comfort in not being in a “flood zone” suddenly have something to be concerned about – particularly in flood-prone areas such as Florida and parts of the southeast.

The NFIP insures five million properties from flood. According to the Congressional Budget Office, the government program operates at a loss of more than $1 billion per year. Congress is expected to overhaul the program and has extended its current status seven times in the past year.

Independent insurance agents must stay tuned to legislative changes that affect the NFIP as flood insurance (or lack of) became a major problem for homeowners and businesses in 2018. Agents do well to advise every client about flood risk. As stated, it’s no longer prudent to rely on flood maps to determine flood risk.

Agents must seek out every available flood insurance market for their clients as private flood insurers begin to enter the market.

Cyber insurance is critical for business owners

Cyber insurance has moved center stage in 2018. Cyber attacks have grown increasingly familiar with many major retailers and companies reporting hacks. Macys, BestBuy, Marriott, and Delta reported data breaches in 2018.

The experts are predicting cyberattacks to grow. One cybersecurity research firm predicts cyber loss to hit $6 trillion in 2021. Cyber liability coverage has become extremely important for business owners. Independent agents must inform their commercial clients of the risk and help protect them with the proper coverage.

The learning curve may be steep, but agents not well versed on the risk or coverage forms for cyber liability must get up to speed. Those agents with a solid understanding of the coverage and a strong go-to-market will become highly prized for business owners and risk managers.

Cyber liability is not just a growing risk for commercial clients, it can also be an excellent opportunity for cross sales in your commercial book.

Millennials shape the market

The rise of the Millennial generation has caused insurance agents to consider every aspect of their business – their products, marketing, and even how they attract and retain employees.

Forward-thinking independent agents have shaped their marketing efforts to include a more millennial lifestyle. It isn’t realistic to assume your clientele has the traditional lifestyle goals of a nuclear family, or even car and home ownership.

In 2018, we found The Millennial generation has different insurance needs. For example, traditional auto policies may give way to rideshare or bicycle insurance. Homeowners policies have also given way to renter’s policies with higher limits, better coverage, and online access.

Insurance consumers go mobile

Technology continues to interrupt and shape the insurance sector. 2018 brought exciting innovations to the industry. Insurance consumers began spending more time on mobile devices, pushing agents to focus on MobileFirst outreach.

Independent agents must respond with mobile technology approach including web chatting, mobile claims reporting and mobile-enabled quoting and binding.  

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The sharing economy drives insurance innovation

Other sectors have inspired some of the most interesting 2018 insurance stories. The sharing economy has pushed insurers to come up with workable insurance solutions for rideshare and home share users.

Both industries have a remarkable need for good insurance, but no need for the cumbersome comprehensive coverage of typical commercial business or commercial auto policies.

Insurance companies are catching on and drafting policy forms for ridesharing and pay per night insurance platforms for home sharing hosts. Independent agents can earn from this growing trend by helping their clients secure the appropriate coverage.

Telematics extends its reach

Telematics was one of the first insurance technologies to arrive on the scene. Large auto insurers leaped onto the data collection technology to better underwrite auto policies and offer clients a discount for participating in the program.

Telematics programs are at the heart of usage-based insurance (UBI). According to one report, by 2020 70% of all auto insurers will use telematics. Independent agents must be prepared to discuss the technology with their clients and outline the benefits, such as more personal and accurate underwriting.

Telematics is also extending its reach into the claims department. It enables real time reporting when a claim occurs, the extent of the damage, and if there are potential injuries. This means claims adjusters respond proactively, making the claims process, shorter, faster and more accurate.

A changing insurance landscapes

Technology and changing consumer behavior drove significant changes in the insurance sector during 2018. A look back at the year also shows natural disasters, and legislative actions made their mark on the industry.

Independent agents must continue to monitor technological advances that are changing the industry. Insurance on demand, the sharing economy, and growing automation of backroom insurance processing will likely continue to take center stage in 2019.

As always, a careful review of the past year is wise. As they say, the past is prologue.

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