Thinking about insurance industry trends for the next year was always a fun exercise whether I was at the META Group, Financial Insights (IDC) or Ovum (now Informa Tech, I believe). Each trend captured the opinions from our team of technology-focused insurance industry analysts concerning what we thought would occur over three to five-plus years for each specific issue. Once the trends were finalized by the team, our trend report drove a significant part of our research agenda for the following year. Instead of trends, I decided to publish my realistic expectations for the 2020 insurance industry:

1. The League Tables (ranking of insurance carriers) for each major insurance line of business will look the same at the end of 2020 as the tables look at the end of 2019.
2. There will continue not to be any (statistical or otherwise meaningful) correlation between investment levels in startup insurance firms and any measurable impacts on incumbent insurance firms specifically or the insurance industry generally. (Hype does not equal reality regardless of how much PR digital ink is spewed by the startups!)
3. Insurance firms will continue in their grand tradition of exhibiting "magic bullet" syndrome: believing that the latest technology or technology application can resolve their major business objectives and can be implemented by using minimal company resources.
4. Insurance firms, particularly in the U.S. and Europe, will continue to struggle to rationalize the large multiplicity of each of their core administration systems (i.e. policy administration, billing, claims management systems).
5. Independent agencies (and broker firms) will continue to sub-optimize their operations by not acting in the reality that they are joined at the hip with each of the carriers they conduct business with.
6. Although insurance firms will continue to recognize the absolute criticality of data, the firms’ various data elements will collectively behave more like useless sludge than a clean and useful resource.
7. The lack of clean, standardized data will continue to hinder (stop?) insurers from successfully deploying customer-facing (and other market-facing, including producer-channel-supporting) initiatives.
8. Most insurers will continue to give lip service to providing world-class customer service.
9. The number of independent insurance agencies and insurance broker firms will continue to decrease as M&A continues in the producer channel, but the number of agents/brokers will remain stable.
10. 5G, immersion technologies (AR and VR) and enterprise streaming will join the never-ending parade of technologies/technology applications in 2020, already chockablock with other "supposed insurance firm immediately must haves" that include leveraging social media, offering increased functionality on mobile devices, virtual agents/chatbots, interactive video for client onboarding and customer service, IoT, big data, cognitive computing, deep learning and machine learning – all of which technology firms will use as door openers as they reach out to insurance CIOs and CTOs.
11. Cyber risks will continue to cascade through any device connected to the Web used, owned, leased or otherwise in the possession of society (families, individuals, businesses, federal/state/local governments and the military) adding more pressure on insurers to decide whether or how to profitably offer protection or services.
12. I’ll continue to hope, in vain, that increasingly more insurance firms will realize the importance of using geospatial solutions as critical components of decision-making, whether the geospatial data comes from terrestrial or Earth Observation sources.

See also: Are You Ready to Fail in 2020?  

