This article was originally published in Independent Agent.

With continued pressures from the coronavirus pandemic and changing weather patterns following us into 2022, scheduling meetings with your personal lines customers may be more important than ever. Whether it's reviewing relevant life changes, understanding how the pandemic has impacted individuals and families, or simply discussing coverages they may need going forward, an annual needs assessment is a great opportunity to showcase the experience and value your agency brings to your customers.

As you prepare for these conversations, here are five questions you should plan on asking: 

 

1. Have you made significant improvements to your home or are you planning to? 

The Hanover's 2021 “Home Renovation Report" found nearly 70% of homeowners had plans to improve their homes over the next year. That's not surprising, given the increasing amounts of time people have spent at home due to COVID-19.

As a result of the pandemic, many homeowners added study spaces for remote learners, offices for remote workers, updated family rooms, expanded outdoor gathering spaces and more. These kinds of upgrades—in addition to kitchen or bathroom renovations, installing a deck, building an addition, finishing a basement or updating a cooling system—can all impact insurance coverage needs. Significant home improvements should prompt homeowners to reassess the coverage A limit of their homeowners insurance policy.

The report found of those who made major home renovations during the pandemic, 40% failed to contact their insurance agent to ensure their coverage reflected the home's updated value, making it important you proactively ask your clients about any changes.

This also is a good time to ensure the home is covered at its replacement cost. Should it ever be a total loss, most homeowners will want to be insured for the cost to rebuild. This is especially true given the recent increase in labor and material costs. With an increase in a home's replacement cost, agents may want to consider whether a customer should be moved to high-value home insurance protection. Coverage designed for customers with more complex insurance needs can offer more value, added benefits and customized protection.

Beyond coverage A, homeowners may consider other coverages as well. For example, they may contemplate equipment breakdown coverage if appliances were upgraded, including water heaters, security systems, refrigerators, central air conditioning systems and more. This coverage can potentially address costly repairs or replacements that may be needed if those systems and appliances were to fail. 

 

2.  Are you working out of your home, have started a home business or are renting your house? 

There are 31 million small businesses in the U.S. and more than half are home-based, according to the U.S. Small Business Administration—and during the pandemic, more are setting up shop than ever before, leaving many of them open to financial risks not covered under standard homeowners policies.

Whether it's a business with foot traffic located within a primary residence, inventory stored at the home or a business that simply requires liability protection, there are several options to help protect these homeowners.

Similarly, homeowners who rent out their houses as short-term rental properties also can be protected by home-based business coverages. Some insurance companies offer home-based business coverages as endorsements to homeowners policies, making it more efficient, cohesive and cost-effective for both the customer and the agency. If home-based business coverage is added, customers may also want to consider an umbrella policy for additional protection.

Additionally, cyberattacks continue to grab the headlines. With that in mind, home-based business owners should consider cyber coverage that can help with system restoration, expert advice and data recovery costs for computers and connected devices in the event their home network is breached. Such coverage may also assist with online fraud that results in direct losses, such as phishing schemes or identity theft and unauthorized use of credit cards or accounts.

 

3. Have you considered how to protect your assets from extreme weather events? 

Severe weather events are becoming increasingly common. In 2021, there were 20 weather disasters in the U.S. with losses that exceeded $1 billion, according to the National Centers for Environmental Information (NCEI). More and more, weather patterns are changing, resulting in natural disasters in geographic regions that typically haven't been susceptible to them.

Agents can educate customers on preparedness by talking with them about completing home inventories, ensuring items like sump pumps are proactively installed and preventatively maintained, and offering advice to help protect their properties. The Insurance Institute for Business & Home Safety (IBHS) is a great content resource.

Customers may benefit from water backup coverage for damage caused by backed up or failed drains—the third-most costly claim, behind fire and liability lawsuits. When siding or a roof is damaged, sometimes the original materials are no longer available. Rather than having mismatched materials, siding or roof restoration coverage can help keep a home's exterior uniform. For account customers, if a storm damages their vehicle and their home, waiver of deductible coverage could help save them from paying multiple deductibles for one event.

 

4. Would you like to combine all of your accounts with one insurance company? 

Customers who have their personal lines policies with a variety of insurance carriers can potentially benefit when combining their policies with a single carrier. Doing so allows customers and their agents to efficiently address additional coverage needs, such as motorcycle or boat insurance, and may provide some multi-policy discounts too.

A common effective date and a single company to call for claims improves ease of use for the customer and the agency, while boosting retention. Data from The Hanover shows account business has a retention rate of up to 95%, significantly higher than split and monoline accounts. The data also shows that account business has about 3 times higher premiums and 5 times greater expected lifetime values than split or monoline accounts.

