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• AUGUST 14, 2020 • Midlands Business Journal
Property & Casualty Insurance A section prepared by the staff of the Midlands Business Journal
August 14, 2020
Property and casualty industry confronts uncertainty with aim for ingenuity by Michelle Leach
Remember the good old days when widespread rate hikes tracked with Mother Nature, not a global pandemic? “We had entered what’s known as a ‘hard market’ in several lines of insurance coverage in 2019,” said Gallagher Area President Derek Wright. “Auto liability, property insurance and the costs of umbrella coverage were experiencing double-digit percentage increases over the previous year.” The frequency and severity of hail claims and litigation resulted in reduced coverage (or refusal to write business) in these areas; low interest rates and increased reinsurance expense meant costs were passed on to consumers. “It’s possible that businesses will see
the rate increases from insurance companies over the next year and assume the increases were related to the pandemic,” he said. “Unfortunately, the companies were already well on their way to increasing rates and this disruption has only intensified that need.” Uncertainty of coverage related to COVID-19 losses has been a source of frustration, Wright noted, particularly business interruption property claims amid pandemic-driven closures and claims that employees and guests have contracted the virus at work. “Companies will point to exclusions in their policy to support a denial of these claims; however, some states, who have jurisdiction over local insurance placements, have attempted to force payment of these
Derek Wright, area president at Gallagher. claims,” he said. products. Uncertainty could impact profitability “Those companies that have not already and policy pricing dramatically for “years embraced advances in technology and digto come.” ital capabilities to enhance their business, “It’s also creating a flood of litigation likely experienced more challenges during that will not be resolved in the near future,” the pandemic,” Seiboldt said. “Consider Wright added. transforming a workforce from working Lack of coverage (or clarity over in-office to completely working remote … coverage) may affect how insurance is New processes such as photo-based autopurchased for the foreseeable future. mobile estimating has gained additional ac“It also will most certainly bring about ceptance with our customers, due to social innovation and options to help business distancing requirements.” owners find creative solutions,” Wright Its Driveology product allows customsaid. ers to earn discounts based on actual auto Prior to COVID-19, Farm Bureau Fi- use, advantageous when customers drive nancial Services COO-Property Casualty less often and shorter distances. Jay Seiboldt said companies were embracNebraska Asset Protection Group ing enhanced technology, providing new Certified Insurance Counselor Michael and improved services. A. Luna said insurance hasn’t been as “The industry was operating at near negatively impacted as other industries record surplus levels, ensuring insurance and has historically fared well during companies could respond when needed down markets. most, at claim time,” he said. “The indus“We were in a very good position finantry was competitive, providing customers cially before the shutdown occurred, which many available options, coverages, and has helped insulate the impact,” he said. price points.” Negative impacts include: agency Insurers are reassessing operations and Continued on next page.