Insurance Journal published an article last week about how funding cuts to FEMA might eliminate updates to the Flood Insurance Rate Maps (FIRMs). A consumer group is concerned – but should they be?
The Risks of Hazard has, for a few years now, been advocating that the insurance industry needs to start closing the protection gap on US flood. To do that, it will be necessary for insurers to begin covering risks beyond the NFIP (not just replacing it).
There is a great long piece at Carrier Management on how two of the most pressing challenges on insurance are related. Those two challenges are the ubiquitous, dreaded legacy systems (i.e. old technology) and the lack of young talented people entering the industry. The following quote from Michael LaRocco, CEO of State Auto Insurance Companies, sums it up perfectly, and vividly:
The reality of our crappy technology and our old legacy systems and the old way we do business is part of that problem. It’s not going to be attractive for someone to come to a company and work on a green screen. That’s not going to do it for them.
When stated so well, it’s obvious. Insurance has historically struggled with technological innovation, and that struggle has made aging demographics a problem. The essay goes deeper into that crux, but really, these two sentences are all they needed to publish – it’s a proper money quote, and impossible to disagree with.
The article is called Three Major Areas of Opportunity, and lists three ways that technology / innovation will impact insurance in the near future. Nothing controversial in the choices – they are the calling cards of “innovation” for insurance:
- Underwriting automation
- Connected devices (i.e. IoT)
Naturally, we’ll take a deeper look at the underwriting piece, with IoT and cyber stuff beyond the Risks of Hazard horizons.
Ms. Mohan lists six benefits than underwriters can realize with the modernization of their systems, and it is hard to argue with any of them. Here are all six, with quotes from the article and comments:
- Ms. Mohan states: “Automation in the insurance industry can make underwriting both more efficient and more precise”.
- We here could not agree more: using underwriting analytics that increase automation is a sure way to reduce underwriting leakage.
A new kid is on the block underwriting private flood insurance in Florida today! Neptune Flood Insurance is an MGA combining a wealth of experience and some unique innovations to bring more options for property owners. Plus, it’s a great name for an MGA.