The Lowdown: Innovation, Social Inflation, Hot Markets and More…

By | December 4, 2019

I recently had the benefit of attending the Society for Insurance Research 49th annual conference, where I was immersed in discussions about data, research, artificial intelligence, machine learning and more. This intimate conference included 200 attendees from 48 carriers and 24 exhibitors. The agenda included opportunities to attend presentations addressing personal and commercial lines, life/health, consumer insights, data/innovations and research.

My Personal Picks?

Social Inflation: William Wilt, of Assured Research, provided an update on social inflation’s impact on commercial auto underwriting losses. What is social inflation? “It captures an increased propensity to sue, rising jury awards, expanding judicial theories beyond the 4 corners of a contract…” explains Wilt. The trends he tracks include continued rise in legal advertising spend, aggressive plaintiff activity, verdicts by angry juries and increases in litigation financing. While such a social phenomena is difficult to measure, Wilt speculates that the increase is at least in part due to anger… people are more litigious right now because they’re angry! For more on social inflation, check out these articles.

Hype of High Tech Vehicles: Kay Wakeman, of Highway Data Loss Institute, offered a great reality check on advancements in high tech vehicles with an overview of testing and data analysis. The HDLI receives 320 million insurance data transactions every month from insurance provider representing 85% of all private passenger auto written in the US. This information, combined with the VIN numbers and collision avoidance system information provided by manufactures, allows the HDLI to evaluate the success of these systems based upon actual crash data. Walking us through the data on crash prevention systems and claims severity, Wakeman points out that in most instances, while claim frequency is declining, claims severity continues to rise because the cost of technology has not reached economies. For an example of the test results of rear crash systems, read more here. Before you buy your next car, check out HDLI’s safety model rating tool.

Innovation: Sridhar Manyem of AM Best presented a comprehensive overview of the new innovation score to be added to their rating process in 2020. According to Maynem, AM Best is taking a look at innovation to protect policyholders against developments that might cause risk. Why? Because innovation is good, but must be utilized responsibly. AM Best is looking at how companies are able to transform ideas into significant improvement in products, processes, services and overall business model. This includes a review of leadership, culture, resources and the process structure, a comparison of results to those seen in the industry and relative to customer expectations. This score will be included within the business profile section of the rating process. For more detail on this topic, check out a recent article by our Carrier Management reporter, Mark Hollmer.

Hot Market: Matthew Sternat, of Conning, provided insights into the heavily sought after small business market. The small business client is defined with a premium cap of $50,000 and under 30 employees. An estimated market of $100 billion in premium, this represents a large market of very small businesses (61% with 1-4 employees) with great opportunity for insurers to grow with them as they gain their loyalty. By industry, 51% are in service sector, 16% retail, 9% finance, and 7% construction. Competition for this market is heightening as large, national carriers leverage distribution channels, personal lines carriers look to cross sell to business owners, and innovative startups focus on the user experience and attack the smaller end of the market, with an effort to simplify the buying process. For hints on your value proposition to small business owners, read more here from our Carrier Management contributors, Gerritt Graham.

With over 25 presentations to choose from on so many relevant topics, I’d recommend the experience to anyone in the industry, and not just within the research field. The conference was just the right size to interact with all of the exhibitors and make lasting connections with industry professionals. Though a guest, I was treated like a long term member of the Society. I think their video recap reflects my sentiments so I’ll leave you to view it!

About Pamela Simpson

Pam is the Senior Strategist, Branded Content & Research for Insurance Journal. More from Pamela Simpson

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