The recent trends being seen in the Property & Casualty insurance industry include the use of telematics and AI analysis/IoT data. Lemonade and Hippo are among insurance startup companies that are leveraging AI technology. Voom Insurance, Root, and Metromile are some insurance startups that are implementing telematics. Below is an overview of the findings.
- According to PropertyCasualty360, telematics identifies shifts in driving patterns and increases road safety by providing feedback to drivers. Interest in telematics has been growing steadily before and during the COVID-19 pandemic, and forward-thinking P&C carriers have been investing in technology that help them “understand policyholders and their risk profiles.”
- CB Insights’ “P&C Insurance Trends” report states that a majority of major insurers are now offering a “usage-based auto insurance product using telematics.”
- Telematics enables P&C companies to “rapidly identify changes in driving behavior and process billions of dollars of premium refunds in the span of just a few weeks.” It gives insurers the ability to address distracted driving, and to reduce risk significantly.
- According to Deloitte, telematics will improve all aspects of the insurance experience, from improving risk assessment to facilitating more dynamic pricing. Forbes reported that insurers such as State Farm, Progressive, and Nationwide have already introduced telematics devices.
- Plug and Play reports that telematics is now a standard part of everyday life with access to millions. In response, insurance companies have adopted the new trend. It identifies Voom Insurance as one such insurer.
- Voom Insurance, is a Tel Aviv-based on-demand insurance startup that uses telematics to “assess and mitigate risks” for drones as well as “specialized mobility services,” including e-scooters.
- Startups Root and Metromile, Lemonade’s peers and direct competitors, are mainly using telematics technology to improve their pricing management. Telematics is also enabling them to better their loss ratios.
2. AI Analysis and IoT Data
- According to Plug and Play, artificial intelligence (AI) and internet of things (IoT) has numerous applications in the P&C insurance industry. This has been driven by the growth in the application of AI and IoT in the home environment. AI enables insurance companies to analyze data on property management and consumer habits innovatively.
- According to Deloitte, many insurance companies are pursuing artificial intelligence initiatives, but only 17% have been successful at industrializing or scaling AI technologies. However, the report notes, they stand to benefit from expanding their AI capabilities.
- McKinsey’s report states that IoT capabilities are enabling P&C insurers to improve underwriting. Scaling these capabilities will be a differentiator for the industry.
- CB Insights’ “P&C Insurance Trends” report states that P&C insurers are leveraging IoT to better manage their risks and provide new services.
- Plug and Play identifies startup Hippo as an example of insurance companies that are using smart technology to insure homes against water damage, fire, and break-ins. Hippo provides policyholders with smart monitoring devices that identify potential risks.
- ZFort Technologies names Lemonade as among the pioneers in the P&C insurance industry that are using Behavioral economics and AI. Carrier Management points out that Lemonade has been able to stabilize its loss ratio due to its AI-driven approach.
- According to a Forbes report, Lemonade leverages AI technology to prevent fraud, and this has been instrumental in the positive performance of its IPO. Its loss ratio in the first quarter of 2020 was approximately 80%, compared to the industry average of 50%.
Plug and Play Tech Center collects data by conducting thousands of interviews with corporate and anchor partners from its Insurtech program. An April 2020 Deloitte report also provides the same trends for the global P&C industry. The findings by Plug and Play are corroborated by a paywalled CB Insights report, a McKinsey report, and a Forbes Council Post. Only the reports by Plug and Play Tech Center and CB Insights seem to provide global trends; however, we have used information on the U.S. P&C insurance industry to expound.
Property &Casualty Insurance Trends and Response: Strategies
Insurance companies are responding to the COVID-19 pandemic by implementing innovative soultions and providing support to their employees, customers, and communities. Below is an overview of the findings.
1. Innovative Solutions
- According to a report by the Insurance Information Institute (III), insurance companies have implemented innovative solutions to ensure continuity of their daily operations while respecting the social distancing guidelines.
- Deloitte provides a link to a resource that highlights the key actions taken by insurance companies globally in response to COVID-19. Insurance companies have implemented operational strategies by adopting digital solutions and other innovative strategies.
- The resource lists insurance companies that have responded to the pandemic. Arag (Germany) is offering digital and mobile solutions and Allianz (Colombia) has enabled policyholders to access their services digitally. Kakau (Argentina) has developed an innovative solution for its customers.
- Another resource by CB Insights states that insurance companies have turned to insuretech to reduce costs and improve their customers’ experience in the course of the pandemic. QBE Insurance Group leverages data analytics startup Hyperscience to “process personal automobile claims” and AI startup Riskgenius to automate coverage and risk review processes.
2. Employee Support
- The III reports states that insurance companies have taken steps to support and protect their employees during the pandemic. Some companies have pledged not to lay off employees at this time.
- Other insurance companies are allowing employees to work at home to provide uninterrupted customer service. Chubb and Marsh & McLennan are among companies that have pledged not to lay off their employees.
- According to the Deloitte resource, Progressive (United States) is providing financial support to its employees and customers via its “Apron Relief Program.” Aviva (United Kingdom) is offering full pay to employees who volunteer for the British Red Cross or the National Health Service.
3. Customer Support and CSR
- III reports that insurance companies have responded to COVID-19 by easing the burden for their customers as part of their CSR efforts. State Farm (United States) is offering assistance to customers who are experiencing financial hardship and The Hannover (United States) is “paying additional living expenses to homeowners who are forced from their homes following a covered loss.”
- MAPFRE (Spain) allocated €54 million for the support of suppliers and customers, €5 million to aid in COVID-19 research. Westfield and State Farm are among companies matching employee donations.
- Insurance companies are responding by refunding customers’ premiums because of lack of use due to the pandemic. In Canada, insurance companies such as Aviva and Johnson have provided over $600 in rebates and discounts due to COVID-19.
- In the United States, companies such as Chubb, Travelers, and American Family Insurance have allocated millions of dollars to support customers and communities in the fight against COVID-19