Forecasting Insurance Trends for 2017

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With 2016 in the rearview mirror, many brokers, agents and underwriters are reviewing risks and opportunities that will arise during the new year.

Increased political uncertainty, the potential for more interest rate hikes and regulatory changes, as well as sluggish global economic growth mean it’s crucial for individuals and companies in the insurance industry to keep their fingers on the pulse of what might potentially unfold in the new year. While it’s impossible to truly forecast what will happen, here are some trends that are worth watching as 2017 kicks into gear.

Economic Headwinds

Although the country’s economy has largely been improving in the past few years, growth has not necessarily been as robust as many would like and external financial factors are weighing on the industry. Ernst & Young’s 2017 “Property-casualty insurance outlook” compiled some critical numbers regarding the economic growth and financial state of the insurance sector for the past year. For instance, the Insurance Information Institute noted that net investment income dropped to $26.5 billion through the first six months of 2016 from $31.6 billion in the first half of 2015 due to the continuation of the Federal Reserve’s loose monetary policy. This represents a 16 percent drop in net investment income for the industry.

In light of continued sluggish gross domestic product expansion, the insurance industry and the property and casualty sector, in particular, is expected to face additional uncertainty with decreased expectations for premium growth in the new year. EY reported on a forecast from Munich Re that projected real premium growth in the North American property and casualty market to reach just over 1.5 percent in 2017 after an approximate 4 percent growth rate in 2015.

Cybercrime Isn’t Going Away

The past few years have seen a surge in the number of data breaches at a variety of companies, from retail to healthcare, no sector appears safe. Criminals targeting sensitive financial, corporate and personal data will be ramping up their efforts to remain ahead of the cybersecurity curve. In addition to encouraging clients to implement robust cybersecurity measures to combat these digital threats, brokers and agents can continue expanding their cyber liability product offerings.

As noted by Property Casualty 360, annual gross written premiums for cyber insurance is expected to balloon from its current $2.5 billion number up to $7.5 billion by 2020. This could act as a major growth engine for brokers and agents, provided they’re able to educate their clients on the risks posed by a data breach or other cybercrime.

Cybercriminals will continue to improve their illegal methods of obtaining sensitive digital data in the new year.

The Rise of InsurTech

There are several drivers causing disruption in the underwriting sector, including the rise of the Internet of Things and a surge in start-ups offering insurance technology, or InsurTech, solutions. The IoT is providing more advanced analytics and telematics to assist in the actuarial process, with the promise of lower premiums and better risk management. Meanwhile, start-up funding from seed, Series A and angel investors is pouring into InsurTech companies, demonstrating venture capitalists’ eagerness to invest in this technology.

These technologies aim to accelerate speed-to-market, provide growth options and boost the relevancy of insurance products to mitigate risks. However, while InsurTech solutions might be innovative and push the needle, experience and personal client relationships will remain a key component of providing insurance coverage.

Regulatory Changes

The change in leadership in Washington may potentially lead to regulatory modifications, with issues ranging from cybersecurity and the National Flood Insurance Program expected to be the first to be affected. While nothing is currently in the pipeline, brokers and agents should keep their ears to the ground to be ready for any changes. Although regulatory revisions typically take some time before agencies and institutions implement the alterations, brokers, agents and underwriters staying on top of these changes will keep their firms competitive and ensure their operations aren’t up-ended when the any new regulations go into effect.

“Active shooter events have have surged in the past 15 years.”

Active Shooters to Remain a Threat

Unfortunately, the news of active shooters in a public place, such as a school, theater or club, will remain a grim reality in the new year. The sad truth is that these events have surged in the past 15 years, and, as the Washington Post noted, “We live in an age of public shootings.” While these tragic incidents are impossible to predict and difficult to prevent, brokers and agents working with companies and institutions that have public access, should be sure their clients have an active shooter insurance policy in place to protect their interests in the aftermath of one of these horrific events.

Who Can Help?

The McGowan Companies provide customized and innovative product solutions for a wide swath of commercial sectors. With so much uncertainty swirling around in the insurance sector, brokers and agents who partner with McGowan gain access to industry experts with years of experience in the excess and casualty sector.

From cybersecurity liability to active shooter insurance, McGowan Companies provides tailor-made product offerings that ensure commercial enterprises have the protections they need to keep their businesses safe and secure in 2017 and the years to come.

Republished with permission of McGowan Program Administrators. View original article.

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