Last week I wrote about the Protection Gap and how insurers should be serving it. The post has been a huge success, mostly because it features Hemant Shah, CEO of RMS (thank you Mr. Shah!). The article pivoted on the question “What risk is the insurance industry not ready to handle?” and Mr. Shah’s response:
“I worry more about the risks the insurance industry is not covering right now.”
In other words: fill the protection gap.
What makes that response important for underwriters is that it’s a growth strategy. Why? Let’s use Allianz’s 2015 results to explore the importance.
The past year has been a good one for Allianz, as they have reached their highest ever revenue levels and highest annual premium growth in a decade. The growth they have realized is an early result and vindication of their three-year growth strategy, as unveiled last November. The strategy includes acquisitions (as per CFO Dieter Wemmer: “Allianz is keeping to a growth agenda with targeted acquisitions.”) and organic growth in developed and developing markets.
If you’re Allianz, the acquisitions are easy. But, how can they grow in developed markets? How can any carrier?
The protection gap is exactly where that kind of growth can happen. To use the examples mentioned last week (US earthquake and flood), there is an approximate market penetration of about 20% for those perils, meaning most of the market for those coverages is unserved. A company like Allianz, who currently underwrites flood and earthquake insurance globally for both residential and commercial property, can move to fill these gaps, if and when they choose to.
But the protection gaps around the world offer enormous opportunity, regardless of what Allianz and other Top 25 global carriers do. There is business waiting to be written, and the necessary underwriting solutions, including InsitePro, are available now for underwriters who want to grow. The opportunity is there – and so is the technology to pursue it.
