During a podcast I recorded last week with Capgemini's global insurance lead, Seth Rachlin, we went on at some length about a pet peeve of mine: the insurance industry's archaic and often downright unfriendly language.

While I've hit this topic before (most notably here), I haven't exactly seen much change in the past several years, so I'll keep harping on the problem. I realize that not everyone focuses on language as much as I do -- coming from a family with half a century as copy editors at the Wall Street Journal will shape your perspective -- but I believe that insurance's insular language limits our ability to entertain outside perspectives.

As the saying goes, "We shape our tools, and then our tools shape us."

The particular issue that set Seth and me off is the notion of the "customer." That's hardly an archaic or unfriendly term -- in normal use. But insurers often refer to brokers and agents as their customers. I love brokers and agents, but, sorry, they aren't the customers. The people who pay the premiums, who face the risks, who file the claims -- those are the customers.

At a time when we're all supposedly focusing on the customer experience, how can we even begin to get it right if our language steers us toward serving those who sell rather than those who actually use our products?

Almost as bad: In just about every industry, interactions are handled by "customer service representatives." Why can't insurance use that term? Why send me an "adjuster," whose title suggests that either the insurer doesn't think I'm bright enough to get the claim right on my own or that I'm downright dishonest and need to be checked out? The adjuster can do exactly the same job as always. Let's just give customers a friendlier term.

Or: Why are payments to customers referred to as "losses"? When a bank or mutual fund sends me money I've earned, it's paying me interest or capital gains. Corporations pay me dividends. None of these firms talk about losses just because money has moved from them to me. So, why does the insurance industry refer to a payment on my behalf to a doctor as a "medical loss"? Why is a payment to help me recover from property damage in a storm a "catastrophe loss"? Why isn't a "loss" called a "payment to a cherished customer to help the person/business recover in a time of need"?

Yeah, that's a bit long, but surely "claims" or "paid claims" could replace "losses."

Just changing three terms -- "customer," "adjuster" and "loss" -- would go a long way toward reorienting the industry's thinking and lead to a friendlier experience for customers, but let's not stop there. Here are some other changes that the insurance industry should make immediately to its language to make it more accessible to customers:

• Binder → temporary insurance
• Rider → addition or supplement
• Endorsement → amendment
• Underwriting → pricing risk
• Excess lines, surplus lines, subrogation, capitation, inland marine (inland marine!) → something that is meaningful to the customer....
• What else? (I'd welcome thoughts in the comments section here or on LinkedIn, where this will also be posted.)

I realize that jargon can make us seem like we have inside knowledge. When my closest childhood friend went to medical school, he told me that running straight down the middle of our torsos is a narrow bit of fibrous tissue that looks like a white line. "It's called the linea alba," he said. "You know what that means in English? The direction translation is, 'white line.' But you sound smarter when you say it in Latin."

I also realize that those in the industry understand all the terms and thus feel no need to change. But if we're really to get outside our own heads and see the world from the customer point of view, then fixing our language would be a great place to start.

Stay safe.

Paul

P.S. Here are the six articles I'd like to highlight from the past week:

The Next Wave of Insurtech

With automated claims processing, the turnaround time for settlement will be measured in minutes rather than days or weeks.

Insurance 2030: Implications for Today

How employees will be recruited, trained and retained will be quite different – and organizations need to start on that journey today.

Rise of ‘Product-ism,’ Fall of ‘Project-ism’

Firms struggle because they view AI initiatives as small projects rather than a product requiring continuing maintenance and investment.

2020 Catastrophes; Preview for 2021

If this spring La Nina holds together, the central plains could get back to seeing severe weather that was lacking last year.

Life Insurance Is Ripe for Change in 2021

Under the incoming administration, the focus on consumer protection regulation will rise for financial services, including insurance.

Increasing Regulation on Climate Change

In 2021, climate-change actions by U.S. regulators will create both challenges and opportunities for insurers.

Blockchain is providing a solution for the insurance industry to share information easily and slash operating costs.

Having explored the possibilities for blockchain in personal lines and commercial lines in P&C, we conclude our webinar series on the technology (for now) by taking a look at two use cases in life and annuities that are close to moving into production. One, the Mortality Monitor, encourages insurers to share information when someone dies, so heirs can receive their benefits faster and insurers can avoid compliance issues, including fines, for moving too slowly. The second provides an accessible public record on licenses and appointments. Those two use cases, alone, could save the industry more than $850 million a year.

Watch to Learn:

• Where blockchain is about to make a big impact in life and annuities
• The road map for the future of blockchain
• The status of active use cases and their testing schedule
• How to start preparing to reap the benefits

Register for this free on demand panel discussion.

Speakers

Eric Henderson

President, Nationwide Annuity
Nationwide

Eric Henderson is President of Nationwide Financial’s Annuity business segment. He was elected to this position in October 2019, making him accountable for the financial health and strategic direction of Nationwide’s individual annuity business representing approximately $100 billion in assets.

In this position, Eric oversees all aspects of the company’s individual annuity segment, including product innovation, sales and distribution, executing strategic initiatives, driving strategic positioning and product development, managing profitability, and overseeing business operations.

