ABOUT PROPERTY OR CASUALTY INSURANCE

Commercial lines and personal lines make up casualty insurance. While personal lines, such as vehicle and homeowners insurance, cover the risks faced by individuals, commercial insurance is meant for businesses. The world’s economy cannot function without commercial insurance, which protects it from failure by allowing insurers to assume the risks involved in producing goods and services. The current market conditions for property and casualty insurance are at a turning point, with the industry in all of America receiving little support from the economic engine because of its relatively small size. Also technological advancements and the current growths in InsurTech are changing buyers and customers’ expectations. The emergence of telematics, the internet, artificial intelligence, driverless cars and the block chains are changing the current risks in the insurance industry. With these changes in future companies will be required to use technology.

2017 comes with a new era of political administration under Donald Trump; there is a likelihood of diverse and numerous changes that will come with the change of leadership due to expected economic changes and various regulatory changes, changes in trade policy, and changes in tax reforms. With these anticipated changes it’s up to the Insurance companies’ management to rethink about the future of their businesses and come up with the operating strategies that will enable their existence even if tough times strike the industry. They need to ask and answer questions such as;

What changes will the insurance industry encounter as a result of the change in political direction?

In future which is the key business segment to focus on?

How can they streamline costs and attract new businesses using robotics, data analytics, and other emerging technologies?

How do they remain relevant in the fast changing marketplaces? How do they build innovative and customer-driven organizations?

What can they do to ensure the right talents are available and in the right places?

With the changes in technology and regulations in 2017, the demand for new products (for example cyber risk insurance) is on the rise. The desire and the drive to invest in innovative ways of driving growth are faced with the challenge of complying with the current regulations taking place. In commercial business lines companies on a macroeconomic level are giving priority to expenses reduction and enhancement of efficiency, in an attempt to protect themselves from falling out from decreasing insurance rates and increasing measures of profit making.

The Cyber insurance market has a wider coverage now, with over 60 carriers offering cyber insurance and a gross written premium of $3.25 billion. With the increase in understanding and knowledge in cyber risks both by buyers and insurers, the limits of cyber insurance are on the rise. Better still the government should not leave the issue of cyber security fully on insurance companies, just like with the flood insurance they should provide a solution. To protect against cyber security risks insurance companies are creating robust security systems, these systems help protect them as well as buyers against cyber attacks. Insurers are as well hiring expert of cyber risks and also partnering with other companies to have proper systems to manage the increasing threats.

On the Buyers side the property/insurance market is still favorable, according to Marsh’s Property Practice leader Duncan Ellis, but better still buyers should be on the lookout on the awaiting reauthorization of National Flood Insurance Program(NFIP), As well as terrorism attacks. Both buyers and sellers are considering the cyber risks insurance as a key factor to be covered.

Companies with operations in Florida, are likely to face a limited market, generally buyers of casualty insurance should expect to face soft market conditions this year, as cited by Steve Kempsey, of Marsh’s US Casualty Practice competition among cyber liability in 2017 is anticipated to be favorable for buyers the rates are soft, interest rates are low. Looking at 2016 there are possibilities that some market conditions are at their last stages, the claims are on the rise in 2017with accumulated losses, for example, losses incurred when Florida was hit by Hurricanes. Considering property and insurance industry activities and pricing this year things are changing and complicated, some rates have deteriorated while others are expected to continue going down.

To cope with challenge, large insurer companies are facing the slow-growth head on by use of strong strategic and structural methods. Some of them are buying similar businesses to make them much stronger and manage the market changes. Insurers are entering the year with a firm and strong base, this excess capacity, however, is contributing to softening of the commercial line businesses and threatening their ability to make profits. Insurance companies are increasing their abilities to compete with new and existing companies for a share of the market within the economy with a very slow growth rate.

The economic challenges are spurring experimentation of new products and services, companies have found a new market opportunity and are developing products to fit these emerging markets for example business coverage while still expanding on the sales of cyber insurance and cyber services for risk management.

Insurers are as well facing the challenge of bolstering market share, innovation and the levels of profits. For example; auto safety technology could lower the frequency of loss occurrences that would to a cut in the premiums contributed towards that risk, since business will see no need of paying for that policy, another challenge is the effects telematic data has on pricing and underwriting, and the existing balance between internet’s risks and benefits on cyber risks with relation to the connected devices

According to (Willis Towers), the marketplace will still favor buyers of insurance products, especially ones who already have risks management and risk transfers strategies. The high market capacity will enable insurance companies to absorb any catastrophic risk and losses that arose in 2016 in Florida, for example, those of Hurricane Mathew and Atlantic Hurricanes Significant insurance and reinsurance consolidations are expected in 2017, resulting from the decreasing property/casualty rates and profits on underwriting (Keefe). Property will continue going down.

Commercial auto still poses problems to the insurance companies, its capacity is low and very scarce, but it’s experiencing a steady growth. Auto growth is expected to shoot to 10% in 2017 from 3% in 2006( (Willis Towers). Companies are making little or no profits on commercial autos, it’s anticipated that the commercial insurance rates will decrease owing to the current adequate results and consistency in the market shares excluding commercial auto whose rates are anticipated to go down as has been the case ( (Keefe).

There will also be a challenge of widened talent that will result from the retiring groups, in 2017 its projected that 70000 professionals are due to retirement, insurers need to be innovative to attract new talents, to meet the needs of their clients. To handle the issue of talent gaps the companies should; while still solving the issue of customer needs and expectations they should focus on introduce new products as well as come up with new business models, automate most of their processes by using current technology, predict the possible cyber risks posed by hackers and try to mitigate their activities and finally rethink of better ways to attract competent workforce.

In conclusion, it’s clear that insurance companies should pay key attention to technology; today several technological advancements are taking place, to remain competitive insurers need to move with time, incorporating latest technologies in their working systems. Also cyber risk should be a top agenda for the insurance companies, cyber threats are on the rise and buyers are considering expanding their business coverage to include cyber risks management, companies should, therefore, make sure they too understand and have packages covering cyber risks. Also insurance companies should be well prepared to face the changes expected to come along with the change in political administration having in mind the United States is in a new political era under Donald Trump, changes brought about new reforms that come with new government should be predicted, and anticipated solutions put aside in case the reforms touches on the property and insurance industry.

Works Cited

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Keefe, Bruyette & Woods. (n.d.).

Willis Towers, Watson. “Insurance Journal.” Marketplace Realities Report (2017).