Ch’ch’ch’ Changes
Look around you. They may not be at your front door, but have you checked your backyard lately?
This issue is about asking the right questions. With so much change afoot—technological change, regulatory change, change in the business climate—you need to make sure you’re keeping tabs on myriad conversations…so we’re helping you adjust your lens.
In the pages that follow, we’ll explore issues that on the surface may not seem directly applicable to your business. But if you view them as they really are—major challenges for our industry as a whole—then you’ll connect the dots on their implications for our segment of the business.
Changes in the way we drive, for example, from ride sharing to autonomous autos, mandate that we change the way we think about insurance. As the driver’s role changes, so, too, does coverage. Traditional personal auto insurance is starting to morph into cover for manufacturers for car defects or commercial policies for people who use their car for ride sharing. We’re seeing a shift from personal liability to product liability.
The fact that we’re talking about a fully automated car within the next three years says it all: we need to think differently. Vehicles are changing—the data, the safety features—and premiums and underwriting will no doubt follow. As the role of reinsurers and insurers changes considerably, the role of the broker also needs to change.
As the role of reinsurers and insurers changes considerably, the role of the broker also needs to change.
If you’re not asking the right questions, you can’t appropriately evaluate the risk.
Imagine your Amazon packages being delivered by FedEx with the “truck driver” in the passenger seat or rearranging packages in the rear of the truck. Or what about the computer glitch that causes a driverless vehicle to trigger a 60-car pileup? The risk we know today may diminish, but the risk we experience tomorrow will be equally demanding.
Workers compensation is also undergoing an unprecedented transformation. States far and wide are making reforms to corral costs. Employers are trying to gain more control over their programs, trying to make a cultural shift that’s focused on safety and preventing injury in the first place. Brokers need to recognize that shift and find a new role in prevention, helping employers minimize their risk. Check out our feature “Who’s Really Paying for Workers Comp?” and this topic may strike a chord: “The reform movement doesn’t necessarily mean more business for brokers, but it does mean more work.”
What is this doing to workers? We are currently enduring a presidential election cycle that asks about stagnant incomes. Is this one more example of sticking it to the employee?
Speaking of more work, our third feature, on the major regulatory change going on in the European Union, should get your heart rate moving. While it’s taken a dog’s age, Solvency II is finally bringing new rules for capital adequacy and reporting for all risk carriers in the 28 states of the EU. It’s expected to send shockwaves around the insurance world, but how it will affect the U.S. industry remains to be seen.
Be on alert. “The International Soap Opera That Won’t End” on page 48 is laden with words like “unclear,” “unapproved,” “unsustainable” and “impossible.” In a nutshell, the new rules are complicated, and much of the industry isn’t quite ready for them. Solvency II could affect the valuation of foreign-owned carriers and also could put pressure on them to withdraw from various markets. We’ll have to wait and see.
Ultimately, we can’t continue to view these segments of our industry in the same way. We must be probing our clients to see how their business is changing and, thus, how we can change ours. In the end, it comes down to our basic foundation: staying on top of trends and helping clients make decisions around managing their risk.