Prior to his current role, Eric was Senior Vice President of Individual Products and Solutions, representing both individual life and annuity segments. He began his career at Nationwide as an Actuarial Assistant in 1985 and spent much of his career as an actuary in Individual Annuities. Since that time, Eric has held positions of increasing responsibility, including Senior Vice President of the Individual Investments (Annuity) Group, Senior Actuarial Officer for both Retail Sales Support and Individual Variable Annuities, Vice President and Product Manager for Individual Variable Annuities and Income Products, and Vice President and Chief Financial Officer of the Individual Investments Group.

Eric earned both his master’s and bachelor’s degrees in mathematics from The Ohio State University and is a Fellow of the Society of Actuaries.

Eric serves as a board member on the Insured Retirement Institute (IRI), The Institutes RiskStream Collaborative™ Life & Annuity Advisory Board and the BalletMet Board of Trustees.

Patrick Schmid, PhD

Vice President
The Institutes RiskStream Collaborative

Patrick G. Schmid is vice president of The Institutes RiskStream Collaborative. In this role, he oversees products, operations and technology; coordinates efforts among RiskStream Collaborative insurers, brokers and reinsurers; and provides thought leadership for The Institutes.

An economist with a passion for blockchain, Dr. Schmid has worked in risk management and insurance for over a decade, researching trends on important market issues. Working as an economist for Moody’s Analytics before joining The Institutes, he has also taught economics and related subjects at a number of Philadelphia-area colleges and universities.

Schmid formerly served as the director of research for the Insurance Research Council (IRC), a division of The Institutes. As the IRC’s research director, he was responsible for providing timely and reliable information based on extensive data collection and analyses. His research examined public policy matters that affect insurers, consumers and the general public.

Dr. Schmid has published research in a variety of property-casualty insurance areas. He frequently presents research findings to industry executives, industry associations and company management. He has testified before regulatory and legislative bodies. Dr. Schmid is often quoted in insurance periodicals, and his research has been reprinted in various industry-related academic journals.

Prior to working in the Insurance industry, Dr. Schmid was an economist for Moody’s Analytics.

Dr. Schmid has a PhD in economics from Temple University. He has taught economics or related subjects at a number of Philadelphia-area institutions, including the Wharton School, Albright College, Temple University and St. Joseph’s University.

Paul Carroll

Editor-in-Chief
Insurance Thought Leadership

Paul is the co-author of “The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups” and “Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years” and the author of “Big Blues: The Unmaking of IBM”, a major best-seller published in 1993. Paul spent 17 years at the Wall Street Journal as an editor and reporter. The paper nominated him twice for Pulitzer Prizes. In 1996, he founded Context, a thought-leadership magazine on the strategic importance of information technology that was a finalist for the National Magazine Award for General Excellence. He is a co-founder of the Devil’s Advocate Group consulting firm.

The insurance industry has historically thrived on face-to-face interactions. A year ago, U.S. life insurance brokers told McKinsey that 90% of their sales conversations and even 70% of their customer follow-ups happened in person. Of course, those numbers plummeted during the pandemic: By May 2020, a follow-up McKinsey survey revealed that in-person interactions had dropped to less than 5%.

To maintain regular interactions with prospects that feel as meaningful and personal as formerly in-person conversations, insurance companies must turn to social media to meet audiences where they're socializing during the pandemic.

Over the last few years, however, the algorithms that govern organic content's performance on social media have shifted to make breaking through more difficult for brands. After all, social media platforms exist to make money, and their primary revenue stream is advertising dollars. Insurance companies that used to see engagement simply by posting on their business pages must now begin investing in paid advertising campaigns if they hope to achieve anything resembling earlier organic results.

Unfortunately, this trend is solidifying at a time when most insurance associates — indeed, most people in general — are stretched thin. Life insurance companies are busy handling a significant increase in demand for their services, and property and casualty areas are busy helping customers navigate changes in policies such as low mileage rebates.

Agents simply don't have the time to focus on marketing themselves right now. In this environment, insurance companies must support them by focusing on social media marketing efforts and examining ways to help agents cut through the noise and foster real, human connections online. These three strategies are excellent places to start.

1. First, equip agents with social selling.

To maximize a paid social strategy, agents need to be engaging with prospects and clients organically on social media first. Enable your agents to practice social selling — which means sharing branded content from their own profiles to their own networks.

A company's social accounts might offer some brand visibility, but associates have a far greater reach than your brand, and their followers trust their content much more than your company's content. When agents share helpful information that highlights their expertise, their networks will already begin to see them as trusted resources. This lays a solid foundation for launching a paid campaign with individual agents.

Of course, the last thing any insurance company wants to do is add more demands to their agents' already full plates. If you want employees to build their social presence organically, you have to make it as easy as possible. Marketing teams can build clear, comprehensive social media policies and train agents on them. Then, they can provide agents with a steady stream of engaging, curated content that aligns with the brand and interests agents' followers.

See also: Want to See Social Media Genius?

