A wave of new product offerings is jeopardizing the property/casualty insurance industry’s image as uncool.
Since the beginning of the year, dozens of property/casualty insurers have announced innovative protections for risks involving new technologies, current economic concerns, personal and family relationships, home-based small businesses, and unusual sporting events.
“This is a new era in property/casualty insurance. Innovation is breaking out all over,” said Roger Hurtvig, president of the insurer-backed Insurance Innovation Institute (III) in Las Vegas.
This is an industry with a reputation of being slow to generate or embrace new ideas but the III’s own measure of innovation — the P/C New Products Index — has been rising steadily for the past year and hit a record high of 75 out of a possible 100 points last week.
“It seems that with every day comes a new idea,” Hurtvig said. “”The new products are anchored in traditional insurance principles but they speak to a new generation of risks. It’s very exciting.”
Investors are taking notice.
“Interest in P/C stocks is higher than I can ever remember,” said Joy Gerber, a senior analyst with Barways who has been following P/C stock for two decades. “The industry appears to be shedding its staid image a bit. Investors who never looked at P/C stocks are asking about them.”
Gerber gives insurers credit for their efforts, even while she retains a wait-and-see attitude. “Expectations are high but let’s see if all the innovation sells,” the analyst said.
Of course, that ultimately depends on whether customers, more than insurers or analysts, are excited about the new ideas.
According to III’s Hurtvig, customers don’t typically seek out new insurance products to buy. However, he predicts that as insurers boost their television advertising and golf tournament sponsorships to introduce the new products, customers will respond and sales will jump.
“To be honest, as innovative as the industry is right now, it is in many ways just catching up with a world that has changed and is continuing to change very rapidly,” he said. “Risk is in the air and there is a need for new protections. The industry is poised to cash in.”
So what are some of these new ideas that have put the property/casualty industry’s unhip reputation at risk?
Editors at Insurance Journal searched the insurance market database at www.MyNewMarkets.com and reviewed hundreds of recent insurance company product and program launches and enhancements. The editors found that some of the most original new insurance products are utilizing technology advances, responding to the difficult economic times, catering to personal relationships, and recognizing the explosion in home-based businesses.
According to Insurance Journal, the Top 10 Most Innovative P/C Insurance Products are:
- Pay-As-You-Park: Private passenger auto policy from Progresso. Rates are based on how long the vehicle is not driven. Policyholders are sent a small white box that attaches to the front driver’s side wheel. The box contains a meter that is loaded with an initial estimated premium. The box calculates premium discounts for every 15 minutes the vehicle is parked but adds surcharges for every 15 minutes the vehicle is in motion. Pay-As-You-Dock boat policy also available.
- GreenMaker: R.W. Barkley is selling a product liability policy for home or garage-based businesses that manufacture cosmetics, clothing, jewelry, toys, computers, beer, firearms, scuba gear, musical instruments, motor vehicles, mobile homes or other products using primarily recycled, upcycled, natural or organic materials.
- Commercial Specific Liability (CSL): A low-cost option to the Commercial General Liability (CGL), the CSL lets business owners specify the exposures they want covered. The final ISO form is not expected until June but some examples of actions expected to be covered include: nailing into a water pipe, electrical wiring or cable; causing a fall due to the failure to remove or warn of water, change in elevation (a step), or intoxication; and releasing a pollutant that the insured did not bring to the job site.
- Vanishing Coverage: A multi-year package policy from Hubb Insurance available only to owners of high-end coastal properties and antique autos. The premium is lowered by the same amount the deductible is raised each year until the deductible reaches the policy limit or the premium hits zero, whichever happens first.
- Home Business Interruption Protection (HBIP): Revelers Insurance has a business interruption policy for any legal service business conducted from the home, from hackers and day traders to massage therapists and insurance agents. Covers loss of Internet connection, telephone service, HVAC and refrigerator. Key family interruption provision covers time lost due to family emergency, including injury, sickness, potty training accident, or the “Daddy, I’m bored” syndrome.
- No-Show Coverage: There is coverage for shoddy work, but what about when the plumber, electrician, roofer or other contractor doesn’t even show? Handover Insurance now covers damage caused by old pipes, leaky roof, frayed wiring or other conditions that did not get fixed on schedule as promised.
- Global Scoring: Chartus has developed a policy that guarantees to convert its auto and home policyholders’ credit scores to whichever foreign currency presents their financial history in the most favorable terms.
- Relationship Breakdown Coverage: Hartford Stream coverage is triggered after two lovers break up and remain separated for more than three months. Pays 50 percent of the cost of unreturned gifts including rings and other jewelry; moving expenses; temporary housing; damaged or lost goods; up to $50,000 for reputational damage. (In a related announcement, Dole Mutual has come out with a Personal Equipment Breakdown Coverage that covers damage to reputation and ego due to erectile dysfunction; includes Viagra or Cialis prescription co-pay.)
- Homeworkers’ Compensation: The Harmfort has developed injured worker coverage specific to hazards of the home-based workplace. Includes injuries related to solitary worker syndrome (where individuals exhibit reduced social skills), excessive weight gain, unnatural pet attachment, and deterioration of driving skills.
- Hoosier Daddy Policy: An Indiana insurance company has launched a policy that protects a family’s income while the breadwinner is imprisoned for financial crimes. Not currently available to Wall Street executives or public officials in New Jersey, Illinois or Louisiana.
There have also been a number of innovative special events type coverages. Strike Coverage covers the prize money owned when a perfect game is bowled. Eagle Coverage is being marketed by a Florida specialty insurer that wants to expand beyond its hole-in-one coverage. Finally, there is an April Fool’s Policy, which covers reputational damage caused by temporary anger and embarrassment from believing everything you read.
Andrew Simpson, Christopher Boggs and Charles Boyle contributed to this special report.