Through the looking glass
Even though we’re in a new year, some old insurance claims issues bear watching.
While 2020 was an unusual year, it highlighted many of the things the insurance industry is doing well and some areas where it could see some improvement.
The coronavirus expedited the use of InsurTech for many companies and they were able to serve their policyholders with very few interruptions. The transition from working in the office to operating remotely was fairly painless for most insurers. We used technology to report claims, investigate them, determine coverage and make payments. Some carriers are even weighing the continuation of remote work for many on their staff. Plans to start bringing people back into the office will be implemented judiciously.
While technology was able to serve both carriers and their clients, the number of COVID-19-related claims highlighted the importance of reviewing policy language for exclusions and coverage determinations. Vague language creates questions for both adjusters and policyholders, and without a careful review and update, carriers could be liable for covering claims they have not priced or collected premiums for in advance. Already the courts are making those determinations for insurers in several markets and this could set an unwanted precedent.
COVID-19 lawsuits are one of just several issues we’ll be watching in 2021. We expect to see a rise in the use of parametric insurance as carriers seek ways to set accurate reserves for major losses and policyholders select coverage that will provide faster payments in the wake of those claims. While not a total loss solution, this type of insurance addresses key obstacles for insurers and claimants.
Another issue we’re monitoring involves the rapid growth of the cannabis industry. While we’ve been watching it for some time, the coronavirus pushed it to the back burner in 2020, but we anticipate significant growth in this industry in 2021. For insurers, this means an increase in coverage is needed for grow operations, manufacturers, distribution chains and outlets, as well as retailers. While marijuana sales were over $16 billion in 2020 according to BDSA, they reported that many states have surpassed their growth projections. As the cannabis industry expands, so do the risks and the number of claims.
Technology will continue to play a significant role in the claims process as it becomes more automated and ‘touchless’. While human interaction will be vital for specialty and complex claims, technology will enable insurers to focus on customer service and other critical aspects of the claims process that an algorithm cannot provide.
Welcome to 2021. Let’s hope it’s a little calmer and quieter than its predecessor.
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