Since 2020, the world has seen more change, disruption and surprises than in any period in recent memory – and the U.S. personal auto and property insurance market is no exception. Declining auto claims and associated consequences are now in focus.

The P&C industry has endured catastrophes, runaway inflation, highs and lows of post- and pre-COVID accident frequency and crushing supply chain blows. Insurer loss costs have been drive to new heights. 

Through all of this, auto insurance lines are recovering and are on track to achieve a, 98.4 combined ratio in 2024, per S&P forecasts. That is a far cry from the height of the insurance crisis years posting, with the inferior auto combined ratio of 104.9 in 2023 and a dreadful ratio of 112.2 in 2022. 

As premiums catch up, a number of underwriting actions are now reshaping insurance products and consumer responses. One such change in consumer behavior, among several, is a decrease in auto damages being claimed.

Insurance parlance is often accused of being an insider’s only language or unnecessarily complex. The insurance ‘tail” effect, however, is easy to follow and applies here – famously.  

Claims, reserve adjustments and both rate setting and underwriting all produce a tail effect that will only be fully realized later. Catastrophes produce losses into the future after the original loss date and are inherently termed long-tailed. Have you ever wondered what happens with those initial loss projections that are tossed around as either absolute or sometimes in ranges that differ by tens of millions of dollars? The tail end ultimately tells the true story as financial adjustments are made months and years down the road.

See also: Auto Insurance: Perennially Predictably Profitable

Policyholder Impact

As of this writing, auto and home insurance are experiencing a dramatic tail effect from a confluence of rate increases, reduced coverage and more restrictions. It’s a form of the popular “shrink-flation” moniker used to describe groceries – that bag of corn chips costs the same, and consumers aren't supposed to notice that it's now an ounce lighter. Likewise, full coverage may not be what it used to be, as deductibles become higher. In addition, a decline in reported repairable auto claims shows that policyholders are foregoing repairs or dropping collision coverage. This has downstream implications of self-funded or unrepaired damages.

Meanwhile, carriers are launching auto insurance products to offer “lighter” versions as part of their underwriting/product actions put into motion a while back. Allstate, for example, is rolling out ASC (affordable, simple, connected), which offers three main types, starting with a budget-savvy, bare bones choice. Essentially, it offers less coverage, designed to address rising premiums. Allstate’s rental car reimbursement is now offered as a transportation expense in a flat dollar amount of $200, $400 or $800 for about the same premium as the previous coverage of 30 days, with a maximum of $1,200 coverage. 

The tail effect of lesser protection at the same or higher cost is just beginning to be experienced.

Collision Repair Industry

During the pandemic, accident frequency plummeted, as did demand for repairs. As accident rates rose sharply in 2022, already trending repair technician shortages became an even bigger problem. Repair cycle times elongated and drove repair costs up further. Cost of technician labor pushed body shop expenses upward and MSOs (multi-shop owners) or consolidators applied newly found leverage on insurance carriers to raise estimate labor rates. 

The collision repair industry is a critical part of the insurance claim resolution cycle and has been going through major change. Consolidators funded by private equity have made major inroads. With just over 30,000 U.S. professional collision repair shops, some 6,600 have been consolidated into multi-shop locations. 

Meanwhile, the influence of automobile technology and push toward OE certification of shops demands additional investment in equipment, technology and more skilled labor. Insurers rely heavily on their branded direct repair program (DRP) shop networks to provide repair services under cost-controlling agreements. Once a claim is reported, insurers guide claimants to have damages estimated. Although image technology is making headway, 45% of claim damage inspection is performed by DRPs, per CCC Intelligent Solutions, a leading estimatics technology and information provider.

The tail effect of declining insurance repair work is rumbling through the repair industry and pressuring top line revenue outlook at a time when repair margins are being squeezed and higher investments are needed.

Investors

Private equity investors play an important role in bringing capital and an alternative to an industry still made up of mostly independent shops. Consolidation offers the benefit of brand and consistency, appealing to consumers and insurers. Insurers benefit from negotiating and partnering with MSOs, which make up large portions of their repair networks. Collision industry consolidation has been steady over the past decade as an attractive investment target. A slowdown in repair volume may prove disruptive to future capital infusion as investors have choices and larger MSOs may pursue IPOs.

Accident rates are another piece of the puzzle, as frequency has stabilized and advancements in advanced driver assistance systems (ADAS) toward autonomous driving portend a future of fewer accidents – fewer, although more costly to repair. The National Highway Traffic Safety Administration (NHTSA) is requiring that automatic braking be standard in cars and light trucks by 2029 and continues to advocate for more ADAS consistency and efficacy. Others, such as Cambridge Mobile Technology, are highly focused on reducing distracted driving and are making strides. Carriers and repair industry stakeholders have been watching all such developments for several years and recognize the long-view implications.

Additionally, sustained total loss rates of roughly 22% of reported claims are a part of the equation. In other words, more than one in five claims is for a vehicle that is automatically not fixed because damage amounts exceed repair thresholds. Experts are watching closely as complexity of repairs, OE repair requirements, cost of parts and influences from more electric vehicles (EVs) could push up total loss rates. Conversely, greater car loan debt drives consumer behavior, and policyholders upside-down in car loans may be reluctant to have their cars totaled. Per Edmunds, one in four owe more than their car is worth. The average debt is $6,400, and 22% owe more than $10,000. 

