Increased risks are impacting insurance profitability. Earlier this year, AM Best indicated an increase in losses and expenses were responsible for the P&C sector’s $4.1 billion net underwriting loss in 2021 and a weakened combined ratio of 99.6%[i] . AM Best estimated that the 2021 catastrophe losses accounted for 7.7 points on the combined ratio.
Already in 2022, the Marshall Fire in Colorado is expected to reach $1 billion in losses, with nearly 1,000 homes destroyed and hundreds more requiring damage repair. Tornadoes in Kentucky and other locations devastated both homeowners and businesses. Rising construction costs, strained supply chains, and lack of construction workers are driving up the cost of rebuilding, putting many insureds at risk of not having enough insurance coverage and insurers at risk of not knowing their overall portfolio of risk.
Lack of coverage has grown over the last few years due to the rapid rise in home prices as people relocated or sought homes to support work-from-home options. In November 2021, the median price of existing single-family homes rose in 99% of the 183 markets, as tracked by the National Association of Realtors in the third quarter, with double-digit price increases of 15% – 30% on average or even higher[ii]. With a competitive housing market, many properties don’t get inspected, leaving unidentified risks unknown to the insured and insurer.
With all these changes, many property owners are underinsured, posing a potential customer experience and reinsurance coverage challenge for insurers. With the cost of insurance increasing and profitability impacted, insurers need to look at their broader portfolio and find ways to assess potential losses, predict their impact, and initiate loss prevention strategies more accurately and precisely. And while there’s not much customers can do to avoid disasters, other risks and potential losses may be preventable, offering an opportunity for insurers to create more value and trust with customers.
How should insurers adapt to these increased risks? How should they assess properties – only high-value ones or the broader portfolio? With on-site adjusters or self-survey or video? How can they better understand their overall risk within a portfolio? How can they better serve their customers? Join us for this webinar to see how next-gen digital property risk management that uses digital loss control, digital underwriting and AI/ML models can help insurers adapt in a world of increasing and changing risk.
Denise Garth, Chief Strategy Officer – Majesco
Ben Holub, VP Product Management, Data & Analytics and Loss Control 360 – Majesco
Clive Anderson, Systems and Governance Manager – Aviva