It was a record breaking attendance at the AIRROC Spring Membership Meeting on March 5 & 6. Hosted at the offices of Norton Rose Fulbright in New York City, members held meetings and also heard from great education panels. Read on for highlights for this particular session.
Karen Borg and Randi Ellias of Porter Wright Morris & Arthur LLP moderated a panel discussion including Adam Hoover of Jetty Insurance and Adam Troyer of Aon Reinsurance Solutions that focused on developments in the on-demand, usage-based, and micro insurance markets.
Mr. Troyer led off the discussion by describing the differences between the three types of products. On-demand products are pay-as-you-go products that may permit the consumer to toggle coverage on and off. Usage-based products set premium based on time-on-the-risk and data regarding behavior during time-on-the-risk. Micro insurance products cover consumers during, and set a premium based on, the time that is actually spent on risk. Auto insurance is perhaps the most widely known example of usage-based insurance, but these types of coverages have expanded to encompass a wide variety of personal and commercial lines, including homeowners’ insurance, health insurance, commercial auto insurance, and workers’ compensation, among others.
Mr. Hoover pointed out that one of the biggest barriers to entering the market is the difficulty that companies have in marshaling the available data. The sheer volume and velocity of data collection raises practical issues concerning how to parse the data to extract relevant underwriting information. Mr. Troyer noted that companies also had to carefully evaluate the accuracy and validity of the data being used to underwrite these products. Finally, insurers must be careful to protect the privacy of customer information.
Offering on-demand, usage-based, and micro insurance products permits an insurer to make more pricing options available to the customer. The underwriting process is frequently quicker and easier, and customers have the benefit of tailoring coverage to the period for which the coverage is needed. Insurers and customers also reap benefits from a claims perspective, as the data available can provide objective truth concerning the circumstances of a loss, reducing the potential for fraud and leading to quicker claim payments. Both Mr. Hoover and Mr. Troyer acknowledged that the question of who owns the data relating to a loss – the insurer or the customer – was unsettled, with Mr. Troyer pointing out that at least one insurer offering a usage-based product did not require the customer to sign over rights to the data as a condition of coverage, but only sought access following a loss. The panel noted that, to date, no legislation or case law has addressed the issue, nor has the industry developed its own standards. Accordingly, access to data for the purpose of resolving subrogation claims remains an unsettled question.
Finally, Mr. Hoover and Mr. Troyer discussed what they saw as the next phase of on-demand, usage-based, and micro insurance. They agreed that the next wave of products would likely be focused on property risk, such as earthquake, fire, and flood, as companies have begun to move toward analyzing parametric data relating to those perils.
Refer to page 29 in the Spring 2019 issue for article. https://www.airroc.org/assets/docs/matters/AIRROC-MATTERS-Spring-2019-Vol-15-No-1.pdf
