Insurers: Don't wait for something bad to happen to show up

Nobody will argue that it’s a homeowner’s job to protect their home. But insurers have as much incentive as anybody to make sure nothing bad happens to a customer’s property.

And while we all agree about the underlying logic here — less property damage equals fewer claims to pay for insurers and fewer repair costs for homeowners — insurers don’t always act like they want to prevent bad things from happening.

In fact, insurers too often have the reputation of showing up only when bad things happen.

This needs to change. Insurers aren’t powerless to help prevent damage. We can — and should — become partners in homeownership. That means working with homeowners to proactively identify and address potential issues so they don’t become an even bigger problem down the line.

Here are three ways insurers can help homeowners mitigate damage so that everyone enjoys better outcomes.

No. 1: Know the answer when the homeowner doesn’t

We don’t do ourselves any favors by asking for obscure information during the application process. It’s unlikely that a homeowner knows whether or not they’re in a flood zone — or even how to find out.

What’s worse: Including hard-to-answer questions in application costs us.

Frustrated customers will abandon the application altogether. Those who power through might make their best guess, which leads to inaccurate underwriting and can be wildly expensive in the event of a claim. And even if we catch these mistakes, we too often do it with human underwriters, which is a costly, time-intensive, and imperfect process.

The solution: Use all available data to pre-fill applications. Whether it’s public data scraped from the web, purchased data, or data pulled from browser cookies, pre-filling applications leads to greater accuracy and less frustration for potential customers.

Maybe even more to the point, our customers are expecting it. When was the last time you filled out your full address, or even credit card number, online? Obviously, switching to a pre-fill application will mean an IT overhaul, but that’s the cost of managing risk today.

No. 2: Subsidize prevention efforts.

The average cost of repairing storm damage to a home is $7,226. That’s why Kin partners with companies that provide wind mitigation inspections, and our customers are more inclined to do it. The inspection gives us and homeowners a rundown of how wind-resistant the home is and insight on how the home could be improved. In turn, we can offer easy and substantial discounts for the customers’ preventative measures. Better wind mitigation also means lower claims costs when a storm inevitably hits.

There are dozens of ways to subsidize prevention, which as developing partnerships around smart-home technologies that will detect pipe leaks (like Flo) or break-ins. Partner with folks who offer tree inspections to prevent fallen-limb damage. Develop a network of trusted service providers you can refer your customers to so they don’t have to worry about paying for sub-par work when they seek home repairs.

Subsidizing prevention can go beyond partnerships, too. As partners in homeownership, we can provide educational materials that empower customers to protect and maintain their homes. Fewer than 40% of homeowners do regular maintenance, often because they don’t know how. By providing knowledge and resources, we can help our customers minimize their risk exposures.

No. 3: Cut your costs and pass along the savings.

Proactively making underwriting stronger and customers’ homes safer will translate to lower costs for insurance companies. And we should pass those savings along to our customers.

In addition to its reputation for showing up only when bad things happen, the insurance industry is often suspected of hoarding profits for itself while doing everything it can to avoid paying customer claims.

We know this isn’t what really happens, but we have to work to change the public’s perception. One way to do that is to be the bearer of good news: update processes and systems to reduce costs, lower prices to reflect the savings, and tell customers why they’re saving money. This will help retain existing customers and attract new ones.

An insurer is only as strong as its weakest customer.

Insurers can’t know what’s going on at every home they cover 24/7. But we can take steps to be an ongoing presence in our customers’ homes. When we make it easier for our customers to report information accurately, detect and improve areas of risk, and save money, we make their homes safer and their lives better. That translates to better outcomes for everyone.

Sean Harper (Sean@kin.com) is the co-founder and CEO of Kin Insurance, an independent property insurance company that uses big data and machine learning to provide quick, fair and accurate insurance coverage for homeowners. These opinions are the author’s own.