2. Then, tailor social selling with paid advertising.

Paid social should absolutely be a part of your 2021 advertising plans, but you should still incorporate elements of your organic social selling strategy — namely, the agents. Put your individual agents front and center in the ads targeted to the audiences in their respective geographic regions.

Consumers today expect this level of personalization. One report found that 72% of consumers will engage only with marketing messaging that's tailored to their interests, and Accenture confirmed that most are willing to share the data necessary for a more customized experience.

Ultimately, it's human nature to seek out person-to-person connections. People trust other people more than companies and brand names. Insurance companies should take every step possible to build, maintain and reinforce the human relationships that were the cornerstone of the industry pre-COVID-19, and getting individual agents in front of the right people on social media is a great way to highlight the human element.

3. Use software to control and expand your efforts.

Insurance companies can no longer rely on mass channels and one-size-fits-all campaigns to establish trust and convert clients. Personalized marketing efforts are increasingly complex, and they're best handled by marketers with central authority.

As agents deal with the same changes that are rocking the broader industry, they're relying on marketers to implement complex paid campaigns at the brand, branch and agent levels. That's a lot for one marketing team to handle, but social media management software exists to make it easier. The right tool can streamline and automate workflows, making sure no ad ever publishes without the correct approvals. This helps ensure each post is compliant and in line with your brand's style and voice. Software can also allow marketing teams to reach more people on more platforms with simultaneous multiplatform features, allowing campaigns to scale with ease.

With the operational details of executing a social strategy taken care of, marketers can focus more on arming agents with everything they need to create the types of meaningful, human connections that will foster trust and set the stage for strong relationships to come. 

See also: How Social Selling Can Boost Results

The insurance industry upheaval brought on by COVID-19 has necessitated a stark shift in the industry's approach to advertising. Organizations must strive to build personal relationships and connections from a distance, but a branded organic strategy won't meet social advertising needs as algorithms evolve. Instead, the insurance companies that pivot to social selling, human content and solutions at scale will rise to the top of the news feed in the coming year.

Many could not wait for 2020 to end, and numerous summaries highlighting the many different catastrophes and their impact on the insurance industry have been published. However, there is a need to put things into perspective at times, and this article looks to highlight a few unique aspects of 2020 and the catastrophes that have not been widely reported that have helped the insurance industry.

There is no escaping all the news about all the catastrophes in 2020 that have totaled $83 billion according to Swiss Re and $82 billion according to Munich Re. However, what is not widely mentioned in all of the various discussions is how normal these losses are. According to AIR Worldwide (AIR) and its 2020 Global Modeled Catastrophe Losses report, the average annual loss (AAL) is modeled at $99.6 billion. The 1% aggregate exceedance probability insured loss (or the 100-year return period loss) is nearly $301 billion. This is not a complete apples-to-apples analysis, as there are catastrophic events that occurred in 2020 that could not be modeled; however, the broader point is that, overall, losses appear to be what the insurance industry should expect in any given year.

The numbers are a good reminder not to put much weight on trends in economic or insured losses and to measure catastrophic trends in the perils that cause the loss; there are just so many moving parts. Roger Pielke Jr., a professor at the University of Colorado, continues to lead this area of analysis by putting losses into perspective. Along with the comments from the Intergovernmental Panel on Climate Change, which mentions that “increasing exposure of people and economic assets has been the major cause of long-term increases in economic losses from weather- and climate-related disasters (high confidence)," Pielke for over a decade has analyzed global disasters as a proportion of global GDP data provided by Munich Re and the World Bank. The latest research continues to headline a long-term downward trend; even with global GDP declining due to COVID-19, his analysis shows that, while there are loss complexities due to social-economic issues, overall the losses could have been worse. The following three sections are highlights as to some of the reasons that have not been mentioned in a lot of these annual reports.

Severe Weather-Related Observations

Various reports show that most of the largest and costliest natural disasters in 2020 occurred in the U.S. Severe weather in the U.S. led to over $30 billion in insured loss across 40 separate industry-wide events, according to Property Claims Services (PCS). But when you look at the severe weather data from 2020, it was not a record year. There is a disconnect between the observations of the peril of severe weather and the large amount of insured loss that occurred. For example, hail occurrences were the lowest since 2005, and, considering that an estimated 60% of annual storm losses in the U.S. result from hail, it would follow that most losses could have been driven from non-tornadic wind activity.

The Nashville tornado on March 2 once again proved that cities and expansive metropolitan areas are not shielded from large tornado impacts. However, as with hail, total tornado counts were observed just below the annual mean count. The U.S. currently is in the second-longest period between observations of EF5 tornadoes. The last EF5 tornado observed in the U.S. was on May 20, 2013. The other unusual aspect of the severe weather season was that Florida and Illinois each saw more tornadoes than Kansas and Oklahoma combined in 2020. Because tornadoes are correlated with outbreaks of other severe weather perils, maybe it was severe weather in the more populated Southeast that also contributed to the higher amounts in insurance loss this past year.