 

5. Can we add an email address and cell phone number to your account? 

This is a simple one, but ensuring customer contact information is up to date can help make it easier for an agency to conduct periodic touchpoints with customers. Customers can then receive communications from their carriers to manage their accounts, sign up for paperless billing and more. This can help boost an agency's retention.

The Hanover's research shows clients who receive two or more communication touchpoints a year have a retention rate that is 10 points higher than those that do not.

The COVID-19 pandemic brought a lot of changes and challenges for many individuals and families. As you're connecting with your personal lines customers this year, these five questions can help prevent gaps in coverage and build account business for your agency. The consultation an independent agent can offer—a personalized assessment of customers' unique needs and risks—is an important value-add over direct carriers.

Taking some time to get up to date on any changes your customers have made can help set them, and your agency, up for success.

 

About the author

Paul James is national sales leader, personal lines, at The Hanover Insurance Group Inc.

As published in Insurance Journal

Asset managers and depository institutions have a wide variety of organizational structures and a myriad of exposures, making it challenging for independent agents to design coverage plans that effectively address their evolving risks. Often, the best approach is to work with a few insurers that offer broader, more flexible coverage options, streamlining the approach for the agent and the customer.

Unique and complex exposures facing financial institutions

The following are some key risks financial institutions face as a result of their unique business activities:

• Consumer lending: Mortgages and vehicles, coupled with repossession or foreclosure risks, create errors and omissions exposures and risks of impartment of collateral
• Commercial and alternative lending: Concentration of assets in classes not always familiar to a financial institution can add exposure to litigation and large charge-offs, potentially impairing balance sheets
• Consumer legislation: Resulting litigation can pose financial and reputational risks, and exposure to potential action by regulatory bodies
• Possession of personally identifiable information: The more personally identifiable information held by an organization, the higher the risk of loss resulting from a breach
• Movement of funds via transfer: Electronic funds transfers and newer and innovative electronic payment methods, may expose an organization to loss of funds, litigation and difficult customer relations regarding responsibility and security of funds

In addition, a financial institution’s structure and location can pose a risk to stability and longevity. Public, private, mutual, pink sheet, over-the-counter and nonprofit structures can be formed as state or federal charters, impacting regulatory and legal exposures. Filing structures differ between formations, as well, creating different reporting requirements, and the location of an organization effects the requirements, laws and regulations that must be followed.

Challenges of splitting between carriers

While many agents would prefer to place a financial institution’s policies with a single carrier, the insurance market is not always conducive to doing so. When an organization’s policies are split between carriers, however, it can expose the organization, its leadership and the insurance agent to risks.

When most carriers develop policies, they are created to be internally consistent. However, using multiple carriers can cause challenges, with some using proprietary forms and others using commercial forms with proprietary endorsements. Using multiple carriers can result in inconsistent policy language and coverage intent. Unfortunately, sometimes it takes a claim to highlight gaps in coverage.

We commonly see property and casualty coverage separated from other coverages, and sometimes lender-placed programs are used. An event could trigger coverage in more than one coverage part and policy. Add to that, when the policies are split between carriers, it can lead to unintended gaps in coverage and complex negotiations between carriers.

Similarly, there are notice concerns related to claims generated by direct causes of loss that then lead to lawsuits, triggering coverage under bond and executive liability policies. Finally, policyholders may have multiple carriers adjusting claims, indemnifying and or defending portions of one loss.

Finding the right carriers

Not all carrier partners are the same. It is difficult for agents to “stitch together” an insurance program using policies from a number of carriers. The challenge includes coordinating between markets, securing correct and complete application answers, analyzing endorsements and coverages, and perhaps most importantly, fully mastering what is covered under which policy and with which carriers.

The key is in selecting the right carrier partners. Carriers with both standard and specialized solutions can offer broader, more cohesive protection for clients. This helps reduce coverage gaps for customers and allows agents to become familiar with the forms, understand program nuances and build books of business that create deeper relationships and stronger marketing alliances.

The Hanover has built a coordinated offering for its agent partners with an appetite and policy language that aligns well between standard and specialty coverages. This offers agents the ability to write the broad range of customers’ exposures with a single carrier, helping to reduce coverage gaps and provide a more seamless client experience. By partnering with the right carriers, independent agents can help build cohesive coverage plans that best protect their financial institution clients and bring true value to their customers.

 

About the author

Helen Ryan Saviano is The Hanover’s president of management liability. With more than 25 years of industry experience, she is a proven leader with expertise in organic, ground-up business development, resulting in profitable returns on investment and revenue growth.

As published in Insurance Journal

There was a time not long ago when most small businesses were well protected by standard lines coverages such as business owners policies, workers’ compensation and auto. Those days are gone.