Technologies in the artificial intelligence family have great potential in insurance, according to a recent SMA survey of P&C insurance executives. This should come as no surprise to anyone following the developments in machine learning, natural language processing, computer visioning, chatbots, virtual assistants and related technologies. After a long and varied history of AI technologies (including the lengthy AI winter), we are now on the verge of the golden age of AI. At least that’s the storyline most have bought into. But in the context of the insurance industry, is the potential of AI overhyped? Or, despite all the enthusiasm, is the ultimate impact even underestimated? To answer those questions, it is necessary to examine the technologies and their possible uses. There is not one easy way to express the potential of AI for P&C. And much of the actualization depends on the time frame. It is important to recognize the many different technologies that compose the AI family. Insurers see the highest potential in machine learning, robotic process automation (RPA) and technologies to analyze unstructured data (natural language processing and data mining). RPA implementations, in particular, are taking off like rockets in the industry. Insurers of all sizes are already leveraging the technology to automate routine tasks. Many projects are also underway using machine learning to assess risk and identify fraud (among other things). So, value is already being delivered, and insurers are moving forward with AI-related projects for specific technologies. Several factors are driving the interest and activity in AI. First, insurance is a process and data-intensive industry. Massive amounts of both structured and unstructured data are captured, routed, organized, and analyzed. The industry has just scratched the surface on the traditional data, and new data sourced from sensors and connected devices is added to that. The possibilities to automate for efficiency and analyze for insight are tremendous. Second, insurance is a people-intensive industry. For most lines, experts are required to sell insurance, assess risk, handle claims and manage operations. Many of the seasoned experts in various disciplines are expected to retire over the next five to 10 years. This creates a compelling need to automate low-level tasks and augment human expertise for more complex tasks so that the potentially smaller and less experienced workforce can continue to propel the industry forward. See also: What Will AI Change First?   Yes, there is a lot of hype about how AI will transform the industry. And the potential transformation may still be a few years away as the power of AI technologies slowly ripples across the industry. But the convergence of industry factors, the rapid progress of the technologies and the experience gained by other industries in their AI deployments mean that AI is likely to transform insurance over time. So, it’s safe to assume that the potential of AI technologies is overhyped for the near term but underestimated for the long term. See SMA’s new research report, AI Technologies in P&C: Insurer Progress, Plans, and Potential, for more details and insights.

Having watched about as much sports as humanly possible over the holidays, I thought I'd borrow the bit that Scott Van Pelt uses to open his SportsCenter broadcast on ESPN: "Best Thing I Saw Today." In my case, the best thing I've seen lately is this video interview of Marc Andreessen, officially on "Why You Should Be Optimistic About the Future" but also on how to think about innovating so you can thrive in that future.

I'm not much of a consumer of video—during my days at the Wall Street Journal, the line was that "one word is worth a thousand pictures"—but this video provides as clear a window into Silicon Valley thinking as I can imagine. You can spend a bunch of time in Silicon Valley meeting with executives, or you can spend half an hour watching that video and pick up nearly as good a sense of things. (Allow 45 minutes if you stay to the end, as the discussion veers off into the future of government, capitalism and civilization itself—self-doubt not being a trait much valued in the Valley). The production values wouldn't cut it on ESPN, but the video displays all of the intelligence mixed with arrogance, the blue-sky thinking mixed with hard-won experience and the intensity mixed with playfulness that make up the Silicon Valley ethos.

I'll call out some insights for those of you who won't devote half an hour to the video, but let me first explain who the players are. 

Andreessen has perhaps the highest profile of any VC these days, as one of the two name partners in one of the most successful firms in the Valley, Andreessen-Horowitz. He also carries the residual fame from having led the development of the first commercial browser, initially as a college student and then as the chief technologist at Netscape in the mid- to late 1990s. (I've always had a soft spot for Andreessen because, when he burst onto the scene, an interviewer had him list his favorite books of all time, and one I'd written on IBM's travails of the time made his top five. I've also long been amused that, while Andreessen is a billionaire, his net worth always seems to be about half that of his father-in-law, whose major insight on technology and innovation was... land. The father-in-law got a basketball scholarship to Stanford, where he majored in geography, of all things, and decided that all that farmland in the Valley would be worth a lot more as office space. He bought all he could way back in the 1960s and became the area's biggest commercial developer.) 

The interviewer, Kevin Kelly, is a big deal in his own right. (He's the one on the left, rocking the Alexander Solzhenitsyn-like beard.) Kelly co-founded Wired magazine and has evolved into a guru on the future of technology.

For the insights, here is a chronological summary, including a few time stamps, in case you want to jump right to that spot:

After some chit-chat, including a funny story illustrating that even the most eminent technologists can be fooled by the pace of change, Andreessen quickly makes his first bold assertion: that the internet is just beginning to change culture. He says the technology first had to become universal, to form a sort of global mind, and that's just about happened. So, he says, we're now at the threshold of major change in how people think and interact, all around the world.