Not all severe thunderstorm wind impacts result from tornadoes. The Midwest derecho was by far the most significant event of 2020. It has been dubbed the equivalent to a major hurricane. Based on reports of high winds and wind damage, 2020 was on par with 2019 and overall the third-highest year of wind local storm reports since 2005. Therefore, maybe a higher percentage of insured losses are coming from severe wind events.

Few Major Earthquakes

2020 started with the most powerful earthquake to hit Puerto Rico since 1918, when a large Mw 6.4 earthquake struck just 5 miles off the southern coast on Jan. 7. Another rare earthquake struck about nine miles west of Salt Lake City as an Mw 5.7. Although the highest earthquake hazard in the continental U.S. is largely associated with California, which still awaits the big one, earthquakes in the past have been devastating. However, the 2020 global earthquake catalog was quite kind to the insurance industry, with the second year in a row with a relatively low number of Mw 7.0 or greater earthquakes from around the world.

Named Storm Activity

Many of the 2020 reviews have highlighted how active and devastating the 2020 Atlantic hurricane season was, in particular on the central Gulf Coast. This active landfall season had an impact on the total insured losses in the U.S., which currently accounts for just under $20 billion and should continue to develop as claims are still being processed. In the season-ending tropical update, it was noted that the clustering of storms was very evident this year. However, the insurance industry needs to understand that the hurricane magnet Florida was relatively unscathed during the active season and this is the 28^th year that the very populated southeast Florida coastal city of Miami has not been hit by a major hurricane directly. Although Isaias had its impact widely felt in New England as it became an extratropical storm, this part of the U.S has not had any direct impacts from a hurricane since Bob in 1991. It has also been 31 years since the last major hurricane made landfall in South Carolina. The U.S. went 12 years without a major hurricane impact, and the landfall activity we are seeing over the last three years may just be nature's way of reverting landfall statistics to a Poisson distribution. Unfortunately, some areas are long overdue for a major hurricane landfall.

Spring 2021 Early Look Ahead

With half of the meteorological winter behind us, the early trends for spring show La Nina, which is known to cause stronger severe weather seasons in the U.S. La Nina is a cold phase of a large oscillation in the central Pacific Ocean, called ENSO, (El Nino Southern Oscillation). Preliminary data shows that the ENSO has already reached the peak of its cold phase. While it was not the strongest of all time, this La Nina was indeed quite strong, which increases the likelihood of its impact reaching into spring 2021.

One of the main influences of La Nina (or any other ENSO phase) can be seen in the changing jet stream. The image below shows the average position of the jet stream during the La Nina seasons and the corresponding weather development over North America. The twisted jet stream brings colder air and storms down from Canada into northern and the north-western U.S., and warmer and drier weather to the southern parts.

The image below shows a comparison of hailstorm and tornado frequency during the spring season in the U.S., between El Nino and La Nina years. In a La Nina spring season, there is a substantially higher frequency of hailstorms and especially tornadoes in the “Tornado Alley” south-central plains.

As La Nina promotes a high-pressure system in the North Pacific, there is usually a pressure drop over western Canada and the north-western U.S. Cold fronts often then move from western Canada down toward the south-central U.S., where they meet warm moist air coming from the Gulf of Mexico. With the jet stream altered by La Nina, the combination of conditions can create storms that become severe and tornadic.

See also: How to Minimize Flood Losses

Below is the season forecast from the European Centre for Medium-Range Weather Forecasting (ECMWF) model. The forecast suggests the pressure forecast will be lower in western Canada, as well as in southern and southwestern U.S. This low-pressure zone means a stronger warm and moist southerly flow from the Gulf of Mexico into the south-central U.S., as a low-pressure system spins counterclockwise.

Below is a graph that shows annual tornado (EF1+) numbers in the U.S. from 1950 to 2020. We can see that many of the most active tornado years were La Nina years. If this spring La Nina holds together, given that it is the most active part of the year for tornadoes, and the occurrence of tornadoes is correlated with other forms of severe weather, there is a good chance the central plains could get back to seeing severe weather that was lacking last year. This is clearly something the BMS Analytics team will be watching and helping clients with, through tools like BMS IVision.

It can be difficult to think about the future when the demands of the day are so pressing. The pandemic and events of 2020 have caused seismic shifts in society, affecting everyday patterns, lifestyles and business operations. Adapting strategies and plans to the pandemic’s evolving realities has been at the top of many insurers’ priority lists. Yet, in the midst of this turmoil, many P&C companies have been engaging in long-term strategic planning exercises. And some of the emerging themes are surprising.

SMA has conducted a number of scenario-planning workshops with insurers and MGAs – starting before the pandemic but continuing through 2020 and into 2021. These sessions, envisioning scenarios for 2030 and their implications for the company, are sometimes conducted at a company-wide level, sometimes for a single line of business and at other times for a specific area like distribution. These sessions are always educational and enlightening, revealing strategic options and exposing company gaps. The most surprising aspect of scenario planning is often how this type of thinking can actually drive near-term operational priorities. One of the most interesting themes that typically emerges revolves around people – especially the workforce.  

