Casualty and Specialty Underwriters - Is an Inflection Point Coming?
October 04, 2014| By Libby Benet | General Liability | English
As Casualty underwriters, we are constantly looking for that next inflection point. It isn't always easy to spot. Yet, the earlier we see it, the better prepared we can be with an underwriting response. We do not view the shifts as good or bad, only as a change we want to address before it takes us by surprise.
Here are some of the trends we are watching:
- Healthcare - Massive changes in our healthcare system give no clear picture of what the consequences will be. Not long ago we shared a link to the Rand Study that is attempting to establish measurements to track the impact of these changes on several casualty lines of business. The study's early forecasts indicate that healthcare law changes will have a significant impact beyond medical professional liability.
- Computational Power - The rise and relevance of data and artificial intelligence will likely have implications at the individual account, line of business and portfolio levels. Will this fundamentally change the way lawsuits are brought and liability is created? Will we see a rise of mass or class actions as a result?
- Transparency of Data - The federal government wants to make lots of data transparent to the public. As citizens, you might find that a positive development but it could be another story for insurers. Consider public access to hospital audit reports; it might help insurers underwrite risk, but it could also help spawn new theories of liability and new waves of litigation. Are we monitoring the impact or ramifications of this transparency?
- Demographic Shifts - Will losses be more severe in the aggregate as seniors make up more and more of the population? We see many shifts in the buying preferences of the under-30 population, such as reduced home and auto ownership. That, too, will ultimately influence losses as well as premium.
- Technology - Technology gains remade the manufacturing sector in the 1970s and 1980s. Today it is disrupting and transforming whole sectors, such as the Movie/Music Industry, Legal Services, Healthcare and Financial Services. As for the automobile sector, Gen Re recently published an article on self-driving car technology. While still in the future, insurers are recognizing the potential impact on losses and pricing.
From an underwriting perspective, we watch for inflection points that could signal a need to adapt rates, forms and guidelines. Given each of our unique portfolio of classes and states, one needs to ask, "Is our underwriting, pricing and coverage keeping pace with these changes? Can we completely rely on past experience as a predictor for future losses? Do we have the risk management in place to see it coming or will we be caught off guard?"
From a marketing perspective, trends create new opportunities but can also diminish existing sources of business. If self-driving autos deliver on the promise of fewer losses and lower premium, where do insurers see new products or growth to fill the void? If renting continues its upward trend, how can insurers improve penetration in that segment? Will the changes in healthcare create new exposures my company can insure?
At Gen Re, we keep the opportunities and threats in mind when tracking trends moving across the insurance landscape. If we can help you watch for that inflection point and prepare for the future, let us know.