What 2021 May Hold for the Personal Lines Insurance Market

Michael Miller | January 14, 2021

Illustration of painter on a ladder painting 2021 on the wall.After a year full of uncertainty, making predictions about 2021 may seem futile. While the future is never certain, there are a few personal lines market trends for you to watch in 2021. Some are the direct result of the events of 2020, while others have been in the works for several years. All of them are things to keep your eye on at your agency as you plan for 2021.

2020’s Auto Premium Cuts May Not Affect 2021

Profits Last year, as the pandemic forced people to work from home, many auto insurance carriers offered policyholders rebates and rate cuts. These carriers certainly lost premiums due to this goodwill effort. However, experts believe carriers will not feel the pinch for long, as the loss in premium will likely be offset by a decrease in accident claims due to fewer people being on the road last year.

Policy Customization Will Continue to Increase

From Progressive’s Snapshot product to State Auto’s 360 offering, telematics has been a personal lines insurance buzzword for years. Telematics devices help policyholders save on their premiums as a reward for good driving habits. They are also the first wave in a trend offering policyholders more customization in their personal lines coverage.

Experts at Deloitte believe that as more people work from home or live and work in urban areas, carriers will adjust their coverage models. They may choose to move away from policies framed around coverage for individual vehicles to general coverage that includes all personal modes of transport, such as bicycles.

The trend toward more customization is great news for independent agents. We have an advantage here, since offering our customers custom solutions is what we do best.

Parametric Insurance May Make Its Debut

Parametric insurance has been common in catastrophic insurance for years. It made its entry into the commercial lines market in 2020 in response to the pandemic. Instead of insuring for general catastrophes, parametric insurance insures against a specific type of catastrophe. Rather than general earthquake coverage, for example, a parametric insurance policy may cover $100,000 in losses for a magnitude 5.0 earthquake.

Because of their specificity, parametric insurance policies eliminate the claims process and often have faster payouts than traditional insurance policies do. They allow carriers to precisely predict their costs if a covered event occurs. For these reasons, experts believe parametric insurance coverage may make an appearance in personal lines markets in the next few years.

Sales and the Claims Processes Will Move Online

Online insurance sales have been gaining momentum in the industry for years, and the pandemic made online sales an even larger priority for carriers. But the industry did not foresee a demand for virtual claims. The pandemic forced many carriers to offer virtual claims adjustments to avoid unnecessary in-person interactions. The move to online sales and claims is unlikely to go away once the pandemic has waned. Carriers will continue to move operations online and roll out new technologies to make the sales and claims processes smoother for customers, agents, and adjustors alike.

Natural-Disaster Related Claims Will Continue to Rise

2020 was the hottest year on record. Changes to the global climate will continue to increase the likelihood of extreme weather events. Expect disaster-related claims to continue to rise in 2021, as they have the last few years. Now is the time to get your customers insured against flood damage.

As you plan for 2021, keep your eye on these trends while also planning for the unexpected. Protect your agency against uncertainty by watching the market and expanding your relationships with your Smart Choice® carriers. The more carrier relationships you have, the more likely you’ll have a solution for customers when the unexpected arises. Speak with your State Director to discover what personal lines carriers you can add to your agency this year.

 

Cover of Smart Choice Magazine 2021 Issue I, The Personal Lines IssuePlanning for the Future is Always Worth Your Time

Change is something we're all reluctant to face, even in the best of times. Mostly because it is uncomfortable and foreign. Last year was full of discomfort, fear, unknowns, and an entire host of other emotions. It was also full of new triumphs, and human growth. We can use our newfound adaptation skills to continue reinventing how we do business, why we do business, and how we can translate these changes into more success professionally. Check out the 2021 Issue 1 of Smart Choice Magazine for more.

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