Tag Archives: home insurance

Digitizing Reshapes Home Insurance

The digital disruption to the U.S. home insurance buying process has been on the horizon. However, the fallout from the pandemic has rapidly shifted the industry, as consumer expectations are evolving and carriers look for solutions to streamline customer interactions. Consumers continue to purchase more goods and services online and expect companies to provide them with seamless experiences. For home insurance carriers, that means digital engagement is no longer just a communication channel. It is now a way of doing business. Carriers using digital business models and leveraging the right data will be better-positioned to make informed decisions and deliver a superior customer experience. 

To better understand how home insurance carriers are transforming the customer experience and underwriting process to meet these expectations, LexisNexis Risk Solutions commissioned a third-party survey of the top 50 U.S. property insurance carriers in 2020. Findings from the study were compiled in the Innovations Transforming the Home Insurance Buying Process report and reveal how disruption, innovation and the pandemic are affecting the industry. To stay competitive, carriers may need to invest in automation to improve their buying processes. 

Results showed that carriers are prioritizing automation as the impact of COVID-19 continues on claims activities and other areas of the policy lifecycle. Carriers that have not invested in automation can act now to keep up with market leaders. Carriers have an opening to improve the customer experience at bind, renewal and claims by using the intelligence available at their fingertips to help reduce time and expenses, maximize efficiencies and better understand their customers’ risks and returns. 

Additionally, carriers see other challenges looming in the next three to five years. Survey respondents listed their major concerns as: losing customers with higher expectations; a growing use of comparative rates; targeting customers with competitive premiums; answering insurtech threats; and charging adequately for changing weather patterns. Carriers need to be ready to implement digital solutions and automation built on a wider dataset.

Enhancing the customer experience

To keep up with the increase in claims activity and consumer demand for a digital insurance experience, most U.S. home insurance carriers are relying more heavily on available data sources to reduce the questions asked during the policy purchasing process and decrease in-person inspections.

The study revealed 67% of carriers are in the process of making changes to their investments in the home insurance buying process, while 43% have already made significant adjustments within the past two years. Key goals of carriers’ home insurance investments include improving the customer experience (77%), improving profitability (60%) and reducing underwriting expenses (53%). 

All carriers surveyed placed the most importance on minimizing customer friction. Relying on consumers to supply information slows the process, increasing the opportunity for mistakes and customer frustration. For carriers, that means gaining access to other sources of data they can trust to be more accurate and up to date.

See also: How to Exceed Customer Expectations

Responding to digital and market disruptors

Digital technologies are having a large effect on the business. New disruptors to the home insurance industry include self-service apps for consumer-led inspections, third-party aerial imagery, digital-only carriers like insurtechs, Internet of Things (IoT) smart home appliances and the gig economy. 

Almost all (93%) carriers reported that self-service apps do not eliminate manual claims processes completely, but do help to reduce costs. The evolving gig economy also offers new opportunities, and many (75%) carriers have responded by offering specialized coverage products.

As the use of data prefill capabilities, advanced analytics and aerial imagery are increasing, carriers are mindful that these new market entrants are filling current gaps in the home insurance product set. As a result, 93% of carriers surveyed are investing in digital and mobile capabilities, product innovations that settle claims faster and ways to enhance the customer experience. 

Data is a key enabler for carriers wanting to remain competitive with changes throughout the customer lifecycle. It can assist agents to identify and recommend the best products and services to customers. This is an important path to improve the customer experience and potentially boost carrier profitability.

See also: Pressure to Innovate Shifts Priorities

Looking ahead for growth 

As home insurance automation continues to evolve, the carriers that use quality data to optimize their customer experience will likely be able to offer a more consultative and trusted customer experience, while positioning themselves for better segmentation and helping them make decisions faster. They will do this by both confirming data versus collecting it from the consumer, and by leveraging prior policy information to guide them to the right coverages for that consumer. 

Now more than ever, home insurance carriers need to evaluate their processes to see where enhancements are needed. Those that have a future-ready, digital business model will be in a better position to answer consumer needs and anticipate buying trends. Carriers having access to the right data at the right time will reduce customer friction throughout the policy lifecycle and address pain points, helping position them for rapid, competitive growth.