Many dimensions can be explored when contemplating longer-term strategies to compete in the world of 2030 ... or 2025 … or 2022, for that matter. Business models, products, distribution, underwriting, claims, participating in new ecosystems, combatting new competitors and many other areas can be considered. There are important developments and strategic options for all of these areas. However, we have observed that, in virtually every session, the evolving workforce becomes a central theme – even for those that did not explicitly intend to take the workforce into consideration.

Often, projections on AI and connected-world technologies dominate the conversations. The potential for insurers to gain access to real-time data about every physical thing they insure is compelling – and leads to a vision of how the industry can leverage expertise on risk to help customers significantly reduce accidents and incidents while responding rapidly with new capabilities when something bad does occur. This creates a ripple effect in actuarial, underwriting, policy service, claims – and essentially every other area of the business. Yet, in the midst of exploring the opportunities and gaps related to advanced technologies, the role of industry professionals and the evolving workforce rises as a critical success factor.

Strategies related to the future workforce take on several dimensions.

Roles

Central to the roles of agents, underwriters, adjusters and other industry professionals is interaction with technology. Higher levels of automation and AI tools for insight shift the roles of these individuals in significant ways, even generating the need for brand new roles.

Retirements

Before the pandemic, the industry was already in the early stages of a wave of retiring seasoned professionals. The pandemic has changed the retirement trajectory, and more are seeking early retirement. The rise of the millennial generation continues and must be a significant factor in workforce planning.

Worksite Flexibility

The rapid shift to work-from-home has forever altered work patterns and employee desires. P&C insurers did remarkably well in adapting, practically overnight, to a remote workforce. While some are eager to be back in the office, there are just as many or more who are now expecting the flexibility of choosing to work either at home or in the office.

See also: Insurtech 2021: Reset vs. Resume

Recruiting, Training, Retaining

The combination of role evolution, retirements and worksite flexibility change the game for the HR community. There is a growing recognition that the competition for talent will be different because location becomes less of a concern for many companies that are adapting to remote workers. In addition, the skills needed in a digital/AI world will be different than those required today. This is not to discount the value of deep insurance expertise – that will be more valued than ever. It is also important to value personal relationships and attributes such as empathy in the claims arena. But the big picture is that the way that employees will be recruited, trained and retained will be quite different – and organizations need to be starting on that journey today.

Companies are finding that these types of scenario-planning approaches can be a great way to spur innovation and get individuals out of old patterns of thinking. In addition to the workforce discussions, there are always very important implications and ideas related to many other dimensions of the business. Often, the most valuable outcome is to bring together individuals from across the business to build new internal relationships and share ideas across silos. The mix of people involved can be intended to advance cultural change but can also result in the sharing of practical ideas that improve the business in the short term.

According to Chubb’s 2020 Homeowners Risk Survey, American homeowners have been inescapably affected by the COVID-19 pandemic. This fourth annual survey, which measures homeowners’ attitudes and behavior toward property protection, not only looked at such topics as renovations and water damage, it also adopted a COVID-19 lens to understand what risks and challenges have affected homeowners. 

One-third of all homeowners have put off home maintenance due to COVID-19 concerns, and 45% say that COVID-19 has reduced contractors’ ability to address maintenance needs. Postponing necessary home maintenance can be a critical mistake, as letting small problems fester can lead to expensive repairs. Even so, despite not wanting contractors in their home, homeowners are not willing to tackle some important home protection matters themselves, including such measures as checking appliances hoses, inspecting home heating systems and conducting water heater maintenance.

In addition to understanding home maintenance concerns, the 2020 Chubb Homeowners’ Risk Survey also found that COVID-19 has challenged city-dwellers to consider moving to more suburban areas, along with an influx in interest of rental homes. 

For a copy of the full executive summary, click here. Key findings from the survey are identified below.

Property Risk During Quarantine

As we all continue to feel the pressures of COVID-19 while trying to stay safe and healthy, it’s possible that quieter home risks have taken a back seat. According to the 2020 survey, the top three risks that homeowners are most concerned about are the day-to-day upkeep of their homes (60%), maintaining their home value (45%) and weather-related water damage (38%). With just 38% of homeowners showing concern about external or weather-related water damage in 2020, the survey shows a significant dip from the 2019 survey – which reported 75% of homeowners concerned about external or weather-related water damage. 

Homeowner awareness of weather-related water damage is important, as they will likely be better prepared to protect their property from increasingly aggressive and frequent storms. However, it remains equally important for homeowners to remain vigilant against interior water leaks. In fact, interior water damage is more common and costly than homeowners may think. And during a time where individuals are spending their time indoors, homeowners may lose sight of the hidden threats of leaking pipes. Since the beginning of quarantine, 20% of homeowners have experienced some form of water damage; according to Chubb claims data, a single internal water leak now averages in excess of $50,000 in damage. Homeowners must remain keenly aware of potential water damage risks in their homes. 