Asked how he determines what technologies will work and what won't, he kiddingly objects to the question. He says that just about all technologies work—after they've failed for a long time, usually at least 25 years. He says Radio Shack introduced the first smartphone in 1982, but all smartphones failed until Apple came along with the iPhone in 2007. Videoconferencing traces back at least to the 1960s and a demo at the World's Fair but has only come into its own recently. He says fiber optics were invented in the 1840s but took almost a century and a half to catch hold. So, he says the real question about technology isn't whether, but when (which he admits is a really hard question).

For me, the most important part of the conversation begins at about the 6:50 mark. It concerns the future of AI. In particular, is AI a feature or an architecture?

Andreessen says that most of the startup pitches he sees treat AI as a feature—he jokes that AI tends to be the sixth and final bullet point in a deck because the founders only realize they need to include it after they've written up the rest of the bullet points. But he sees AI as a platform and thinks the implications are profound.

He says that, when you have a new layer of architecture, everything above that layer has to be rewritten and will end up being different. As examples, he cites the changes that occurred when the internet became a layer of the tech architecture and that are happening now because of the mobile and cloud platforms. He says AI could, for instance, do away with the need for forms and databases that people search through; instead an AI could just give you the answer. He notes that this is the approach that Google is trying to take with search. It doesn't want to give you loads of pages of results to search through, as it did early on; it wants to give you the answer.

Andreessen offers a qualified endorsement of voice technology. He says it will play a key role, perhaps in conjunction with AI, and thinks it has crossed a threshold that will lead to very fast improvement from here on. But he doesn't see that voice can be a straight replacement for the keyboard or touch screens. 

He also expects that 5G will improve at a super-rapid pace because leadership in the technology has become a point of honor for nations, especially the U.S. and China.

At about the 25-minute mark, he and Kelly go back and forth on why innovating via analogies doesn't seem to work very well. They talk about all the "Uber for X" business models that were expected, and Andreessen explains why such analogies often prove dangerously facile. 

If you're interested in the history of venture capital, at about the 27-minute mark Andreessen traces its roots all the way back to the 1600s. He says the term "carry"—the roughly 20% of profits that VCs take on their investments—began as the amount of the fish that investors in a whaling expedition were entitled to carry off. Who knew?

More importantly, he explains the importance of the portfolio approach that VCs take to their investments—an approach that is increasingly understood by innovators in corporate environments but that, in my opinion, still needs to penetrate much deeper. Andreessen says you have to assume failure for many ventures, because that's just how the world works. The trick is to test in a rigorous, inexpensive way so you limit the expense of the failures. Then the successes can more than cover for the failures.

I hope you find the video half as insightful as I did. Maybe you, too, will even get a chuckle out of things like Andreessen's reference to the inventions of the transistor and microchip as "not obvious"—Silicon Valley speak for "abso-freaking-lutely brilliant and totally out of the blue, but I have to maintain my detached persona and certainly don't want you to think I'm acknowledging that those inventors were smarter than I am." 