Does Amazon Threaten Home Insurers?

Amazon has made no secret of its intent to disrupt virtually every industry on the planet, most recently announcing a partnership with JPMorgan Chase and Berkshire Hathaway to create an independent healthcare company. Reportedly, the retail giant has also begun to explore the idea of setting up an insurance price comparison site in the U.K.

The formula is now clear. Amazon and other consumer-first digital disruptors like Google set their sights on a conventional industry with aging distribution and marketing channels, then things start to change rapidly. With an insurtech revolution already starting to brew in the home insurance marketplace, how long will it be before the likes of Amazon and Google enter the market in a serious way? And, if they do, will customers welcome them?

While industry incumbents like State Farm, Allstate and Progressive have begun to speculate on potential scenarios for this kind of digital disruption, J.D. Power’s P&C insurance industry practice went right to the source – the consumer – to ask how real home insurance customers would feel about the presence of tech companies in this space.

Following were the key findings from the J.D. Power Pulse Survey:

20% of Consumers Would Use Amazon or Google for Home Insurance

The data revealed that 20% of consumers would use an Amazon or Google for their home insurance. Millennials showed even higher interest at 33% for Amazon and 23% for Google. Of those who indicated that they would be willing to switch, 80% currently have insurance with a large national carrier.

See also: What if Amazon Entered Insurance?  

75% of Consumers Interested in Home Telematics

While most of the media’s attention has focused on the future of automation technology in automobiles, the disruption to your home experience – and by extension your home insurance – through smart home technologies is likely to have an equal or greater impact.

Smart home technologies are revolutionizing many areas of the home, from simple comfort features that can now turn lights on and off or access in-home entertainment by control of your phone to home security and emergency support with automatic shutoffs and alerts.

The insurance industry wants in on the action. Insurers see smart home technologies as an opportunity to deepen their relationships with customers, while improving home coverage options and underwriting. While leading home insurance carriers have begun to venture into these areas, not much research has been done to understand the consumer’s demand as these features become available. Based on the J.D. Power Pulse Survey, following are insights into the current consumer appetite for this type of technology:

  • Top areas for insurtech disruption: Among consumers polled, following are the top area of their relationship with their home insurance provider that needs the greatest improvement:
    • Product Options/Coverages – 20%
    • Underwriting Sophistication – 15%
    • Claims – 14%
  • Top insurtech technologies: Among consumers polled, following are the top technologies consumers are most excited about coming to the insurance industry:
    • Cybersecurity – 36%
    • Blockchain – 25%
    • Internet of Things (IoT) – 24%
  • 75% of consumers are interested in home telematics. While the bulk of talk on telematics has been focused in the automotive space, home insurance customers are overwhelmingly interested in getting discounts on their homeowners insurance for proper home maintenance and security.
  • 46% of consumers would be willing to allow their home insurance company access to smart home sensor technology in appliances, such as refrigerators and air conditioners to help prevent loss and malfunction (smart tech loss prevention). 56% of consumers who currently have “smart” tech in their home would allow access

See also: 5 Misunderstandings on Home Insurance  

  • 34% of consumers would likely switch to a home insurance company that offered smart home technology loss and protection options:
    • 57% of millennials would likely switch
    • 40% of consumers who currently have “smart” tech in their home would be likely to switch (64% of consumers reported having some sort of smart tech in their home, such as a smart thermostat, doorbell, etc.)

What the 3 Little Pigs Teach Us

The three most famous houses for risk exposure are the one made of straw, the one made of sticks and the one made of bricks — occupied by our friends, the three little pigs.

These three houses face extreme local straight-line wind exposure courtesy of the Big Bad Wolf. The key lesson taught by this fable is that the better prepared you are for risk exposure, the more likely it is that you’ll come out on the bright side after the risk has passed. Unfortunately, we see every day that some children and many adults did not heed this moral.