The continuing evolution of small businesses, especially in a post-pandemic environment, means coverage requirements are evolving, too. The increased need for specialized coverage options such as cyber, employment practices, errors and omissions, and more, is resulting in a new and fast-growing market segment – small specialty.

Beyond standard lines

This new segment and the expanding service expectations of customers are creating a service challenge for independent agents – and an opportunity for carriers to provide efficient and effective solutions for their agent partners by expanding their servicing capabilities.

Unfortunately, while carriers have been long adept at servicing BOP-focused small commercial business and standard lines in service centers, they largely have been unable to service the small specialty market. This forces agents to do one of two things – either split the servicing of their small business accounts, placing standard lines business in a service center and retaining servicing responsibilities for small specialty policies, or service the full account on their own.

Generally speaking, neither is an ideal solution for agents. After all, agencies work with service centers to increase efficiency, broaden their service capabilities and reduce expenses. But are agents truly getting the full benefit if only half of an account is managed in a service center? Often, the answer is no. With the shift to a more account-focused approach to insurance, service centers must be equipped to manage more complex policies for small businesses in a holistic way.

Specialized service

Small businesses with specialty exposures can be better served when carriers take an innovative and collaborative approach, rethink their models to best serve agents and expand their servicing capabilities to address this new market. Customers don’t think of their small business risks in the traditional silos of small commercial and specialty – they want end-to-end insurance solutions and servicing.

Small commercial service centers that service both standard and specialty lines offer many benefits to agents, helping to provide an all-in-one experience for their customers, while improving their economics and saving valuable staff time.

Plus, with a broader view of small business customers and their evolving needs, service centers are well-positioned to identify gaps in coverage. In this respect, service centers can offer significant value – and a competitive advantage.

The right partner

It is important to note not all services centers are staffed by licensed insurance professionals, and this is an important consideration to make as businesses’ risks continue to evolve. A service center whose staff has a deeper understanding of the risk landscape is one that can help round out accounts and recommend important coverage enhancements – all of which also benefits agents.

That’s why working with a service center that can offer this higher level of expertise can make all the difference. Carriers like The Hanover can effectively service all of lines of risk for small businesses, providing exceptional service to customers and generating agent growth.

Learn more on Agent Solutions

 

About the author

Erin Fenlon is The Hanover’s vice president, small commercial operations. With more than 25 years of property and casualty experience, she is a proven leader with expertise in the transformation of operating models, technology and processes, resulting in successful profitable growth and modernization of the user experience.

As published in Insurance Journal

The explosive growth of digital marketing has encouraged companies to increasingly lean into social media as a way to reach their audiences. This has resulted in a flood of new social media ad content—and a lot of sharing music, imagery and pictures.

But who created that content? This is where a lot of companies, ramping up or creating their social media marketing strategies, tend to overlook a significant risk: the potential for copyright infringement. Media such as imagery, music and photography is intellectual property and is owned by its creator, who must grant permission if their work is being used. IP is generally defined to include a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc. Many social media posts include music and songs or pictures that may be the intellectual property of others; use without permission can lead to copyright infringement claims.

There is often a cost associated with the use of content that is owned by another person or entity —and additional, often significant, costs, if the unpermitted use results in a lawsuit.

This can be a tricky subject, and not just for social media novices. In one high-profile incident, pop star Katy Perry found herself facing a legal challenge in 2019 for posting a photo of herself on her Instagram page. What could possibly be wrong with that? It turns out that the photo was owned by the photographer who took the picture, who sued Perry for $150,000.

So, how can independent agents help their customers navigate the new world of social media marketing? By helping raise awareness for these risks. A good first step is to educate customers that IP risks should be reviewed for infringements and that they can lead to costly claims in the event of a violation of intellectual property.

Content owned by influencers

This matter is becoming further complicated as companies increasingly entrust social media content creation to outside “influencers.” A social media influencer is an individual who utilizes a variety of social media platforms to express their opinions on specific brands or products, thereby influencing their captive audience.

When an influencer shares images, music or videos on behalf of a company, the company assumes liability for the contents of that post. This includes any potential copyright infringement, and this is a major risk when working with influencers. According to a study published in 2020, only 14% of influencer posts sampled were fully compliant with copyright guidelines.[2]

And despite the fact that many instances of copyright infringement are often accidental, they can still be costly. Damages are often based on the number of instances of infringement, generally averaging between $750 to $30,000.

This is where agents can help business owners and leaders understand their responsibilities to ensure the content on their social media platforms is used in a compliant manner. Further, they need to understand that if content is being shared or leveraged from other sources, they must take the proper measures to obtain approval for use.

