How migration patterns & court backlogs are impacting insurance
Changing migration patterns carry shifts in vehicle demand and driving, making policy adjustments for impacted individuals vital.
The pandemic popped up a number of issues across the insurance spectrum, stretching from cybersecurity and workers’ comp issues to traffic volume shifts. Garnering less attention are the long-term effects the insurance sector will see from migration to suburbs and rural areas and court backlogs.
As seen in 2020 during lockdown periods, the appeal of urban living waned and consumers moved from certain states into others, according to Mark McElroy, executive vice president and head of TransUnion’s insurance business.
“The other part is people are moving from more densely populated areas to less dense ones,” he explains.
As a result, the housing market boomed and continues to do so. Existing home sales reached 6.2 million in February 2021, up from 5.7 million during February 2020, and average home prices have grown 16%. McElroy notes blooming prices squeezed some first-time homebuyers out of the market.
For insurance companies, these mean changes in mobility and risk distribution across regions as population shifts continue. Additionally, changing migration patterns carry shifts in vehicle demand and driving, making policy adjustments vital.
Court delays hurt underwriting
With lockdown measures moving court dockets into holding patterns, which they are still trying to work through, the ability for underwriters to have full visibility on risks is reduced, according to McElroy. This is abundantly clear in the auto insurance market.
During 2020, the average time to adjudicate an auto incident increased by 16 days compared with the year prior, TransUnion reports. While some proceedings have resumed, many traffic-related cases remain in a backlog. In some states, the challenges have been deemed insurmountable and violations are simply being expunged, McElroy says.
“Think of it this way: A consumer received a multipoint speeding violation in June of last year, and it is still be adjudicated, and they are going for a renewal. If the consumer doesn’t share with me that they got a multipoint ticket, it is going to impact underwriting,” he says. “It’s about the assessment of a risk and knowing that there are those delays.”
One fallout from this has been a 9% reduction in personal auto conviction surcharge revenue. However, insurance companies can reduce the impact from this by turning to court records, according to TransUnion. By leveraging judicial records, insurers could see a 35% increase in surcharge revenue.
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