While no one provides Wolf-Based Wind Scores (WolfHubTM), it is now possible to find risk scores on just about every other bad thing that can happen to your home or business. We are strong believers in the power of mitigation. After all, many times you can’t just up and move from your location. But to know what to mitigate for, you have to understand the risk around you.

Like the first two little pigs, most people don’t understand the risks around their property, and let’s not overly reward the third little pig. While he certainly did mitigate for Wolf-Based Wind, building his house near a forest potentially exposed him to wildfire. Seeing that he was planning on farming, there had to be a body of water nearby for irrigation, exposing his house to flooding, as well. Lack of knowledge is the leading cause of hazard loss.

See also: 4 Steps to Integrate Risk Management  

That’s why we provide www.freehomerisk.com. So anyone in the U.S. can get a better understanding of the hazards that affect their property. For example, this address in Miami, 701 South Miami Ave., returns a risk identification report like this:

All of the hazards lit up in green are hazards that are applicable to that specific address. Not every address will have every hazard, as hazards are regional in nature. For example, Florida sinkholes only happen in Florida, while tsunamis only happen to places with exposure to the Pacific Ocean. Once you’ve identified the risk types to be aware of you, can investigate further by getting the Risk Exposure Report Card, with grades specific to the address.

For 701 South Miami Ave., Miami, the Risk Exposure Report Card looks like this:

As you can see, at this address you (and the three little pigs) have a lot more to be concerned about than just Wolf-Based Wind.

5 Misunderstandings on Home Insurance

Hiring an insurance broker should mean ease, speed and extra security. But not everything about putting a middle man in the process of buying insurance is great. Mistakes and mishaps are bound to happen at some point.

Misunderstandings between homeowners and insurance brokers aren’t uncommon. The insurance industry has become a lot more chaotic. More clients are finding it hard to trust agents and brokers, who do sometimes use unethical tactics to earn a living.

Let’s take a look at some of the most common misunderstandings.

1. Conflict of interest

Insurance brokers get remunerated through a fee or commission for their services. They can get paid by the insurer for bringing a large volume of business to the company. They can also get a commission from their clients by finding the best deal and insurance for them.

The risk of conflict arises when the insurance broker favors his personal gains over his duty to his client. This can result in the client agreeing to higher prices or extra coverage he doesn’t really need.

See also: A Wakeup Call for Benefits Brokers  

2. Nondisclosure and negligence

Before a client signs up for insurance, it is his responsibility to divulge all pertinent information, including his income, medical history, home values and details of his home security. Failure to disclose all this information can render him uninsured when he files a claim.

There are cases, however, where even forthright and honest men can forget pieces of information. Having an insurance broker handling all the processing can make it more likely to happen. And negligence by a broker can result in a costly misunderstanding.

3. Failure to understand exclusion

Clients mostly shop around for price and reputation without realizing the other important factors that can affect their coverage.

Insurers are slowly cutting back on coverage and increasing their deductibles in an attempt to increase profits. While insurance brokers can give their best when discussing the exclusion clauses buried in lengthy policies, they can still miss critical details, and one word or phrase can mean thousands of dollars when it’s time to make a claim.

A carport, for example, does not technically fall into the category of a building, which means that a client should not expect his insurance to cover a collapse.

4. Underinsurance

When doing an assessment, a typical insurance broker would need the help of real estate appraisers or an online program to know how much coverage a homeowner can get. If the broker is fairly new and untrained, he may even obtain figures by directly asking the homeowner how much exactly he is expecting to get.

This lack of knowledge can mean that homeowners are greatly underinsured. Yet they will have a false sense of assurance and only realize their problem in the wake of a disaster, such as a tornado or flash flood.

Another common misunderstanding between homeowners and insurance brokers involves replacement cost and market value. Most homeowners expect to receive a coverage that will equate to their home’s market value. Replacement cost, on the other hand, is generally higher than the amount a buyer is willing to pay for a house. It’s based on a lot of factors, including the materials used, cost of labor for the demolition and repair, etc. An agent or a broker needs to be very thorough in discussing these details so that he and his client can determine the right insurance and coverage.