See also: Insurtech Profits? Maybe Next Year

New Products and Solutions

As the insurance and repair space is reshaping, new products and new solutions can fill the void. Yelp, for example, is well known for user reviews and connecting customers with businesses and services. Beyond restaurants and shopping, Yelp just announced acquisition of RepairPal for $80 million to offer car repair estimates. Today, Yelp already helps consumers find body shops, and greater demand from declining insurance claims is boosting demand for estimating costs outside of a filing a claim.

Photo estimating has found a home among insurers as an alternative method of auto damage inspection and is used regularly by insurers to start a claim. This same technology can be offered to consumers to similarly size up damages and better inform decisions to make claims or not.

The door is open for gap protection and other services. Solving for total cost of car ownership; financing, insurance, maintenance and use has always been elusive. There have been several car subscription programs launched only to be discontinued. However, Volkswagen just announced Flex, a single monthly fee combining car, insurance, maintenance and roadside assistance.

Embedded insurance models may also be a fit for gap protection and other out-of-pocket costs, distributed outside of a traditional insurance agency. Straightforward affordable protection alternatives would be opportune for embedded insurance.

Parametric insurance is gaining in the homeowner space to protect for flood, earthquake, power outage and cyber attacks. Such products that provide automatic payout could cross over and help fill auto accident out-of-pocket costs, as well.

Conclusion

Like it or not, the concept of insurance risk transfer is changing.  Affordability is front and center, and making trade-off decisions is daunting when gambling between no coverage and having a high deductible. 

All of which is reminiscent of how healthcare coverage and costs reshaped risk transfer in health insurance. How far the change goes in auto and home remains to be seen. Carriers must balance profitability with strategies for growth and capturing market share in a highly competitive space and may pull back on underwriting actions as rates restore profits. Thus far, there are no signs of such a reversal, and the tail effect is just beginning to unfold.

During the first week of October 2024, East and Gulf Coast port workers went on strike for the first time since 1977, in what analysts forecasted to be the most disruptive U.S. labor event in decades.

Although initially projected to last for weeks or even months, the port strike ended quietly after just three days. Shortly afterward, hundreds of independent intermodal truckers who transport shipping containers between warehouses and the 36 affected ports resumed operations. They worked quickly to clear the freight backlog, allowing them to resume earning revenue needed to maintain their auto-liability premiums.

But another port strike could occur if union members fail to ratify the tentative deal currently on the table, and other disruptive events can occur often. 

The insurance industry can better prepare stakeholders for potential insurance and business impacts from future disruptions. This preparation can follow strategies that property and casualty insurers use for natural disasters like hurricanes — including Helene and Milton, which occurred on either side of the port strike.

Insurance consequences of strike that could have been

The port strike's insurance implications were relatively minor for many small and regional intermodal truckers that haul shipping containers. Equipment limitations make it difficult for these specialized carriers to pivot to hauling other types of freight when shipping containers are trapped on cargo ships, and when trucks don't run, paying monthly premiums becomes challenging.

Whether a company's primary auto-liability coverage is written on a stated vehicle or monthly reporting policy, pausing insurance coverage during idle periods isn't an option. Such pauses would jeopardize the companies' standing with the Federal Motor Carrier Safety Administration (FMCSA), which authorizes interstate operations. Additionally, stationary trucks remain exposed to weather damage and accident risks.

Truckers are left with minimum premiums to meet without incoming revenue. A longer work stoppage at the ports could result in business closures for many truckers, with ripple effects affecting the freight capacity market and broader economy.

While insurers cannot influence macroeconomic events, they can better anticipate their impacts. Treating market events like natural disasters enables better preparation and more effective communication about coverage options and policy requirements.

See also: Preparing for a Rough Hurricane Season

Applying hurricane preparation lessons

Property and casualty insurers follow established protocols during natural disasters. They issue operational guidance before and after events, including updates about new business moratoriums and claims processes.

Auto liability insurers can implement similar strategies for transportation sector disruptions through:

Access to Market Intelligence:

If you’re like me, your inbox is oversaturated with information from countless news sources and industry groups. It’s difficult to cut through the noise and zero in on the most important developments likely to affect your policyholders.

Case in point: The recent port strike had been signaled months in advance but got buried in the news cycle, leading some insurers to get caught on their back foot when the disruption finally materialized.

Access to reliable insights on evolving developments is essential for crafting an effective response strategy that keeps your partners and policyholders informed. State and national trucking associations, such as the Truckload Carriers Association, and market intelligence publications offer reliable and timely data and analysis to help you stay ahead of trends and anticipate potential challenges.

Anticipating that insureds may inquire about removing vehicles from their policy or canceling mid-term allows you and your partners to stay ahead of potential issues, ensuring you're prepared to offer timely solutions and maintain strong relationships. Proactively communicating policy and market information also demonstrates to insureds that their agents and insurers are in their corner, which is especially important for insureds that don’t have regular contact with their insurance carrier.

Data-Driven Policy Options:

Telematics devices providing real-time vehicle data help verify operational status and location. This information can support more flexible policy options, such as usage-based premiums rather than fixed monthly costs.

For example, one of the most favorable auto liability policies available offers a 0% minimum premium, allowing policyholders to pay only for the miles they run, rather than being locked into a fixed monthly cost, even when their vehicles are not in use. But taking advantage of this type of policy typically requires insureds to invest in advanced telematics systems that transmit data directly to their insurance carrier, allowing them to confirm when trucks are sitting idle.

Insureds can’t simply switch policies in the midst of a disruption. But we can use this moment to reiterate the options that are available to them and encourage insureds to consider policies that offer more flexibility during unexpected events. On the flip side, insurance carriers should take advantage of the opportunity to exchange more favorable policy terms for insureds’ valuable telematics data.