Cheers,

Paul Carroll
Editor-in-Chief

The average person sends 15 texts per day, and 90% report that they read incoming texts within three minutes. Text is the channel many people — especially younger consumers — use most often to communicate with friends and family. And text can be a great way for insurers to communicate with customers and build relationships. But, because the channel is so central to personal communication, it’s critically important for insurers to get customers’ permission and understand their communication preferences before reaching out via text. Managing consent has been a major focus for the past few years because it’s a privacy issue. Customers appreciate the chance to opt in and want to understand how you plan to use their number. Managing permission is critical, but it’s just the first step. The text platform has specific qualities and limitations that don’t apply to other channels like social media or email. Texting has enormous potential if you understand the context and expectations people have around the messages they receive. Here are three tips insurers can use to build meaningful relationships with customers via text: 1. Change up your messaging. If you look at recent text messages received from a friend, you’ll probably see questions, statements, tips, links, photos, etc., all in one thread and all in a single voice. A text communication strategy from an insurance brand should look like that, too: The content should vary. It shouldn’t be a series of cross-sell pitches (though pitches have their place). See also: 3 Ways to Build Digital Relationships   Customers don’t want to feel like a number when they’re dealing with any type of business, especially an insurer. You collect a lot of data on customers. Consider using it in a non-intrusive way to build relationships. If your customer has boat insurance, consider sending boat care tips. Above all, curate your text feed so that it’s interesting and valuable. 2. Limit the use of five-digit codes. If you receive texts from organizations, you probably don’t know who it is until you click because it arrives on your phone under a five-digit code instead of a name. Some businesses use multiple codes to send out different types of texts: one code for sales, another for customer service, a third for claims, a fourth for renewals, etc. Try to limit the use of five-digit codes to two or three at maximum, and, if you can, use only one five-digit code for all text communication. Your subscribers may add you to their contact list under your brand name; if you use multiple codes, you will dilute the impact of being in the contact list. Remember that customers expect to be able to reach you by responding to any of the codes you use to send texts. 3. Use centralized message control and analytics. This is a basic tip, but too many insurers who are savvy about marketing and sophisticated about communication on other platforms make the mistake of not analyzing incoming text messages to see what customers are saying, and some fail to respond appropriately when customers text back. Text analytics can be incredibly revelatory and serve as a valuable snapshot of customer sentiment. For example, if you send customers a notice about a new safe driver discount program and a customer responds with a question, you gain valuable insight about your message and an opportunity to respond quickly and consistently on the same channel — text. Insurance is about being there for customers when they need you the most. Text messaging is a great way to meet customers where they are, using the same channel they use to communicate with their friends and family. It’s important to get customers’ consent for text communication and understand their expectations. Once you have permission, the success of your text campaign is up to you. See also: How to Improve the Customer Journey   Insurers will continue to look for ways to strengthen their bond with customers and relate to them on an individual level. Texting can be an excellent channel for personalization. When you know what kinds of messages resonate on text and understand what customers expect in return, you’ll be texting your way to stronger customer relationships.

The annual Consumer Electronics Show in Las Vegas (CES) is where the latest TVs, smartphones and a plethora of smart gadgets of every imaginable kind are introduced and on display. This year, the press is breathlessly reporting on the latest in tech that relates to every area of human endeavor, including areas like sports, transportation, beauty, sleep, baby care, learning, fitness and much more. There are top themes or top 10 CES innovations articles from every major press outlet – everyone has a perspective. The reason that I personally attend CES every year is to see the technology innovations and then think about them in the context of the insurance industry. While things like 8K TVs or digital appliances are of interest to all of us, there are many other tech products and advancements that have important implications for P&C insurance. Within that framework, let me present what I believe are the big themes of interest to insurance:

1. Security and Privacy: This might just be the biggest overarching theme of the event. The advent of regulations like GDPR in Europe and the California Consumer Privacy Act (CCPA), coupled with the intense dialogue in society about these topics, has resulted in many companies coming forward with new or improved products. There were hundreds of new solutions, including those aimed at specific domains like smart homes or connected vehicles, payments and security for personal devices and personal digital data, and others focused on areas like the IoT infrastructure. Expect this area to continue to be a focus as both individuals and businesses grapple with cyber-risk and the issues of data ownership/sharing.
2. The Expanding Mobility Ecosystem: The automotive ecosystem was already complex before the digital age, but now there are increasing numbers and types of companies offering new capabilities and services. As vehicles continue to become "computers on wheels,” the expectation is that occupants will be able to conduct, from their vehicles, every type of digital interaction that they can now do from their office or their living room couch.
3. AI and Voice Everywhere: These technologies were prominent at CES2019, but the tech continues to advance and become embedded in more and more products. Voice is poised to become a dominant way that we interact with the smart, digital world around us. AI is becoming not only pervasive but, in many cases, invisible. The Consumer Technology Association describes it as the Consumerization of AI.
4. Smart Tech for Commercial Vehicles: Just to reinforce what we at SMA have been saying for some time, it looks like connected, autonomous vehicles will have the most practical, real-world applications in commercial vehicles over the next few years. The options for autonomous public transportation vehicles continue to expand, and the use cases in controlled environments are many. Personal automobiles continue to add and enhance automated driver-assist systems (ADAS) features and advance up the autonomy levels. But the many challenges of autonomous personal vehicles on the open roads mean that, while the potential is tremendous, the reality is many years away.