See also: A ‘Perfect Storm’ of Opportunity (Part 3)  

5. Change of policies

It’s the insurer’s obligation to notify its clients about any changes in their insurance coverage. It’s also a part of the broker’s responsibilities to let his client know the terms of renewal, cancellation and expiration of the insurance he’s offering and to make sure the client understands.

But sometimes clients don’t get the message and are underinsured or even uninsured when they file a claim. In cases like this, a client can take legal action against the broker. He may also file a case against the insurer, if it changes the insurance without its client’s consent.

7 Tools for Cutting Insurance Costs in 2016

Pondering New Year’s resolutions? Check out these seven helpful insurance calculator tools:

If you’re like most Americans, one of your New Year’s resolutions probably involves cutting spending in the coming year. But, rather than planning to avoid expensive shopping sprees, consider saving money in other ways – like reevaluating your insurance coverage. This may seem like an overwhelming amount of work, but you don’t need to spend hours on the phone to find out if you can save money.

Instead of jumping right in with insurance quotes, consider using insurance calculators to get started – they require less personal information while still providing accurate estimates based on your needs. These seven insurance calculators are a great place to begin if you want to save money in 2016.


  1. Bankrate: Auto Calculators

To get an idea of how much you’ll be paying in car-related expenses every month, Bankrate provides you with a wide variety of automotive expense calculators. Once you have an estimate of how much you can save each month based on your interest rate and auto loan term length, you can then more accurately plan your auto insurance budget.

Additionally, while Bankrate focuses a lot of its research on automotive expenses, you can also learn more about home and retirement insurance plans with its other financial planning calculators.

  1. CarInsurance.com: Car Insurance Calculators

CarInsurance.com offers in-depth information about all areas of car insurance. The simple and organized layout of the calculator interface gives users easy-to-read results, and it provides additional explanations on overall cost and coverage.

The CarInsurance.com calculator section also serves to connect visitors to other informative resources that can help make lowering their car insurance premiums much easier.

  1. The Hartford: Car Insurance Coverage Calculator

The Hartford car insurance coverage calculator avoids using ballpark estimates, meaning that it requires specific details about your coverage needs to create a more relevant figure. While it does ask more questions than some of the other insurance calculators on this list, it is still an efficient and quick way to get customized results.

The Hartford calculator page also provides links to relevant articles that discuss different available benefits and options for auto insurance.

  1. HomeInsurance.com: Home Insurance Calculator

This basic calculator requires you to answer only three simple questions – ZIP code, square footage and home layout – to get an idea of how much coverage you need. The calculator also provides higher coverage ranges and explains the protection you can expect from each type of plan.

If you have questions about coverage terminology, the HomeInsurance.com calculator offers an extensive FAQ section.

  1. Liberty Mutual: Home and Auto Insurance Coverage Calculators

With an extremely user-friendly and visually appealing platform, the Liberty Mutual home and auto insurance calculators ask simple questions about your life to help you determine which plan is right for you. The home insurance coverage calculator tells you which areas you should be spending more to protect, while the auto insurance calculator allows you to see suggestions for towing and rental coverage. The major elements of the calculator are adjustable, making it easy to customize the estimate to reflect your needs.

  1. Geico: Coverage Coach

Like the Liberty Mutual tools, the Geico Coverage Coach offers estimates for auto and home insurance, but this calculator does both at once. The calculator gives accurate coverage estimates for a wide variety of demographics, and the platform is straightforward and engaging — it takes just a couple minutes to fill out the seven simple questions.

  1. Allstate: Insurance Calculator Tools

Allstate’s insurance calculator tools address all your major coverage needs, including auto, home, life and retirement. The calculators come with all the information necessary to help you decide which plans will work best for you and your family. Additionally, the thorough platform acts as an all-in-one learning center for the most common questions about various types of coverage.

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It’s not hard to figure out where you can save money on your current coverage policies. Try these seven insurance calculator tools to find the best home, automotive and life insurance coverage to suit your budget for the coming year. Once you’ve done some preliminary research, you can start seriously shopping for home coverage, life insurance and automotive protection.

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