See also: The Cognitive Biases Hurting Risk Management

Clear Communication:

Ahead of Hurricanes Helene and Milton, I received a flurry of communication tracking how the storms were progressing and how insurance carriers planned to operate before and after the crisis. Treating other types of potential disruptions with the same sense of urgency is helpful for everyone.

Early and frequent updates about policy terms and available accommodations help businesses prepare for potential impacts. Setting clear expectations enables better decision-making during disruptions.

Market volatility requires anticipating disruptions and preparing accordingly. Whether facing labor strikes, supply chain issues or regulatory changes, having clear response plans and maintaining open communication helps preserve stability. Preparation enables better support for affected businesses during inevitable disruptions.

In today's competitive insurance landscape, precision underwriting is no longer a luxury but a necessity. The art and science of underwriting have evolved significantly with the advent of data-driven technologies, transforming how risks are assessed and priced. Traditional methods of underwriting, which relied heavily on historical data and generalized risk pools, are being replaced by more sophisticated approaches that harness big data and advanced analytics. This shift enhances accuracy in risk evaluation while improving profitability and customer satisfaction.

What Is Precision Underwriting?

Precision underwriting is the process of using numerous data points and advanced machine-learning algorithms to make informed decisions about potential risks. Unlike traditional underwriting, where decisions are based on broad categories, precision underwriting allows insurers to assess risks on a more granular level. By analyzing real-time data, insurers can offer more personalized and accurate risk assessments, resulting in tailored policies that better suit individual needs while reducing exposure to unforeseen losses.

The Role of Data in Modern Underwriting

Data is at the core of precision underwriting. With the integration of big data analytics, insurers now have access to vast amounts of information, ranging from customer demographics and behavioral data to geospatial and economic indicators. This wealth of data enables better understanding of individual risk factors and more accurate prediction of future claims.

Types of Data Used in Precision Underwriting:

• Behavioral data: Tracks habits and actions of policyholders, such as driving patterns for auto insurance or health behaviors for life insurance
• Geospatial data: Provides insight into geographic location of property or individuals, helping to assess risks related to natural disasters
• IoT data: Generates real-time data that can influence underwriting decisions, drawing on devices such as wearables and smart home technology 
• Social and economic data: Helps evaluate claim likelihood based on economic trends, credit scores and social behaviors

Advanced Analytics and Predictive Modeling

The integration of predictive analytics into underwriting has transformed risk assessment. Artificial intelligence and machine learning algorithms can analyze immense datasets to identify patterns and trends that human underwriters might miss. These technologies enable more accurate loss probability predictions and customized policy options.

Predictive analytics allows for:

• Enhanced risk selection through data-driven models
• Improved pricing accuracy with clearer understanding of risk factors
• Fraud detection through anomaly identification
• Real-time decision-making capabilities

The Role of Automation in Underwriting

Automation is crucial for efficiency and scalability in precision underwriting. Automated underwriting systems use predefined rules and algorithms to process applications in real time, reducing manual tasks while ensuring consistent decision-making.

Automation enhances underwriting efficiency through:

• Faster processing times
• Reduced operational costs
• Increased scalability
• Consistent application of rules and logic

The Customer-Centric Approach

Precision underwriting enables more personalized experiences through individual data analysis. This approach allows for policies tailored to specific needs and risk profiles, potentially improving customer satisfaction and retention.

While precision underwriting offers clear benefits, several challenges exist:

• Data privacy and security: Insurers must comply with data protection regulations while safeguarding customer information from breaches and cyberattacks.
• Integration with legacy systems: Many companies rely on older systems not designed for large data volumes or modern analytics integration. Shifting requires significant technology investment.
• Regulatory compliance: Organizations must navigate complex regulations to ensure underwriting practices meet industry standards.

Future Developments

Technology continues to shape precision underwriting's evolution. Blockchain technology may provide tamper-proof data, while advancing AI capabilities could enable more sophisticated predictive models.

Precision underwriting marks a significant shift in insurance practices. The combination of data-driven insights, predictive analytics and automation enables more accurate risk assessment and improved operational efficiency. As insurance continues to evolve, these technologies will play an increasingly important role in risk evaluation and policy development.

The Global Innovation Awards that ITL and the International Insurance Society handed out last week were, first and foremost, a celebration of the great strides being made across the entire insurance industry. We received dozens and dozens of almost universally high-quality nominations from all corners of the world.

The three winners coalesced around a theme: resilience. One winner focused on individual resilience, one on property resilience, and one on societal resilience. 

I suspect you're not shocked, if you read Six Things more than occasionally, to know that I heartily endorse that emphasis for the industry. As I've written many times, I hope we shift more toward a Predict & Prevent model and stretch beyond our traditional work helping people recover after a loss. 

But these awards (sponsored by Lloyd's) aren't just me talking. I led a panel of distinguished judges that winnowed the nominations down to three finalists in each category, but two of the winners were chosen by the executive committee of the IIS and the third was selected by attendees at the IIS's Global Insurance Forum.

So I'm going to take the whole awards process as not just demonstrating broad, keen innovation but as showing that the industry is rallying behind the Predict & Prevent model.

Let's look at the winners.

The winner of the Predict & Prevent category was Whisker Labs, whose Ting device plugs into an electrical outlet in a home and monitors for anomalies in voltage that indicate a short circuit could occur and cause a fire. When a problem is detected, the device notifies Whisker Labs, which arranges for an electrician to go to the home and fix the problem. 

The Ting device is now in a million homes in the U.S., and Whisker Labs says that number is growing by 50,000 a month — State Farm, Nationwide, and a number of other insurance companies provide the device and service to policyholders at no charge. 