See also: Road to Success for P&C Insurers   There are many other interesting products that insurers should follow, especially those in the health and wellness areas, drones and AR/VR. Each of these areas will influence customers, risks and operations over time, but the four themes identified in this blog are most likely to have the biggest near-term impact on the industry.

Data governance, edge computing, artificial intelligence (AI), machine learning (ML) and blockchain have become much more than buzzwords in the life and annuity industry—they represent areas of innovation being implemented today and examined further for the future. I see four major trends in the life and annuity industry that will continue to be important for insurers as we enter 2020: Simplifying business and technology architecture We’ll see life and annuity organizations continue to modernize their technology platforms over the next 12 months. This is where life and annuities organizations will invest most heavily in 2020 from a technology standpoint. Addressing aging and limiting technology infrastructure will continue to be the highest priority for any large or mid-sized insurance company. Organizations that don’t already have a strategy in place to do so run the risk of disruption. The industry is still hurting because of the nature of the monolithic legacy platforms that are so difficult to change. Aging technology and the aging workforce pose a great risk to insurers, now more than ever before. If these organizations aren’t already focused on this issue, they’re going to be in for a rough road in the coming year. To mitigate the risk, they need to immediately develop a strategy and identify a partner to help them get to the finish line as soon as possible, or they won’t have the agility they need to compete in the future. Improving engagement models End-to-end engagement is becoming increasingly relevant today. Customers, the workforce and distribution partners are all demanding easier and more effective engagement with insurance organizations. To meet these demands, life and annuity insurers will have to work on all engagement models: customer engagement, distribution engagement and employee engagement. Insurers will improve how they work on an enterprise level, gaining efficiencies and boosting productivity. See also: Insurance Innovation’s Growth Challenge   Engagement is really about how both internal and external consumers see and interact with an insurance organization and use its capabilities. The industry now has to deal with meeting customer demands for a level of engagement and interactivity it never needed to provide before. Many companies focus on the design of that engagement, which is very important. However, if that design isn’t coupled with modern architecture that can enable it, insurers will fail because they are merely putting lipstick on a pig. Expanding the use of data In 2020, insurers will see greater value from the data generated by their enterprise. As an industry, we’re still having a hard time understanding and rationalizing our internal and external data. Identifying what our goals are and who truly owns the data is a struggle for many companies. For that reason, data governance becomes pivotal for insurers trying to leverage their data. In many cases, AI and machine learning are becoming more embedded and becoming part of the enterprise infrastructure and framework. In the next year, insurers will start to see more value from these efforts, whether for their advanced underwriting models, their implementation of advanced robotics or capabilities to create straight-through processing as well as self-service. We’ll also start to see some large and innovative insurance organizations develop use cases of blockchain implementation. In the past few years, many technology companies have been working on uses cases around agent on-boarding and claims, for instance. In 2020, we may see some of these use cases get implemented in the industry. Digitizing the enterprise As companies continue to work on new architectures, we’ll see them increasingly leverage “ecosystem” thinking. Many capabilities, such as plug-and-play innovations, will have to come into, and integrate with, the enterprise’s capabilities. That ecosystem thinking can only happen if insurers begin to enable a very modular architecture and an application programming interface (API) infrastructure. In this era of constant technological evolution and abundant innovation, it’s becoming difficult for legacy-minded insurance companies to have enough agility to implement and leverage these new capabilities. They’ll need to embrace innovations as they come and to create a unique, personalized context around the innovations that are relevant for their business models. They’ll have to learn fast, experiment fast and fail fast. All this requires a very open digital architecture enabled by API frameworks and infrastructure. New technologies, new trends Insurance organizations should be familiar with edge computing, which has been a heavy user of content management systems and image and workflow systems that require efficient content delivery and consumption. Edge computing will benefit our industry by efficiently leveraging and dispersing content where and when it’s needed. Insurance is a data- and content-rich industry. As new architectures continue to become mainstream, and with the advent of technologies like 5G and IoT, life and annuity insurers will use them to learn about our customers’ lifestyles, income patterns and more so we can provide more precise, personalized and real-time advice. I see insurers playing with that paradigm in 2020. See also: The Behavioral Science on Buying Insurance   Another paradigm that’s becoming buzzworthy in the industry is around no-code platforms. In reality, there’s no such thing as no-code—even no-code platform requires code. However, when you spend most of your time coding the framework and capabilities but not focusing on business functionality, the level of configurability you drive in these platforms limits the amount of actual physical code that’s required to implement business capabilities. This decreases the cost and time to market while enhancing the quality and reducing technology change-related disruption. This will be a trend that will influence the industry’s digital architecture implementations in the future. At a high level, the life and annuity industry will continue to make progress in 2020 thanks in large part to technological advances. The key is to view what may seem to be common buzzwords not only as trends, but also as technologies and concepts that will push the industry forward.