Help businesses avoid social media pitfalls

Social media marketing is a fast-growing, creative and evolving field. And, with a little diligence, there are simple steps companies can take to avoid copyright infringement. As an independent agent, you can offer two important tips to your clients on how to help avoid intellectual property violations and possibly steep financial costs.

1. It’s probably copyrighted. Assume that content such as songs, videos and images are protected by copyright — and never assume that the use will go unnoticed. To ask permission to use the content, businesses can try to locate the owner of the work (or performance rights organization, such as ASCAP or BMI) and receive permission. In the event permission isn’t obtained, the use of stock music and photography services – work offered for sale – is a convenient and cost-effective alternative. These are materials that can be purchased for use and others that are in the public domain and are free to use. These options require some research and represent an expense, but doing it upfront helps avoid an unexpected claim later.
2. Develop a social media policy. Agents can advise their clients to work with legal counsel to develop a social media policy to ensure all content creators—influencers and employees—understand the importance of maintaining compliance and document controls to protect the company. The policy, at a minimum, should specify roles and responsibilities, applicable regulations and legal risks, security risks, accountability, and how to report concerns.

Helping businesses understand the ever-evolving risks they face and the importance of taking a proactive approach to risk management enables businesses to prevent potential claims and highlights the value your agency delivers.

Learn more about Risk Solutions

 

About the author

Christina Villena joined The Hanover in 2014 and leads the company’s loss control and risk management and mitigation efforts for commercial lines where she has focused on driving innovation throughout the risk solutions department in the assessment and service delivery to the company’s commercial lines, specialty and personal lines policyholders.

As published in Insurance Journal

Workers’ compensation claims can significantly impact a business’s productivity and bottom line. Out-of-work employees cause company leaders to deal with the burden of a smaller workforce, training replacement staff, and taking additional measures to ensure employee safety. With the National Council on Compensation Insurance reporting the average cost for a workers’ comp claim at $41,003, the stakes are high. For businesses looking to protect their employees and reduce injuries, emerging technologies play an important role. Independent agents have an opportunity to advise businesses on risk mitigation through partnerships with carriers that are investing in new ways and advanced technology solutions to reduce risk to workers.

Understanding workplace risks

One of the leading workers’ compensation risks is ergonomics-related incidents, such as manual material handling and repetitive upper extremity movements that cause musculoskeletal disorders, strains or sprains. In 2020, the Bureau of Labor Statistics reported 28% of manufacturing injuries were related to strains, sprains and tears. Mitigating these types of injuries helps to protect employees and reduce the need for businesses to use temporary help.

Leveraging AI technology to reduce risk

Emerging technologies, from water sensors to telematics and more, are having a broad, positive impact on insurance coverage risk reduction. Many companies have already seen the advantages of automation powered by AI technology, and can now reap the benefits this technology offers in reducing workplace injuries. Examples of advanced technologies to mitigate risk in the workplace include:

• Ergonomic wearable sensors – These sensors track an employee’s movements throughout a job task, including throughout the day, to record risk. Ergonomic video analysis, using artificial intelligence, enables real-time data to be analyzed as an employee completes a task or series of tasks. By collecting the movement data and assigning a risk score, loss control experts can provide recommendations, best practices, and guidelines to reduce losses. The technology also provides immediate feedback with tips for the employee to modify a task or body position to reduce the potential for injury.
• Video analysis – The use of technologies such as wearable sensors and video analysis have significantly improved the field of ergonomics and workers’ compensation. For decades, loss control experts and ergonomics professionals used time-consuming manual observation methods to complete job evaluations, oftentimes requiring an expert to be on-site to evaluate workers’ risks while performing their job tasks. This creates scheduling challenges for the customer since they must plan to fit with the production schedule or hours of operation of the business. With new technology capabilities, the focus has started to shift from manual observation to analysis through virtual, real-time data collection to reduce onsite worker injury. This technology can help business owners minimize the number of workers’ comp claims related to normal job activities.
• Data collection – Sensors and video are amplifying the data available for businesses to reduce the potential risks. By leveraging technology to collect data, it can be stored, analyzed and then applied to similar situations, enabling insurance carriers to help business owners maintain a safer and healthier work environment, ultimately achieving better outcomes. This can add tremendous value for businesses, helping to prevent common injuries caused by certain movements and tasks.

Agents who stay current on the technology available will continue to deliver more value to their customers. Partnering with a carrier that puts an emphasis on innovation in risk management can help your customers better understand their risks, and put in place proactive loss prevention plans for their organizations. At The Hanover, we invest in solutions for independent agents to help mitigate risks for clients.