See also: Accelerating Into 2021

Maintaining Home Improvement During COVID-19

Although COVID-19 has raised homeowners’ concern about contractors entering their homes, they are still not taking proper home protection measures into their own hands. According to the 2020 survey, no more than a third of homeowners employ home protection behaviors such as: periodically checking appliance hoses (19%), inspecting home heating systems (19%), conducting water heater maintenance (16%), shutting off water supply while on vacation (15%) and installing pipe insulation (12%). 

Additionally, less than half of homeowners (43%) have conducted home improvement projects, with only 17% of respondents bringing in a contractor and 26% relying on their own home improvement DIY skills. Furthermore, 12% of homeowners saw an issue, but with COVID-19 concerns did not bring a contractor inside their homes to address the problem. 

For homeowners who lack home repair skills or have home repairs that require a contractor, here are steps they can take to reduce risks in hiring home contractors during COVID-19:

1. Ask your contractor if they have been experiencing any COVID-19 symptoms, if they’ve been in contact with anyone who has tested positive and what daily precautions they take when interacting with other customers.
2. Request that the contractor wear a mask inside your home and ensure that everyone else within the home wears one, as well. While inside, open doors and turn on all lights to reduce the number of surfaces the contractor may touch.
3. Consider using digital payment options. 
4. Maintain at least six feet of social distancing when the contractor is working in your home.
5. Fully disinfect any area in which the contractor has worked.

Finally, while not specific to COVID-19, it’s always important to request a certificate of insurance from your contractor prior to starting work in your home. 

Relocating Due to COVID-19

One of the trends that the U.S. has seen during the pandemic is a suburban flight at record numbers – perhaps as a result of prolonged time spent indoors. In the Chubb 2020 survey, results showed that 32% of homeowners in urban areas nationwide are considering moving out of their city.  

Homeowners under the age of 45 are most interested in relocating, as this age group is more likely to have younger children and may benefit from having extra square feet to balance remote work, learning and day-to-day life. 

As city-dwellers rush to relocate, property risks can be overlooked when making a purchase. For example, new suburban homeowners must be mindful of maintenance that may not have applied to their city home – such as the installation of sump pumps and the care of a septic tanks in areas outside of large cities.

Not only have home sales increased in suburban areas, outside of New York City, for example, but there has also been an influx in interest in rental homes. Whether it be a short- or long-term rental, people have been looking for an escape from the long quarantine inside their homes or apartments. However, along with any other aspect of homeownership, renting out one’s secondary home can come with risks. 

See also: COVID-19’s Once-in-a-Lifetime Opportunity

According to the study, 74% of respondents have not installed a water shut-off device, with a majority of the group reporting they have never even considered this device before. And many renters may not be familiar with the home’s plumbing systems and may not know where to turn off the water supply if a leak occurs. 

Although life may be on hold in many ways due to COVID-19, it’s important to remember that home protection is a constant challenge.

The last year has proved to be one of the most difficult that the insurance industry has ever faced, but the challenging times are not over yet. In addition to the increase of regulatory challenges, as well as competitive and customer disruptions, insurers continue to endure the unanticipated effects of a global pandemic. Insurers’ technologies are stretched to the max, and employees now work from home offices in an effort to accommodate social distancing guidelines.

Customers have also been confronted by this environment and expect even more from their insurance providers. Between fluctuating stay-at-home orders and other restrictions, along with continuing concerns posed by the current climate, the need for insurance has never seemed so significant. However, for insurers to overcome the added pressures and deliver the exceptional service customers expect, they will need to make a fundamental shift in their operational model.

The key to resiliency is in operational changes and business reinvention

Insurers need to adapt to ensure that the effects of disruption – whether caused by an unexpected event, such as a pandemic, or a new regulation – do not hinder the experience their customers receive. Insurers must reinvent their business so that the services and products they provide are both appropriate for customers now and capable of withstanding future upheaval.

This might sound like a huge undertaking, but it is possible to achieve these goals through the use of technology, which will allow insurers to consolidate, analyze and use data-driven insights. Data is at the heart of the solution.

Better data improves visibility that, in conjunction with accurate scenario-based modeling and planning, will assist in the development of a more agile organization. This is especially important at a time when some insurers have had to grapple with the added challenge of doing business with a lower headcount. Data can also be useful in anticipating when customer service functions might be affected by local lockdowns or increased restrictions. 

Use data to better tailor products to customers’ needs

Better data can drive artificial intelligence that can be applied to how products and services evolve for customers. They want insurance that instills them with confidence during difficult times, but insurers need to balance their coverage to avoid overexposing themselves to events that could appear out of nowhere.

See also: Free Insurance Data You’ll Need

You can’t predict the unpredictable, but you can plan for it

To survive this climate or any other challenging situation, insurers must be able to plan, model and predict the likelihood and impact of possible events. By using technology – and, more specifically, data – insurance providers can ensure that customer expectations are met and that businesses are prepared for the future.

While the repercussions of the pandemic and subsequent economic paralysis touched many industries, changes within the life insurance sector are among the most widespread. Some changes were underway prior to the events of 2020, yet the pandemic and its economic consequences accelerated an industry-wide transformation. Regardless, life insurance is shaping up to look vastly different in 2021.

