Insurance Industry

More than two-thirds of insurers credit predictive analytics with reducing issues and underwriting expenses, and 60% say the data has helped increase sales and profitability.

That figure is expected to grow significantly over the next year, as the inherent value of predictive analytics in insurance is showing itself in a myriad of applications.

Predictive analytics tools can now collect data from a variety of sources – both internal and external – to better understand and predict the behavior of the insured. Property and casualty insurance companies are collecting data from telematics, agent interactions, customer interactions, smart homes, and even social media to better understand and manage their relationships, claims, and underwriting.

Another closely-related tool is predictive modeling in insurance, such as using “what-if” modeling, which allows insurers to prepare the underwriting workload, produce data for filings, and evaluate the impact of change on an insurer’s book of business. The right predictive modeling in insurance software can help define and deliver rate changes and new products more efficiently.

Using the plethora of data now available, here are 10 ways predictive analytics in P&C insurance will change the game in 2020.

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Momentum Insurance is your one-stop for all of your insurance needs, from cars to homeowners, business and health, we’ve got your back. But what about those policies you don’t hear about every day? From celebrities to the just plain bizarre, here are 5 totally weird insurance policies.

Alien Abduction Insurance

Do you believe in aliens? For those who do, there are insurance companies out there that offer coverage in the event that “the truth is out there.” A few companies offer alien abduction insurance, with typical policies costing around $150 per $1.5 million in coverage. In fact, a London based firm has sold more than 30,000 alien abduction insurance policies throughout Europe. Of course, you’ll need to provide proof of the occurrence to file a claim. If you’re a believer, a little green could save you from the little green men.

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Insurance can be a complicated purchase. You’re not buying bread or milk. You’re buying a promise of protection that could potentially make or break your financial well-being. How do you know that you’re making the right choices about coverage? Are you sure you’re getting the best possible value for your dollar? The options can seem bewildering, and here’s the thing – where you buy it determines your future with that policy. You buy a house, you get a homeowner’s policy. You obviously want one at the best price, with the right coverages, and a great agent who is always there when you need help. What some people don’t realize is that their entire experience is going to be determined by the type of insurance agent they purchase their policy through – a direct agent or an independent agent. Direct agents, otherwise known as captive agents, are the everyday guys with the little gecko and the catchy jingle. An independent agent is an agent who partners with many insurance carriers (including the little gecko company) and offers coverages customized for you at the best price available. Independent agents are advisors, not salesmen. Here are 7 reasons why we believe you should choose an independent insurance agent:

They give you a choice

Independent agents represent many different insurance companies that offer a wide variety of coverage options and price points. Most on average sell for five to eight different insurance companies (just so you know, we partner with over 60, including every big-name carrier you’ve ever heard of). There’s no need for you to accept one quote from one company, and there’s no need for you to spend time filling out many different online applications to get your own quote comparisons. With their connections and their knowledge of the market, independent agents can often find a better value for your insurance dollar than you might find searching on your own. Agents do the shopping. You do the saving. They find you the right blend of price, coverage, and service.

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I was recently asked this question by one of our Momentum Insurance and Financial Services clients and thought I would share the answer here for our readers.

There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.

Some people have absolutely no idea that it’s used in the rate at all.

At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.

By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit as a result of an insurance company looking at it.

When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).

When does credit play a role in insurance rates?

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The COVID-19 pandemic, an unprecedented event in modern history, continues to leave its mark on societies and economies around the world and is actively changing the insurance industry. We have learned many lessons so far, the most poignant one being that we weren’t prepared for this.

The impact on the global economy has been devastating. The International Monetary Fund (IMF) says the global economy will shrink by 3%, the worst decline since the Great Depression of the 1930s. Many advanced economies, including the US, UK, Canada, France, and Germany are expected to enter a recession this year. The Dow and FTSE have suffered their worst quarterly drop since 1987. Oil prices have crashed as lockdowns have brought commuting and traveling to a standstill. In the US, the price of West Texas Intermediate (WTI) dropped below zero for the first time in history.

Amid the outbreak, businesses are trying to stay afloat, scaling down operations or shutting down altogether. The insurance industry, which supports businesses through crises and disasters, is one of the sectors at the forefront during this challenging time. And like everyone else, insurance companies are drawing lessons from the pandemic and learning to adapt.

Insuring against a pandemic is hard but not impossible

Pandemics like the coronavirus outbreak are inherently different from other natural disasters. While catastrophes such as hurricanes, earthquakes, and floods hit a specific region, pandemics have no geographical bounds. The timeframe of pandemics of highly contagious diseases such as COVID-19 is virtually unpredictable.

All this makes it harder for insurers to assess and accurately model the risks.

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