Learn more about The Hanover’s risk solutions for workers’ compensation

 

About the author

Christina Villena joined The Hanover in 2014 and leads the company’s loss control and risk management and mitigation efforts for commercial lines where she has focused on driving innovation throughout the risk solutions department in the assessment and service delivery to the company’s commercial lines, specialty and personal lines policyholders.

As published in Insurance Journal

In a world of ever evolving risk, marine coverage is an essential part of any insurance program. Why? There are numerous situations where standard property policies may not provide the specialized coverage or increased limits needed for proper protection. This may include owning specialized property, working at offsite locations, storing inventory off premises or transporting products for customers. The truth is, the majority of businesses need some type of marine coverage to address such risks.

What to look for in a carrier

The best independent agents are strategically selecting marine carrier partnerships that empower them to be more efficient — at a time when operational excellence is more critical than ever — and help maximize protection for their clients.

These agents align with carriers that offer:

1. A broad range of specialized marine capabilities

When a carrier’s marine product portfolio offers solutions that are a natural complement to its standard industry offerings, agents can seamlessly provide both standard property and specialized marine coverage for a broad range of risk exposures with a single carrier. This yields operational efficiency for the agent and a higher level of customer service for the client, with a single bill, a single carrier contact, coordinated loss control activities, and policy language designed to complement and consistently integrate with other policies offered by the carrier.

Many agents look for carriers with diverse product portfolios that respond to a wide variety of marine risks – from specialized property and goods in transit by air, land or sea, to buildings and structures under construction.

2. Online solutions

In a world where risks continue to evolve and financial pressures are at a peak, speed and efficiency are must-haves for any independent agent. Online platforms that enable agents to rate, quote, bind and issue marine coverage simplify the insurance transaction, while allowing the agent to improve customer service and deliver cost efficiency.

3. Program capabilities

Programs can be an exciting business opportunity for an agency. Leading marine carriers have the deep knowledge and expertise needed to write truly unique marine risks. These carriers can offer access to customized coverage and terms through existing programs or can partner with an agency to build custom programs for a verity of groups with similar coverage needs.

4. Technology for clients’ risk management efforts

The best marine carriers provide technical and specialized tools to help policyholders best manage risk. That means a commitment to innovation and keeping up with the latest technologies.

Look for carriers that offer drone surveys for aerial risk evaluation, IoT sensors to detect leaks or freezing conditions on construction sites, telematics for high-value assets, and more.

5. A dedicated marine claims team

Marine is a complex and intricate business, and its claims should be treated as such. Look for carriers that offer a dedicated unit of marine claims professionals who have a significant level of knowledge and expertise. The highly specialized nature of marine products means it really takes equally specialized claims professionals to quickly and accurately handle such claims.

Elevating the insurance experience – for agents and customers

Partnering with a carrier like The Hanover, a top 10 marine writer, can give independent agents a distinct advantage in the marine marketplace, providing access to:

• A broad product portfolio and specialized coverages, including program capabilities
• Expert marine underwriters who partner with agents to understand a client’s various exposures and help develop tailored solutions
• Online quote and issue capabilities that make it easier to underwrite, rate and issue builder’s risk and contractor’s equipment policies efficiently
• A team of specialized claims professionals focused solely on marine claims

With the right carrier partnerships, agents can offer their clients great marine protection that helps ensure the continuation and sustainability of their businesses, while reinforcing an agency’s value.

For more information about our marine offerings, visit Agent Solutions.

 

About the author

Tony DiMarzo is president of marine at The Hanover where he leads the inland and ocean lines of business, overseeing business strategy, tactical initiatives, appetite and portfolio management.

Nationwide trends are impacting many industries, including insurance.  

Not only are home insurance rates rising, but auto insurance rates are also increasing. Even with a clean driving record and no recent claims, you may see a higher premium for your auto insurance.

 

 

How are auto insurance rates determined?

There are several standard factors that influence auto insurance premiums. Rates are determined by the likelihood of a consumer filing a claim and the possible risks involved. Auto insurance rates are also driven by:

• Level of insurance coverage needed
• Number of car insurance claims
• Deductible amount
• Demographics
• Driving history
• Location

There are other influencers caused by national trends which also contribute to rates, the biggest cause being the rise in inflation. When prices rise, the cost of living and owning a car increases, which in turn influences auto insurance rates. These rate increases are happening to insurance companies across the U.S.

We have put together an overview of some current trends to help show you what is causing auto insurance rates to rise. An infographic of Why are insurance costs rising for drivers? is also available.