New Administration and Best Interest Regulation

Under the incoming administration, the focus on consumer protection regulation will rise for financial services, including insurance. Much of this has been done at the state level already, but we’re seeing increased appetite among federal regulators to extend certain requirements.

New York’s 2019 amendment to Regulation 187 is a perfect example. The rule requiring insurers to act in the best interest of the consumer will likely become the standard for the U.S. life and annuity insurance industry over the next few years. The rule demands more simplicity and transparency within the annuity and life insurance sales experience to prevent what some call “consumer financial exploitation.”

The last four years revealed trends toward a “consumer-only mindset” that’s rooted in transparency. For the life and annuity sector, this means digital product comparison will be necessary. Carriers and distributors with a strategic growth agenda should seek to align with this trend rather than ignore it.

Annuity and life insurance sales have traditionally relied on in-person relationships and meetings; with COVID-19 forcing the industry into virtual selling, regulators will want more auditability and transparency over how consumers are treated during the virtual sales process.  

Consumers Demand More Control Over Virtual Experiences

Consumers are also experiencing a transformation of their own. With the majority of lives moving toward virtual experiences and the increased demand for instant answers or services online, consumers have little to no patience for a traditional, paper-based sales process.

This is one of the main reasons that life insurance sales haven’t kept pace with general population growth. Younger generations demand seamless, often-personalized digital experiences with the ability to compare policy options dynamically and interactively in real time. Moreover, most Americans now rely on smartphones and broadband technology to do everything from banking to tracking the status of the COVID vaccine, according to Pew Research. This heightened reliance on digital experiences has affected consumer interest in life insurance and the ability to effectively sell it.

Creating an interactive visual life insurance experience is increasingly popular among carriers and distributors. Virtual sales meetings are also increasing. More and more, consumers don’t want to feel pressured to attend a one-on-one, in-person sales meeting and want more flexibility in the sales experience.

Additionally, for better or for worse, we’ve all come to expect immediate gratification and a quick transaction. This same expectation carries into insurance, especially when it comes to term life. We expect the growing shift to “instant issue” capabilities will continue at a compounding rate in 2021. We also believe many innovators will seek to apply the instant issue model to select product classes and target audiences in the permanent life space.

See also: 6 Megatrends Shaping Life Insurance

The Uninsured and Underinsured at Highest Risk

2020 also exposed the risks for remaining uninsured or underinsured in America. Years of shifting cultural priorities along with outdated digital experiences have left many Americans without adequate life insurance. Unfortunately, this past year has given a glimpse of how dangerous that can be.

Americans now realize how vulnerable they and their families are without sufficient savings or insurance. With new insuretech platforms simplifying the purchase of life insurance, we expect an accelerated shift in tech adoption. For example, we saw a 155% rise in virtual life and annuity insurance sales meetings last spring, and that trend only increased throughout the year. Consequently, financial professionals, insurance carriers and distributors are investing in technology platforms to deliver a “hybrid” sales approach where the adviser or agent blends expertise with a consumer-oriented digital experience.

Overall, while 2020 was a transformative and challenging year, it also propelled the insurance industry forward at an accelerated pace. Regulations that reflect our new reality and cultural shifts will continue shaping the industry into 2021 and beyond. Carriers and distributors that aren’t moving toward digital transformation now will fall further behind in 2021. Despite the rollout of COVID-19 vaccines, experts agree that “normal” life is unlikely to return in the first half of the year, making these major trends a new part of the life insurance selling experience at least for the foreseeable future.

As part of this month's ITL FOCUS on blockchain, we spoke with John Sviokla, strategic adviser at Manifold and former senior partner and chief marketing officer of PwC, about the future impacts and strategic implications of blockchain.

You've made a career out of identifying the strategic possibilities of technology -- going back at least to the seminal piece about e-commerce that you co-wrote in Harvard Business Review in the early 1990s, before most of us had even heard of an internet browser. How revolutionary do you think blockchain will be?

I think blockchains are going to be a big deal for at least three things: trading, in general; supply chains; and identity, in particular. 

Let’s start with trading. You have an intriguing idea about “computability” – about how more of what happens in the world can be recorded and turned into data that can be analyzed and manipulated by computers. In insurance terms, I think, for example, of how AI increasingly lets companies turn “unstructured data” into structured forms that can inform decisions on claims and underwriting, but your concept relates to a far broader set of transactions.

The world is becoming more “computable” all the time. As the world becomes more computable, it is possible to trade not only money but anything worth anything, as long as there is a good syntax and semantics about what is being traded and there is a power to “enforce” the trade.

Think of these emerging markets as being like commodity markets, where you can get real corn and where you can also trade corn futures. Derivative markets trade orders of magnitude more volume than markets in the underlying commodity do. I think the corn futures market trades more than the whole annual corn crop — daily.  

Imagine this sort of derivative trading happening with every part of the economy that has become computable and contractable.

That would be quite something. You remind me of a piece you wrote for me some 20 years ago, where you said people would be able to use the internet to basically list for rent or sale everything they own, all the time. If I’d thought more deeply about what you wrote, maybe I’d have started Uber or AirBnB, rather than just being a consumer.