Whisker Labs says it prevents four out of five fires that would occur in the homes that deploy the Ting. In total, the company estimates it has prevented 15,000 electrical fires. Statistically, preventing that many fires suggests that Ting has saved a number of lives. 

The company is about to start expanding outside the U.S. It is also working with utilities to provide alerts about anomalies that can be detected in the grid by what amounts to a network of Ting sensors. Those alerts could be useful in preventing wildfires because the grid can show that it is under stress well before an electric arc lights vegetation on fire. 

Whisker Labs has pretty much been the poster child for Predict & Prevent around The Institutes, including at ITL. If you're interested in learning more, you might check out an interview I did with the CEO a year ago or a podcast that Pete Miller, the CEO of the Institutes, did with him a year and a half ago. More broadly, I encourage those interested in the topic to subscribe to the Predict & Prevent newsletter that Pete produces. He's been teeing up lots of companies that could be the Whisker Labs of the future. 

The winner in the Property/Casualty category was the Tripartite Program led by the Insurance Development Forum (IDF). The other two partners are the United Nations Development Program, which helps coordinate with national governments, and the German Federal Ministry for Economic Cooperation and Development, which has provided EUR$30 million in funding. 

The Tripartite Program offers public/private risk financing and insurance programs around the world that drive resilience against the impacts of climate risk and natural hazards. The program draws on $5 billion of insurance capacity that the IDF has arranged. So far, the program has deployed $2.2 billion of that capacity in 23 countries, with 18 million beneficiaries. The program also provides expertise on modeling and on risk mitigation techniques. 

Ekhosuehi Iyahen, the secretary general of the IDF, said she's looking for partners — and not for charity but for the myriad business opportunities she's encountering.

The winner in the Life, Health and Retirement category was a venture involving Hannover Re and HealthOme (soon to be known as Kadance). The venture provides a sort of overlay of healthcare based on genomic testing and counseling. The venture initially is focusing on cancer but is preparing to expand into care for other diseases.

When a client is diagnosed with cancer, HealthOme conducts genetic testing that can shed light on how the person will react to potential treatments. For instance, Julian Whitekus, vice president, health solutions at Hannover Life Reassurance Co. of America, said in his presentation to the IIS executive committee that testing determined that a patient wouldn't metabolize a standard cancer drug well. The testing also determined that an antidepressant she was given could interfere with the cancer drug. In fact, she didn't respond well in the early days of her treatment, so her doctors agreed to switch to different medications. This time, she responded quickly. She's now in remission.

Those winners make a might impressive group: Whisker Labs making homes and perhaps electric grids more resilient; the IDF and the Tripartite Program helping countries around the world be more resilient in the face of climate change; and the Hannover Re venture with HealthOme using genomics to help individuals be more resilient when attacked by cancer.

But that's now yesterday's news. I can't wait to see what comes next.

Cheers,

Paul 

While insurance carrier M&A activity reached a 15-year low in the first half of 2024, experts are cautiously optimistic about 2025, forecasting a resurgence in dealmaking activity in the new year. Both deal size and volume are expected to trend higher in 2025. 

Carriers wanting to achieve revenue growth, diversification, expansion, or cost efficiencies can succeed through strategic M&A activity. However, one of the most critical — and often overlooked — aspects that can make or break the success of an insurance M&A is the details of the user experience. Remember that 70-90% of mergers and acquisitions fail, making it even more critical for insurers to focus on the key aspects of an M&A.

For carriers who are considering inorganic growth, it’s important to include a careful evaluation of the insurance customer user experience (UX) as part of due diligence. Today’s insurance landscape is competitive, and customer loyalty is often fragile, so thoughtfully integrating the merging companies' user experience must be done. A seamless user experience means a policyholder can navigate between multiple policies and coverage lines they may now have with one insurer following an M&A—but missing this critical step is costly and negatively impacts the M&A. 

Insured.io recently worked with an MGA that had completed multiple acquisitions over a few years. The result of this M&A was a fragmented hodgepodge of technology systems, including seven distinct policy systems, some legacy and some next-generation. This presented a clear challenge for the MGA when attempting to build a single, unified brand and a consistent customer experience for their policyholders. 

By implementing a unique data strategy, the insured.io team successfully unified the MGA’s Policyholder data and customer experience while maintaining the disparate systems. This allowed them to focus on servicing customers rather than the complexities of a massive internal technical project. 

Insurers focusing on strategies to create an integrated user experience can help ensure a smooth transition during M&A activity. 

Come Together: Focus on UX Integration 

When two companies merge or one is acquired, they often bring different processes, systems, and workflows to the relationship — along with different cultures and customer journeys. This dichotomy can be devastating to the success of the merger or acquisition if not appropriately managed. 

The customer is at the center of the insurance workflow and should also be at the center of an M&A transaction. Their expectations around how they interact with their insurer are grounded in the user experience, encompassing everything from the intuitive design of online portals to the ease of reporting a loss or checking a claim status. During the dealmaking process, it’s easy to lose sight of how this transaction is supposed to bring your customers more value. And they will notice if they get lost in the shuffle. Studies found that 80% of customers say companies should focus on the customer experience during an M&A transition. Other research proves that user experience is critical for retention, with SMS messaging increasing retention rates by 52% when used to notify policyholders of upcoming cancellations. 

A significant concern during M&A activity is the inherited technical debt from the acquired company. Systems and processes differ, even within the same organization, and many smaller companies have disparate technology solutions filled with patches and legacy fixes. These different solutions can become information silos, impeding internal processes and creating a disconnected customer experience that makes it difficult — if not impossible — for the newly merged company to promote a unified brand identity. 