Jump to: More demand | More expensive  | More rentals | More technology | More claims | More distracted | More fatigued | More fatalities 

 

More demand

Once buying habits started to change after the uncertainty of 2020, the auto industry was unable to keep up with consumer demand due to semiconductor chip shortages and supply chain issues. New cars became harder to find and inventory was scarce. This combination of events caused prices for new cars to increase. With less new cars for sale, there has become a shortage of used cars, which saw an even greater price jump.

• Prices for used cars are up a staggering 39.8% since March of 2020, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index. The BLS inflation measurement for new car prices during that same period is up 8.9%.¹
• An estimated 57% of new cars sold within 10 days of being delivered in December 2021, as reported by J.D. Power. Additionally, the time it takes for a new car to sell is averaging a new low of 17 days, down from 49 days in 2020.²
• Demand for used cars is also up, as costs have risen to an average of $29,011, up 27.9% from 2020, according to Edmunds’ data.³

More expensive

As a result of more demand and less cars available for purchase, a larger number of drivers have taken to repairing their existing vehicles rather than opting for a new model. Repair costs, however, have also gone up. Older cars face higher repair prices as well as additional maintenance services. Also, a shrinking labor market due to retirement is driving up labor costs.

• The average total cost of vehicle repairs has climbed 22% over the past five years, jumping from $2,858 in March 2016 to $3,480 in February 2021.⁴
• Labor increased 1.5 hours per claim with an average hourly rate increase of 8.2%.⁵
• Windshield prices are up 15%, hoods increased 9%, lift gates 8% and front bumpers and fenders increased 7%.⁶
• According to the 2020 Transportation Technician Supply & Demand Report at TechForce Foundation, the supply of auto repair technicians has fallen behind demand by 3 to 1. The report estimates that 642,000 technicians will be needed between 2020 and 2024, with an inadequate pipeline of new trainees filling this demand.⁷

More rentals

With a nationwide shortage of cars to purchase, rental fleets have also been struggling. The supply chain issues and chip shortages have led rental agencies to bid for cars and compete with consumer demand. With smaller fleets, there are less cars to rent, leading to higher rental prices.

• Data from travel company Kayak reveals that the average daily rental rate for a car in the U.S. in December 2021 was $81. That is up 31% from the year prior and up even more since December 2019 when the average rental rate was around $46.⁸
• Auto Rental News reports that a total of 726,056 new cars were added to the U.S. rental car industry throughout 2021. This is only a 9% drop from 2020 but is a 58% drop from 2019 when the industry added almost 1,739,000 new vehicles.⁹

More technology

Cars are becoming more advanced each year. Electric vehicles with wireless charging stations are everywhere. Some newer cars have xenon headlights, 360-degree cameras, emergency braking with pedestrian detection, direct adaptive steering and more. All these technological breakthroughs add to the price of a vehicle and factor into replacement costs in the event of a loss.

• High-tech auto parts (xenon headlights, sensors, cameras, etc.) have resulted in an average increase in claim costs of almost $300 in the last 5 years.¹⁰

More claims

An increase in auto accidents has resulted in more and higher claims filed. With complex vehicle technology, replacement parts are becoming more expensive. Much of the price increases are due to supply chain disruptions and worker shortages. This has resulted in total loss costs at some of the highest levels they’ve been at in years.

• Over a 5-year period, total loss frequency has climbed 4.1%.¹¹
• According to a report by CCC Intelligent Solutions, the percentage of collision claims where the vehicle was rendered non-drivable was greater in every month of 2021 compared the same month in 2020 and 2019. The increase was even more evident for liability claims, where the percentage of non-drivable accidents was nearly 25% during much of 2021, compared to about 20 to 21% in 2019.¹²
• CCC shows that the average total loss claim cost climbed from slightly less than $8,000 in 2010 to slightly less than $10,000 in 2020, then jumped to more than $12,000 in 2021.The steady increase in vehicle replacement cost has been attributed to the growing complexity of automobiles during that time period.¹³
• Vehicles are also taking longer to repair. Repair shops were reported to have a backlog of 2.6 weeks during the third quarter of 2021, which was a week longer than in the second quarter of 2021. During the third quarter of 2019, the average backlog was 1.7 weeks.¹⁴

More distracted

Taking your eyes off the road while driving, for even a few seconds, can have disastrous consequences. The rising number of drivers who text while they are driving not only causes harm to other drivers but has led to higher auto insurance rates.

