In 2019, insurance innovations will enable faster recoveries

In 2018, we saw the insurance industry evolve with advancements in real-time data capabilities that have paved the way for faster, more-streamlined payouts. Traditional models were put to the test as a cluster of natural disasters ranging from hurricanes to wildfires wreaked damage from coast to coast, leading to an elevated conversation around how insurance should adapt to help our communities recover faster. With this, let’s dive into the trends we anticipate in insurance and recovery for 2019.

The unbundling of insurance

With an adult millennial population more hesitant to spend their money and growing expectations for customized, on-demand products, 2019 will see more affordable, more personalized insurance options become available. By offering people slices of coverage where they see the most need, more consumers will get coverage for particular risks.

When Hurricane Florence struck the Carolinas earlier this year, the storm caused nearly $20 billion in uninsured flood losses as most homeowners’ policies for residents in the area excluded flood coverage. Cases like these have highlighted the importance for additional standalone or supplemental coverages, particularly in high-risk areas. In 2019, we’ll see this addressed with more personalized coverage options as the industry leans towards unbundling.

The unbundling trend reverses the “make me whole” psychology of traditional insurance, instead offering just-enough, just-in-time, and only where it’s needed. For many Americans who might otherwise choose to forego coverage, personalized and accessible options can be the “make or break” factor for disaster recovery. When individuals have enough to jump-start their own recovery process, they’re more likely to stay in their community to participate in the rebuild, and in turn, community recovery speeds up, too.

The expansion of parametric models

The next few years will be a transition time as AI and real-time data continue to be incorporated into insurance to optimize processes, detect potential risk and shorten payout times. One example of this is parametric models that operate off of real-time data to distribute payouts triggered by the occurrence of an event of a pre-determined measurement. Importantly, these data-driven processes also provide transparency to address the growing consumer concern of subjectivity in claims processes, and with more available data sources, we can expect to see this movement progress.

Social media and connectivity

Looking forward, increased use of mobile and social technology will also contribute to improved recovery speeds. In addition to facilitating communication and payout processes, our connectivity directly affects how a community recovers from disaster. Social media speeds up resource sharing and collaboration in times of disaster.

For example, the response team from the 2018 fires in Northern California were able to quickly communicate when they had reached their capacity for donated supplies. Social media also provides a quick way for victims to check in with family members, especially when phone lines are down, and for authorities to verify the safety of missing individuals. After the recent earthquake near Anchorage, Alaska, Facebook activated its Safety Check feature to allow residents to easily communicate their welfare status.  The stronger our social capital, the faster our communities will recover.

Increased connectedness also effects how we help other individuals in need. Social media fueled recovery efforts for the California wildfires, with Facebook matching up to $500,000 of donations, individuals all over the world contributed to aid an area in need. This trend is indicative of a larger movement towards a connected protection system where individuals in one community could band together and purchase aid coverage for another region, creating a global safety net of protection.

To sum up, in 2019, insurance will continue innovating toward greater resilience. From faster payouts to more customized coverage, and a stronger connectivity across communities, it will become a more accessible resource in anyone’s financial toolkit.

Kate Stillwell is co-founder and CEO of Jumpstart. Contact her at kstillwell@jumpstartrecovery.com.