While the ultimate goal of any M&A is data unification, consolidating policies into a single system takes time and resources. This time investment means insurers must build a customer experience strategy to account for this. Change needs to happen quickly to support a successful M&A with transparent benefits to the UX. 

An insurer’s failure to integrate differing user experiences during a merger or acquisition can lead to a confusing or misaligned customer journey that causes dissatisfaction, complaints, and brand loyalty erosion when customers feel confused or neglected during the transition. Policyholders may feel the new company no longer meets their expectations.

To avoid these challenges, follow these steps: 

Step 1 — Get Aligned on  UX 

Every M&A is driven by a set of strategic goals, whether to expand into new markets, diversify products, or improve efficiency. Aligning your combined UX goals with these overall business goals is the first step in consolidating the user experience during an M&A. 

Step 2 — Understand the Current State of UX

Perform a comprehensive UX audit across both companies to evaluate the current user experiences. The goal is to identify differences, gaps, duplications, opportunities, and best practices from both companies. During the audit, insurers should review these key components of the customer experience:

• Digital interfaces, such as websites, mobile apps, and customer portals
• Omnichannel customer service channels, including IVR, call centers, and email support
• Claims processing systems and back-end workflows
• Billing and payment systems

Step 3 — Visualize a Unified Customer Journey

The next step is mapping out a unified customer journey to create a seamless path from start to finish. The new customer journey must be easy to navigate without disrupting the existing experience customers are familiar with. Account for the current structure of the inherited systems and any plans for future expansion of the UX to build a strategy that can leverage existing internal processes while improving the policyholder experience. Find ways to preserve the best of both approaches while allowing for future considerations.

Step 4 — Lean On Technology to Streamline UX

Leverage digital platforms to integrate the user experiences of both companies without causing unnecessary disruptions and incurring high costs. Cloud-based and SaaS solutions can help speed processes along without the need to “rip and replace”. Consider using data integration and automation tools along with digital portals. A unified CRM system ensures customer-facing employees from both companies have access to the same information, which improves response time and reduces errors. Insurers can accomplish a lot with a few resources when they engage with the right vendors and have the tools to meet their goals. 

Consolidating self-service portals is a critical step in any merger or acquisition. Once the customer portals are merged, insurers can provide a consistent, intuitive omnichannel experience, allowing policyholders to manage their policies, file claims, and make payments easily. Research shows customers who use omnichannel methods to contact their insurers have a 25% higher retention rate.

Step 5 — Eliminate Brand Inconsistencies 

Brand inconsistencies can confuse policyholders and erode trust, threatening to derail the success of the merger or acquisition. The key to successfully maintaining brand consistency while integrating two different user experiences is to identify the core strengths of each brand and ensure those elements carry over into the unified user experience. Research shows UX is just as important as brand and reputation when choosing an insurer. A frequently observed example in the insurance space is a policyholder's disparate experience when an insurer has different log-on instructions depending on the policy type (if your policy starts with 123, click here. If your policy begins with ABC, call us). These separate journeys are common post-acquisition, but they are confusing and frustrating for policyholders. Insurers should instead maintain their focus on consistency in brand and user experience by utilizing technology that allows them to build on the strengths of each company.

Step 6 — Communicate With Stakeholders to Gain Buy-In

Clear and transparent communication with key stakeholders is critical during the user experience consolidation phase of an M&A. Internal teams, policyholders, vendors, and perhaps even regulators must be kept informed throughout the process. Employees must understand the changes and how they impact their roles, and policyholders need to be aware of any changes in user interfaces or customer journeys. Transparency is critical to gaining buy-in from stakeholders.

Step 7 — Focus on Continuous Improvement

When creating and introducing a new user experience to policyholders, insurers should engage in a continuous improvement cycle of testing, refining, and retesting. Feedback from users, key metrics, and usability testing can help insurers make adjustments during the M&A. Because no integration is perfect immediately, adopting an iterative approach allows insurers to make incremental improvements and fix issues when they are identified. This dedication to continuous improvement and listening to policyholder feedback improves the overall user experience by prioritizing the customer journey.

The Biggest Payoff: Customer Loyalty

 A thoughtfully designed and executed UX consolidation during M&A will strengthen customer loyalty and streamline operations, leading to the long-term success of a merger or acquisition. Insurers that take a strategic, technology-driven approach to their UX integration can help ensure policyholders remain loyal and satisfied throughout the merger or acquisition. When UX integration is handled the right way, insurers enjoy a smooth transition, increased customer retention, and a stronger brand.

 About the author:

Steven Johnson is the Co-founder and Head of Product of insured.io, an omnichannel customer engagement platform for insurance carriers.

 External Links:

1. https://hbr.org/2020/03/dont-make-this-common-ma-mistake#:~:text=According%20to%20most%20studies%2C%20between,integrating%20the%20two%20parties%20involved.
2. https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/customer-experience-in-mergers-and-acquisitions.html
3. https://39812339.fs1.hubspotusercontent-na1.net/hubfs/39812339/Insured.io%20eBook%20-%20Revolutionizing%20Customer%20Engagement.pdf?utm_medium=email&_hsenc=p2ANqtz-8Smp3P8AnGfdGYbvLqpfbeM3EDuVY5ARD8yPICFliGPuMngL9PoYQFKaKu4PQI4bABsUD-XWvaohIkEwcv0PorkXZ_Yg&_hsmi=277014961&utm_content=277014961&utm_source=hs_automation

Sponsored by: ITL Partner: insured.io

In an era in which smartphones have become essential tools in daily lives, there has been a surge in the preference for mobile channels — particularly mobile apps. Whether for checking the weather, reading news, scrolling social media, ordering food or managing an insurance policy, there's an app for nearly everything.