• 660,000 Americans are using cell phones or electronic devices while driving—at any given daytime moment.¹⁵
• Teen drivers and young adults are at the greatest risk for distracted driving. Among drivers involved in fatal crashes, drivers age 15 to 19 were most likely to be distracted, according to NHTSA.¹⁶
• Most U.S. states have legislation banning the use of cell phones while driving instead of broader bans on distracted driving. Twenty-four states ban the use of handheld devices while driving, 20 states ban cell phone use while driving and 48 states ban texting. Missouri and Montana are the two states that don’t ban texting while behind the wheel.¹⁷

More fatigued

Drowsy driving, or driver fatigue, is the act of operating a motor vehicle when the driver is tired and has not had enough sleep. Medications, untreated sleep disorders and unpredictable sleep or work schedules can also contribute to driving while fatigued. Reaction time, inability to focus, judgment of speed and/or distance are some of the main effects of driving while sleepy.

• According to the National Highway Traffic Safety Administration, police report around 100,000 drowsy driving crashes annually, resulting in 50,000 injuries and 800 fatalities.¹⁸
• However, a study by the AAA Foundation for Traffic Safety concluded that 328,000 drowsy driving crashes happen each year. This is more than three times the number of crashes reported by police.¹⁹
• Injuries were recorded in 109,000 of those drowsy driving crashes reported and 6,400 of the crashes were fatal. The prevalence of drowsy driving fatalities is more than 350% greater than reported, according to researchers.²⁰

More fatalities

Despite a reduction in driving early-on in the pandemic, consumers got back on the roads when they could, in record numbers. Incidents of speeding and driving without a seatbelt were reported to be higher than before the pandemic, contributing to a rise in fatalities. Between January and June 2021, the U.S. Department of Transportation’s National Highway Traffic Safety Administration reported the largest six-month increase ever recorded in the Fatality Analysis Reporting System’s history.

• From January through November 2021, the number of deaths is estimated to be 42,310. This estimate is up 9% compared to 2020 and up 18% compared to 2019.²¹
• The surge in motor vehicle deaths marks the largest increase in fatalities since 1940s and a sharp change from 2019, where the annual death rate was near its lowest level since the 1920s.²²

Working with an independent agent will help ensure you have coverage that’s the right combination of price, protection and value with The Hanover’s suite of products. By bundling your coverage with Hanover Platinum or Hanover Prestige (for higher-value vehicles), you can have product suites that fit your needs and help you stay protected.

Questions? Contact your independent agent to learn more.

Find an agent

Sources

[1] Fortune  [2-3] CNBC [4-6] CCC Intelligent Solutions industry update – August 2021 [7] TechForce Foundation [8] Car & Driver [9] Auto Rental News [10] Mitchell [11-13] CCC Intelligent Solutions industry update – August 2021 [14] Claims Journal  [15-16] NHTSA survey [17] Bankrate  [18] NSC  [19] AAA Foundation for Traffic Safety  [20] NSC [21] NSC Injury facts – Nov 2021 [22] New York Times

 

Q&A with Bryan Salvatore, Executive Vice President & President, Specialty, The Hanover

As published in Leader's Edge

Today’s agents and brokers are finding themselves with a significant number of markets, but at what expense? Salvatore talks with Leader’s Edge about how carriers can help solve fragmentation trends in the specialty industry.

Q: With rising premiums and complicated risk, the specialty market is growing. But it’s historically a siloed space with many single product relationships. What problems does this present for agents and brokers? What about their clients?

A: The siloed model has primarily been driven by carriers focusing on areas they felt deliver strong profitability while meeting agents’ needs. Yet this model results in a good deal of inefficiencies for agents including duplication of work to manage and service clients across multiple carriers. These inefficiencies also impact the clients who, for example, receive multiple bills. Most importantly, it can lead to questions and sometimes disputes between carriers on where coverage falls when losses occur, such as between a general liability and E&O policy.

Q: How can agents and brokers retain the deep specialization their clients need while overcoming internal siloes that create barriers to holistic insurance solutions for clients?

A: Agents and brokers have been creating specialized practices at increasing rates, both by industry, like construction, financial services and technology, and by product line, like D&O. Regardless of how their practices are structured, agents are serving clients with multiple coverage needs. An agent can either solve those needs with many different carriers or do it with one or two. It’s the question of, ‘When do I use a niche carrier and when do I lean in on my partner carriers?’ And then we, the partner carrier, must make it easy for them to do that.

Carriers need a comprehensive set of specialized capabilities that agents find relevant. Furthermore, carriers must work to improve and simplify their internal interactions between their specialized product and support areas. There are things we put a good deal of emphasis on at The Hanover, for example, coordination between our businesses, greater product capability within our customer service center, delivering a single bill for multiple lines, etc. And we’re seeing really good outcomes with our agents and brokers as a result.

Q: What tools are carriers offering to help brokers gain efficiencies, especially when dealing with many small businesses?

A: The most impactful change is when carriers can align their practices to be more coordinated in solving for a range of clients’ needs. At The Hanover, we establish really strong communication between our businesses and take a coordinated approach to underwriting and quoting accounts and customer service.