Will these blockchain-based trades have to happen in markets, or can they be between individuals and between companies?

Some of these trades will happen in “markets.” Many others will happen over the counter, and over-the-counter markets can grow very fast if there is a way to trade, reliably, with anonymous parties. Let’s do a thought experiment. The global economy is about $80 trillion, give or take. Let’s say that 10% of the global economy is illegal. (I think the percentage is bigger). If the illegal economy is $8 trillion, that’s about three times the size of the French economy. Blockchain has got to be more efficient for many illegal transactions than other means are, so the illegal market, just by itself, will be big for blockchain. On the legal side, there’s tons of over-the-counter trades that can be enabled, generating massive new volumes in the “futures” of anything.

How about your second point: changes to the supply chain because of blockchain?

Any complex supply chain runs across many parties. Think of blockchain as being like container shipping. Container shipping allows for someone to pack something in Sri Lanka, and it gets sealed until it reaches Dubuque, IA. If you read the book “The Box: How the Shipping Container Made the World Smaller and the Economy Bigger,” by Marc Levinson, you find out that simply standardizing the container had vast implications for costs, control, trade, etc. Blockchain can provide that kind of standard structure for payments.

And for identity?  

I think deep fakes, etc., are only beginning. [Deep fakes are sophisticated forgeries of images, even videos, that purport to show something that never happened.]

A researcher at Carnegie Mellon, by the name of Rita Singh, has worked on using human voice to create a profile of people and locations. With a 30-second sample of my voice, she created a 3D profile of me that was pretty accurate – my age within two years, my blood pressure within 10 points, my weight within five pounds, a personality profile, the type of room I was in and even the fact that I had something askew with my skeleton. (I had a knee replacement five years ago.) When the deep fakes come along, I’d like some of my interactions to draw on her technology, which can tag me convincingly to a specific location, date and time. (For instance, if I’m in my car, it will sound different than yours.) I think of what she’s doing as a blockchain-enabled identity vector that brings my reality in space time into my needs to establish my identity. What she’s providing would be very hard to fake, and I want one. Blockchain is a supporting technology. 

When we were partners at Diamond Management & Technology Consultants (now part of PwC) back in the 1990s, we interviewed Ronald Coase, the economist who came up with the notion of transaction costs, for the cover of the magazine I edited for the firm. He said the internet would take out a whole layer of transaction costs and reshape commerce, and he was right. Will blockchain do the same?

Coase was right — any time you change transaction costs, organizations change a lot. Google sucked many individual classified ads from the market into one giant company because Google has lower transaction costs than the market for individual ads did. Etsy likewise created a marketplace of supply because its transaction costs were lower for individuals who make and sell craft items. Blockchain will have an effect similar to what happened with Google and Etsy. 

Many people predicted, especially in the early days of the internet, that a decline in transaction costs would “flatten” markets and give everyone a similar opportunity to compete, but lower costs actually let companies differentiate themselves and let some achieve enormous scale – like Amazon’s AWS cloud computing service. Blockchain, by lowering costs, will enable lots of new transactions. But I bet the scale will go to large, over-the-counter, distributed markets facilitated by the existing giants (Facebook?) or by new ones.

Blockchain’s lower costs will start all fun and decentralized but then grow into the mega-companies we use every day (which should be regulated and broken up, in this man’s opinion.)

When it comes to AI, machine learning and advanced analytics, there is one undeniable conclusion: You need to get there now. The biggest risk in AI today is not implementing AI.

Data can stream from devices, channels, exchanges and other points of origin (e.g., phones, drones, homes, vehicles, inspectors, adjusters, etc.) both continuously and on demand.

This makes AI more of a pipeline than a product. Data pours into the pipes and forms streams of information via data identification, transformation, verification and authentication and is combined with additional data to permit decisions across the insurance value chain.

Sometimes, a process can be fully digital and self-serviced. Sometimes, an AI assist happens. Other times, a human is brought into the loop. Often, the human in the loop is also assisted with AI and analytics. New ways to let a customer do tasks remotely are expedited by AI.

Most companies today seem to implement AI solutions across their organizational chart use cases with three strategies: buy before build, collaborate with vendors and customize and invest in internal AI building efforts. Leading-edge companies have progressed from pilots and experimentation sandboxes all the way through the analytics operations pipeline journey — where data and AI operations engineers route data streams to fusion engines, then decision engines, then user endpoint actions in real time.

But many companies are struggling with ”early days” issues: data governance, privacy, security, cloud management, upskilling, model risk management and AI operations lifecycle management. This is a natural consequence of viewing AI initiatives as small projects rather than a product requiring continuing maintenance and long-term investments.

Getting AI from the sandbox to production means upping the readiness of IT teams to provision, stream, protect and operate AI systems as they move from an analytic project and proof of concept into a product. Steady governance and a cultural maturity for data-driven decisions will help you become successful and remain successful. Sunsetting “project-ism” is the new call to action for AI and emerges as essential to exceptional experiences with data-driven decision making.

You can find the full report here.