Consider this: 97% of Americans now own a smartphone. The average smartphone user spends four hours on their device daily, and nearly 90% of that time is spent using mobile apps.

Mobile apps are typically designed with a mobile-first focus, optimizing the screen size, menus and overall user experience for the device. Developers can seamlessly integrate device-specific features like the camera, push notifications and geolocation services, which are particularly useful for auto and property insurance policyholders. This allows for an interactive policyholder experience and instant access to actions like capturing photos of damage, uploading claims documents, receiving essential updates or reminders and accessing location-based services such as nearby gas prices.

Today, mobile apps are the primary delivery channel for many financial services providers, including banks and brokerages. Yet among insurance carriers, the degree of sophistication and access to fundamental mobile apps and features varies significantly. Insurance carriers can improve customer engagement, satisfaction and retention by addressing these gaps.

Here is how insurance carriers can improve their mobile apps:

1. Support all core servicing capabilities. It is essential to ensure that policyholders have mobile app access to all key aspects of policy information and servicing, particularly the ability to initiate claims and submit photos for damage assessments. Only 50% of insurance carriers currently enable policyholders to initiate claims using their mobile apps. 

Additionally, offering existing policyholders the option to receive quotes for new coverage directly within an app can increase convenience, while support features like contact numbers, chat options and messaging capabilities provide quick assistance.

2. Accelerate access to critical tasks and information. Speeding mobile app access to features like customer support, payments or claims filing — either by not requiring login or by transferring policyholders directly to the desired information or task — can expedite actions and enhance efficiency. About 92% of carriers' apps provide unauthenticated access to some key services, with customer support being the most common. 

More than 40% also offer shortcuts from the device home screen to minimize navigation. Biometric login or alternatives such as PINs can support quick and secure mobile app access when authentication is essential.

3. Integrate value-added features. Incorporating supplemental app features can generate recurring app usage while building policyholder engagement and satisfaction. One-third of carriers offer telematics tools within their primary servicing app, enabling users to monitor and manage safe driving behaviors and use options like accident detection, roadside assistance and claims initiation. Integrating other third-party capabilities like vehicle maintenance reminders or parking locators, currently offered by 25% of carriers, can enhance the overall utility of an app.

4. Assemble important educational content. Building a library of informative content that's accessible from within an app can reduce customer service inquiries, convey important product and servicing information and support relevant insights. Videos are particularly well suited for mobile viewing, yet only 42% of carriers currently provide videos within their apps. 

While centralized access to educational content has become relatively mainstream within websites and via mobile browsers, few carriers supply similar resources within their mobile apps.

5. Enable access for consumers and small businesses. Today, only half of the 10 largest U.S. small-business insurers offer single sign-on access to personal and small-business policies via mobile. Yet many small-business owners acquire both their personal and small-business policies from the same firm. 

Mobile apps that support single sign-on for managing both account types can improve usability and satisfaction among small-business owners.

6. Continuously evaluate and improve. Frequent updates and feature enhancements can help maintain user interest and ensure that an app evolves with policyholder needs and market developments. Insurance carriers should regularly evaluate their apps' capabilities, assess emerging technologies and use feedback collected in-app and through app store reviews or surveys. 

Regular updates for bug fixes and new features can keep an app both relevant and user-friendly.

By focusing on mobile app capabilities, insurance carriers can create tools that meet the evolving needs of consumers while improving policyholder engagement.

The insurance landscape has changed. From new technologies to emerging demographic shifts, insurance agents must adapt to stay competitive. Today's consumers expect seamless digital experiences, personalized solutions and a proactive approach from their insurance providers. With the right marketing tactics, agents can leverage technology and shifting market trends to build stronger client relationships. Here are five key approaches to consider for agency marketing efforts.

See also: Digital Underwriting Is the Future of Surety

Embrace a Digital Approach and Omnichannel Marketing

Consumers today are increasingly digital-first, meaning they prefer online interactions over traditional in-person consultations. According to recent studies, nearly 70% of insurance shoppers now research and compare potential policies online before contacting an agent. An omnichannel marketing strategy allows insurance agents to reach clients across multiple platforms, ensuring a presence wherever potential clients are searching for information.

Tactics for Implementation:

Build a User-Friendly Website. Invest in a website that provides easy navigation, clear product descriptions and resources such as blog posts, calculators and quote tools. Ensure it's optimized for mobile devices, as a significant portion of traffic now comes from smartphones.

Use Social Media Channels. Platforms like Facebook, LinkedIn and Instagram can be leveraged to share information, success stories and client testimonials. Social media also provides an opportunity to interact with clients in real time.

Use Targeted Email Marketing. Email marketing is a tool to nurture leads, provide policy updates and promote products to existing clients. Use automation to send personalized emails, but ensure they are relevant and timely to avoid overwhelming recipients. Follow rules and regulations surrounding spam email by implementing opt-in procedures.

Implement Live Chat and Chatbots. By offering live chat or chatbot services, agents can provide instant answers to client queries, even outside regular office hours. This creates a better user experience and builds trust, especially for first-time visitors exploring policy options.

Leverage Data Analytics for Personalized Marketing

Consumers expect a personalized experience when dealing with brands, and insurance is no exception. By leveraging data analytics, agents can better understand client preferences, predict client needs and deliver tailored marketing messages.

