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January 23, 2018

A shift to loss prevention

Summary:

A longtime colleague at the Wall Street Journal used to advise young reporters, “If you have a good story, you should write it every once in a while.”

Although I am no longer a young reporter, I’m going to take Al’s advice and return this week to what I think is one of the better stories developing in the insurance industry: that companies are moving beyond a product focus and are increasingly helping insureds avoid losses, rather than just compensating insureds after the losses occur. The shift toward prevention services is worth reiterating and will, I hope, keep jumping to the fore in coming months and years.

The latest example is the announcement this week by Good2Go Auto Insurance that it is providing policyholders access to the LifeSaver app to discourage distracted driving. The need is dire. While deaths on U.S. highways had declined steadily since 1980, leveling off at about 33,000 a year (still an ungodly number) starting in 2010, deaths surged in 2015 and again in 2016, when the total was 37,461. The 2017 total will likely be even higher when it is reported in the next few weeks, and distracted driving is considered to be a major reason. 

Apps to limit distracted driving have been around for a few years, but they have mostly wrestled with how to turn off the driver’s phone (while not turning off all the passengers’ phones). What I like best about the LifeSaver app is that it provides feedback about a driver’s habits and coaches drivers about their behavior, something that may be more palatable for drivers and may prove effective as the backlash against distracted driving builds. In any case, it’s nice to see insurers keep experimenting with how best to protect people.

Another recent example is the private firefighting forces dispatched to some homeowners during the wildfires in California late last year. Again, this isn’t strictly new—the origins of fire insurance trace back to volunteers who organized to fight fires—but the high profile of the efforts in California suggest that such loss-prevention efforts will be stepped up. 

Meanwhile, Roost continues to roll out announcements about deals with insurers to subsidize its devices for policyholders—the devices alert homeowners to fires and water leaks. And life and health insurers are encouraging us deskbound types to use FitBits and related devices to increase our activity and improve our health.

We’re still in the early days of this push toward loss-prevention, and many of the business models have yet to be proved—I’m especially skeptical that my FitBit will do enough to improve my lifespan measurably—but, hey, at least insurers are up and moving. 

Have a great week.  

Cheers,

Paul Carroll,
Editor in Chief

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About the Author

Paul Carroll is the editor-in-chief of Insurance Thought Leadership. He is also co-author of Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993. Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.

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