As you begin the new year, my wish is that you will be ready to fail in pursuit of your innovation vision. That’s right: Be ready to fail. And then accept and learn from your failures. The last few weeks of 2019 were a time to reflect on the past year’s accomplishments, disappointments, and discoveries. With the clock striking midnight on Dec. 31, we instantly began to create 2020 – with all of its aspirations, goals, opportunities, market demands, risks and pressures. In the corporate world, the year barely gets started when leaders are identifying and documenting risks to their plans, then figuring out how to avoid, cover for or mitigate those risks. However useful the exercise, these and other corporate norms feed employee anxiety about being tagged with failures. They discourage the experimentation that brings about the failures that spawn discoveries. Startups are committed to the ethos of “fail fast, fail cheap,” but when they are not built with the culture, leadership, process and skill to turn failure into learning they will fail their way to complete failure. Most startups, after all, do. No matter where you sit in terms of company size, sector or life stage, there’s probably room to improve your approach to failure. That’s why, rather than adding to your inbox yet another year-end “top 10” list, I’ve decided to help jumpstart 2020 by encouraging you to get better at failing in a way that creates more success. I was motivated by reading "Failure Found to Be an 'Essential Prerequisite' for Success" in Scientific American. The article describes a recently completed study about failure. Based on research and analysis of three very large and very different data sets, the study presents quantified findings about failure. It isolates three factors that differentiate what some people do that allows them to harness failure for success while others simply fail. Interestingly, the research:

• Overturns the commonly held view that persistence and luck are primary drivers of success. In fact, the study found no difference in work effort or persistence between those who succeeded versus those who failed.
• Reinforces the connection between success and the ability to continue to learn from each prior failure so that the next attempt comes closer to success.
• Reports fresh, empirical findings that the other key factor alongside applying the learning from the past failure is shortening the amount of time that elapses between each attempt.

Can you point to moments when you looked at the potential for failure and, instead of devoting energy to an avoidance strategy, anticipated how to learn from it? How do you feel and react in the face of failure? See also: Insurtech 2020: Trends That Offer Growth   Here are some recommendations on how to make failure fuel for success in 2020:

• Accept, deep down, that failure is not only inevitable, it’s good for you. I know that It’s easy to espouse the value of failure but very hard to walk the talk. This year, take the walk. The points in my own career where I failed, or was even just viewed as having failed, led to the pivots that delivered the most joy, success and reward from the new opportunities that arose as a result.
• Mine each failure for learning and insight to apply to your next revision, prototype, iteration, experiment, development sprint, pitch deck, decision or mentoring session.
• Move quickly and with a sense of urgency to that next step to reflect what you have learned from your prior failures.