Tactics for Implementation:

Use Customer Relationship Management Software. CRM platforms enable agents to track client interactions, policy histories and life changes. With this data, agents can send personalized offers and messages that resonate with each client.

Segment Your Audience. Use data analytics to segment clients into groups based on demographics, location, policy type or stage of life. This segmentation allows for more targeted marketing efforts, ensuring that each group receives relevant content.

Implement Predictive Analytics. Predictive analytics uses historical data to forecast future behavior. For example, if a client purchased a home insurance policy three years ago, they may soon consider additional coverage or new services.

Expand Into Underserved Demographics

As the market evolves, certain demographics are becoming more prominent, including younger millennials, Generation Z and multicultural audiences. Marketing that addresses the unique needs of these demographics can create a competitive edge.

Tactics for Implementation:

Understand Cultural and Generational Nuances. Different demographics have varied expectations and values. For instance, millennials and Generation Z clients value transparency, quick responses and a digital-first experience. Multicultural clients may prefer bilingual services or culturally relevant marketing.

Highlight Values and Social Responsibility. Younger clients tend to be more socially conscious and may prefer businesses that align with their values. Highlighting community involvement, eco-friendly policies or social causes can resonate with these demographics.

Use Targeted Digital Ads. Platforms like Facebook and Google allow agents to create targeted ads that reach specific demographics. These ads can be customized by age, location and interests.

See also: Enhancing Claims Via Digital Payouts

Build Trust Through Educational Content Marketing

Insurance can be complex and intimidating. Many consumers seek information to help them understand policies, coverage options and claims processes before making decisions. By providing educational content, agents can position themselves as trustworthy advisers.

Tactics for Implementation:

Start a Blog or Video Series. Regularly publish blog articles, explainer videos or social media posts that cover topics like policy comparisons, common coverage gaps or seasonal insurance needs.

Offer Free Resources and Tools. Provide downloadable guides, e-books, checklists or calculators to drive traffic to your website and help clients understand complex topics.

Host Webinars and Q&A Sessions. Virtual events allow agents to interact with clients directly, answer questions in real time and address trending topics or seasonal concerns.

Optimize for Customer Retention With Engagement

Retaining existing clients is usually more cost-effective than acquiring new ones. Engagement with clients improves retention rates and helps build strong, long-term relationships.

Tactics for Implementation:

Use Automated Reminders and Policy Reviews. Send reminders for policy renewals, coverage updates or annual policy reviews to show clients you're invested in keeping their policies current.

Send Personalized Check-ins. Consider sending messages or making phone calls on significant life events, like birthdays, anniversaries or during times when clients might consider new coverage.

Create a Loyalty or Referral Program. Reward clients who renew their policies or refer others to your agency. Ensure compliance with state regulations regarding gift values and referral programs.

Technology has empowered insurance agents to reach clients through new channels, gain insights through data and build stronger connections through personalization and educational content.

For most policyholders, filing a claim is one of the few direct interactions they have with their insurance provider. This automatically puts the claims process under scrutiny. Because claims are typically filed in difficult situations, any inefficiencies only heighten frustrations. Even minor delays or errors risk damaging the customer relationship. This makes it essential for insurers to focus on optimizing their claims management.

Moving from traditional paperwork-based methods to modern automation helps address common issues in claims handling. Here are the primary challenges and potential solutions:

Multiple Touch Points

A single claim moves through many departments and adjusters before reaching its conclusion. While this process involving multiple stakeholders ensures compliance with standard rules, it often results in fragmentation.

This fragmentation affects employees, who must manage multiple tasks and handle sensitive information to make decisions. It also affects policyholders, who struggle to track their claim status and anticipate settlement timelines. This causes frustration during an already challenging period.

To address this issue, organizations can store claims documentation in a centralized digital system that integrates with existing platforms, helping break down data silos and improve efficiency.

Data Security

The average cost of a data breach in 2024 is $4.9 million. Because insurance companies handle sensitive customer information, implementing strong security protocols is crucial. Regular audits ensure compliance with regulations.

While insurance companies traditionally viewed hard copies as the safest option, digital solutions with proper security measures better ensure regulatory compliance. Digital storage enhances collaboration and helps standardize processes across organizations.

Increasing Customer Expectations

Studies show that 81% of customers prefer personalized experiences, seamless omnichannel interaction and smooth end-to-end journeys. Insurance companies often struggle to meet these expectations.

Organizations can improve by designing experiences that blend digital tools with human interaction. This includes offering easy access to live support when needed and ensuring customers can switch smoothly between automated systems and representatives.

Dependence on Outdated Systems

Legacy technologies pose specific challenges for insurance companies. These systems consume significant resources and often require specialized support. While switching to new systems requires extensive research and evaluation, continued reliance on outdated processing systems can result in inefficient workflows and slower service.

Modern claims management systems can improve efficiency, accuracy and transparency while reducing maintenance needs.

The shift toward automated, standardized and integrated claims processing helps insurers provide faster service, reduce cycle times and support policyholders through their preferred communication channels.

We live in a world of VUCA – volatility, uncertainty, complexity and ambiguity. An ever-evolving set of external factors influences our people, operations and corporate culture. Most of the time, the changes come in gentle waves, often visible only in hindsight. But sometimes, larger storm surges create inflection points that herald significant shifts in the world of work.

Now is one of those times.

In the past four years, technology disruption, shifting demand for specific skill sets and heightened incivility in public discourse have increased in our daily lives. These trends have found their way into workplaces, leading to significant changes that require both employees and leaders to adapt.

