Q&A: Industry trends to follow in 2019

Just a few days into Q1 2019, there is much to speculate about what the insurance industry could expect to see in the year ahead.

To get a professional’s perspective, PC360 asked Joe Beneducci, chairman, president and CEO of ProSight Specialty Insurance, to share his insight into what he believes may be the biggest trends and themes to look out for in 2019.

NU: What are some of the biggest trends you believe will be a focus in 2019?

Joe Beneducci: Partisan politics by both sides of the aisle in Washington, foreign trade issues with China and interest rate uncertainty are all contributing to instability for the investment markets and continue to strain our economy. Progress with any or all of these 3 things will be essential to the investment markets regaining stable traction. We need leadership from Congress and the White House that demonstrates a strong bias for our country’s long term success rather than simply being seen as winning at the expense of the other party.

NU: Breaking it down by sector, what would say some of the biggest issues and trends will be in construction and workers’ compensation in 2019?

Beneducci: The construction industry is strongly linked to interest rates. While interest rates saw increases in 2018, I think we will see some moderation in the Fed’s ambition to increase interest rates which should help improve confidence in construction starts. While workers’ compensation is beginning to show signs of stress in several states given continued downward pressure on rates, payrolls should continue to be strong in 2019 which should keep exposure levels adequate.

The combined impact of these forces will create very different competitive circumstances between different states. Insurance carriers will be forced to maintain more precise discipline across various states to ensure they achieve sufficient profit levels for the future.

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NU: What should insurers be wary of or focused on heading into the new year?

Beneducci: Varied levels of profit potential in workers’ compensation and a continued trend of heightened catastrophe exposures will create challenges for insurance carriers in 2019. On a positive note, carriers have increased the opportunity to use more sophisticated technology and data mining to assist clients in managing their risks and reduced loss exposures.

More effective use of predictive modeling and more advanced uses of technology such as telematics and biometrics will afford carriers more valuable data to support their clients ever changing needs.

NU: Any comments on trends in InsurTech you see changing or evolving in 2019?

Beneducci: There’s a lot that will evolve with InsurTech in 2019 but a few of the biggest developments will be related to the maturity of a relatively immature space. A growing list of InsurTech companies will begin to see their burn-rates become stressed. Many business concepts that received start-up funding will start to lack sufficient funding to keep their “ideas” alive and we will begin to see real contraction in InsurTech funding while much of the true start-up funding will dry up.

It’s also going to become much harder for InsurTechs to continue to defer evidence for how their business model can be successful without turning a profit. Many InsurTechs have been afforded generous honeymoon periods to construct their business models but time is running out for many of these businesses if they can’t confirm their potential with profitable results.

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