Keep in mind that, even if not by design, you are a role model for your team, partners, colleagues, board, investors or friends who will all pick up on the signals you give off about your latest failure. Besides what it will do for you, if you are able to overcome avoiding, burying, denying or rationalizing failure, you will help those around you, and improve their confidence in and willingness to support your vision. Find your successes this year by embracing the failures.

The six-month 2019 North American hurricane season is officially in the books, and it was an active one in terms of named storm counts, with the majority of activity coming in the typical mid-August and mid-October periods. The season ended with 18 named storms, six of which became hurricanes, and three of those achieving major hurricane status (Category 3+ on the Saffir-Simpson scale). Having 18 named storms in a season is well above the 12.1 average (1981 – 2010), but the number of hurricanes and major hurricanes is right around what would be expected in an average year. In terms of ACE (Accumulated Cyclone Energy), the season ended up at 123% of the average, with two storms, Dorian and Lorenzo, contributing an impressive 61% to the tally. [caption id="attachment_37446" align="alignnone" width="570"] Preliminary Atlantic Tropical System Track Map Source: NHC.[/caption] *After spiking this summer, the Atlantic Multidecadal Oscillation (AMO) index dipped back to near average in November, according to the Klotzbach and Gray AMO index, as far north Atlantic sea surface temperatures are currently near their long-term average values. This could have explained the higher activity this season and could lead to lower counts next season if sea surface temperatures continue to drop. [caption id="attachment_37449" align="alignnone" width="570"] After spiking this summer, the Atlantic Multi-decadal Oscillation (AMO) index dipped back to near average in November.[/caption] *Madden-Julian Oscillation, which is associated with an upper-air wave that moves across the tropics every 30 to 60 days, will continue to drive periods of activity in 2020. It is important to watch these waves move from the western Pacific into the eastern Pacific, as they will ultimately help named storm formation in the Atlantic Ocean.

In 2018, extreme weather had a devastating impact on certain states – primarily driven by increasing severity, rather than frequency, of catastrophic events. LexisNexis Risk Solutions' recently released, fourth annual Home Trends Report highlights the impact that the 2018 extreme weather events had on insurance losses. A staggering 56% of all catastrophe claims come from just four states: California, Colorado, Florida and North Carolina. States hit by Hurricanes Florence and Michael, the California wildfires and severe hail saw the most catastrophic losses. Claims in these states are also up to 56% from the 36% of claims these states accounted for in 2017. The latest Home Trends Report underscores the growing need for insurers to understand and respond to by-peril loss trends and the potential for climate change and extreme weather to drive these losses. While fire losses have continued to increase since 2012, catastrophe claims accounted for nearly 40% of fire losses in 2018 – the highest in a decade and a significant jump from the previous high of 15%. As a result of hurricane devastation to North Carolina and Florida, 2018 was also the worst year on record for wind claim severity, up 15% from 2017. Hurricane devastation also led to a costlier September in North Carolina, with loss costs 17 times more than a typical September. While Colorado was unaffected by the hurricanes and wildfires, the state ranked the highest in loss cost overall for 2018, as well as the highest over the six-year period (2013-2018) that the study tracks. In terms of hail, Texas continued to top the nation for claims, representing 29% of total volume. See also: The Future of Home Maintenance   The report highlights some of the challenges that home insurance carriers face in managing by-peril risks, including increasing severity and unpredictability of weather-related patterns and their impact on catastrophic claims. The report also underscores how it is imperative that home insurance carriers collect, analyze and use aggregated by-peril data to help generate a deeper understanding of the risks associated with a particular location and of how to price future policies accordingly. For the long term, aggregated by-peril data can enable more accurate pricing, a healthier book of business. If you are interested in learning more about the impact of extreme weather events on insurance losses, click here for the LexisNexis Home Trends Report.