Let's examine what's fueling each of these challenges.

See also: What's Causing the Insurance Talent Shortage (and How Can Carriers Cope)

Challenge 1: Technology Disruption

Concerns over emerging technology have created one of the greatest challenges in today's workplace. While initial excitement around generative AI has normalized since the launch of ChatGPT, AI remains a key stressor as organizations and workers struggle to understand its implications. Questions persist about whether AI will accelerate productivity or prove destructive to the workforce.

Organizations must understand this transformative technology, leverage it effectively and improve workforce adoption while addressing concerns about job displacement.

Challenge 2: Growing Skills Gap

A growing skills shortage affects many industries. While an aging workforce contributes to this challenge, technology's impact on future skill requirements presents a bigger issue. Many required capabilities differ from traditional ones; technological changes will require significant upskilling. Organizations must identify needed skills and determine how to develop them as the landscape evolves. This requires assessing current skills and mapping future capabilities that combine technical and human-centric qualities such as digital fluency and change management.

In 2017, McKinsey reported that 700 million jobs could disappear by 2030 because of technology, globalization or demographic shifts. However, a follow-up study found that 900 million jobs will emerge. These positions will require different skills than today's roles, necessitating comprehensive workforce development.

See also: What Does Gen Z Want?

Challenge 3: Workplace Conflict

The employer-employee relationship has shifted in recent years as post-pandemic preferences and priorities, coupled with increased incivility, amplify workplace conflict. While hybrid work contributes to this dynamic, other factors play a role. Workforce expectations have changed: Employees focus intensely on organizational purpose, culture and experience. Employee engagement and healthy work culture remain central to performance and retention.

Some tension intensified during COVID-19. Though people showed consideration early in the pandemic, relationship-building and trust became harder in remote environments. Working remotely led to isolation and fewer opportunities for personal connection. As geopolitical tensions increased, workplace civility declined, leading to more discord, divisiveness, disrespect and disagreement. This manifests in increased employee grievances and relations issues.

Addressing these challenges requires a strategic approach:

• Lead with values and culture, defining organizational direction and ensuring purpose statements resonate with employees.
• Elevate human resources functions by aligning business strategy with workforce needs while emphasizing speed and responsiveness.
• Develop managers who connect employees and employers, empowering them as effective communicators rather than information bottlenecks.
• Enhance workforce productivity by engaging high-impact employees, providing personalized learning opportunities and measuring both technical and emotional intelligence.

As workplaces evolve, supporting functions must adapt. Technology grows increasingly dynamic, requiring active consideration of its role. Required skills change rapidly while employee-employer interactions continue shifting.

While change management remains important, organizations must move beyond standard approaches. They must reframe change management for today's context and develop employee resilience amid uncertainty. Agile, resilient and empathetic mindsets have become crucial for success, as workforces need tools and support to evolve effectively.

Wildfires are getting worse. From California to Portugal, from Australia to Greece, fires destroy ecosystems, disrupt economies and ruin lives. As climate change intensifies, they will grow in both frequency and size, threatening areas once thought immune.

Regions like Wales now face much greater wildfire risks, and extreme heat waves are four times more likely than they were 150 years ago. The average wildfire season has tripled in length, pushing regions not historically at risk to strengthen their infrastructure.

The cost is eye-popping: In the U.S., this season's wildfires caused more than $89 billion in lost output, according to one study – a number that's likely to rise. Major insurers have left places like California, leaving residents without coverage and increasing the costs of firefighting, disaster relief and rebuilding.

See also: Texas Wildfires Illustrate Challenges

Geospatial data, gathered through advanced Earth observation technology, offers hope. By helping predict, track and mitigate wildfires, Earth observation is becoming essential to understanding and responding to the threat. While this technology has highlighted the severity of the wildfire problem, it also plays a key role in solutions.

Outdated wildfire risk models, many developed decades ago, fail to account for worsening climate change and have left communities vulnerable. Now, dynamic models can accurately predict wildfires in near real time, allowing insurers to develop sophisticated risk management systems that alert property owners to wildfire risks.

Modern wildfire monitoring systems can assess the likelihood of a wildfire's outbreak with precision. These models consider multiple risk factors, including land gradient, moisture levels and vegetation dryness and density.

When an area or asset is deemed at risk, the systems notify relevant individuals or organizations, who can then take action – for example, by clearing dry vegetation or creating defensible spaces around properties. Emergency services receive these notifications, enabling quick response to prevent loss of life or property.

Satellite data can now track the entire lifecycle of a wildfire, from ignition through spread and containment. Analysis of this data provides clear understanding of area vulnerabilities and the extent of fire damage, which informs future risk models.

This information supports resource allocation for emergency response teams, improves firefighting approaches and provides critical information for recovery efforts.

See also: Can Insurers Take the Lead on Climate Resiliency?

Climate change's impact continues to grow. The Portuguese government declared a "state of calamity" following wildfires this autumn, mobilizing emergency services to fight 100 fires caused by "climate breakdown," according to a European Union spokesperson.

Fires devastate habitats and release carbon emissions, further fueling global warming. With global wildfire outbreaks expected to soar by 2050, using advanced risk modeling and mitigation solutions is essential. The insurance industry, which has historically underestimated extreme weather costs, must adapt to this reality.

Insurance has long played a key societal role, increasing financial stability, providing peace of mind, stabilizing social security, facilitating trade and managing risk. As challenges multiply and intensify, geospatial data and Earth observation technology enable insurers to maintain this role.

This data-driven approach allows better understanding, prediction and mitigation of risks connected to our warming planet.