When dealing with small businesses, low touch or no touch account placement capabilities are key. Thinking about agent portals, the key is to link them to multiple lines of business in one location. Take our TAP Sales platform. It includes traditional and specialty lines coverages so that when our agents are looking for solutions for their small business clients, it’s not just a business owners policy. Carriers also offer client service centers and other online self-service capabilities to create a high touch feel for clients without impacting the agent’s resources or productivity.

Q: What challenges have you seen with uptake of digital tools, e.g., data integration and interoperability?

A: Digital readiness is a real issue. A lot of specialty carriers have numerous lines of business at varying ages and stages of technology sophistication, so there needs to be thoughtful investment over time to deliver a cohesive digital experience. At the same time, carriers are investing in some really innovative technology, portals and digital tools. We’re seeing more API integration than ever before, which allows carriers to tap into agents’ management systems to provide a more seamless experience. But, adoption of these innovative tools and integrations takes time. There’s a lot of interest but putting it into practice can be a bit challenging.

Q: How can we overcome these challenges to most effectively serve the insured?

A: It really is a journey that requires time and dedication. We have to keep learning and investing so that we continue to advance these capabilities—because the industry is changing rapidly. Many of us see people coming into the business that represent a new, more technology-savvy generation. The way they approach self-service and digital tools is much different. I also think we have to keep communicating with agents and clients to make sure they are aware and comfortable with digital tools and that we have their input on what is meaningful and valuable to them. When I see what we’ve been able to do at The Hanover by working closely with our agents, and our commitment to a coordinated approach to serving their clients, I get really excited for the future.

Now more than ever, innovative risk management practices demonstrate the unique value that carriers and independent agents deliver to their customers.

As published in Best's Review

From the liabilities associated with the COVID-19 pandemic to cyberattacks and the use of robotics in the workplace, there is little doubt that business risks continue to evolve at a rapid pace. At the same time, traditional perils, such as extreme weather and auto exposures, remain prevalent and ever-increasing.

These realities have spurred successful carriers to leverage innovation to create a distinctive risk management experience. Across our industry, we are seeing the introduction of technology-enabled tools and services to help businesses minimize risk and maximize safety. For example, the use of drones, data analytics, telematics and water detection tools are becoming commonplace. This is only the beginning.

An increase in risk management innovation couldn't come at a better time, as loss pressures continue to mount. Take property losses, for example. According to Verisk/ISO, fire historically makes up 35% to 40% of loss costs and water damage comprises 10% to 15%. As we manage through the COVID-19 pandemic, these loss trends are essentially holding steady at their historic averages, and in some cases increasing. Couple those loss trends with an increase in industry catastrophe losses and it is becoming even more important to find new ways to mitigate losses.

The emergence of the internet of things (IoT) has been instrumental in this regard. IoT has enabled the industry to expand policyholder offerings to provide discounts for the use of tools that can help reduce claim severity related to freezing and water damage, benefiting residential and commercial customers. With this new capability, a contractor can install technology to detect water intrusion and stop an incident before it escalates, preventing massive losses. We've seen significant benefits from this new tool in our business.

And it goes well beyond just sensors. Carriers are making vast improvements in the area of employee safety, as well. For instance, companies are now completing ergonomic evaluations using artificial intelligence and wearables while evaluating the impact of exoskeletons to reduce ergonomic risk or to support an injured employee in returning to work.

When it comes to managing claims and assessing risk, drone technology and thermography continue to present new opportunities. While drones have been used for some time now to assess claims, their use offers a significant opportunity to improve the pre-loss and risk assessment processes. The benefits of thermography include the detection of heat-related problems in electrical equipment, as well as identification of mechanical issues. Studies have shown that for every dollar spent on a thermography survey, five dollars in cost avoidance is identified on the damage. Furthermore, by combining drone use with thermography, surfaces can be scanned to detect issues that aren't visible to the eye, enabling carriers to identify and highlight potential problems long before they become major losses.

Given the rapid pace of change in our industry, it is to risk managers' advantage to work closely with their independent agents to understand how carriers are investing in innovation, what new and evolving capabilities they believe are most critical in the market and the advancements in the area of risk management. Ultimately, engaging in frequent conversations regarding risk management innovation is the best way for risk managers and agents to understand emerging capabilities and other investments across the value chain. This insight will enable agents to partner with carriers that are committed to an exceptional customer experience focused on mitigating risk and delivering quality protection and services.

 

 

As published in Leader's Edge

With prevailing economic pressures widely expected to persist, more and more businesses will consider different ways to adapt, including the possibility of smaller, less skilled, and/or over-burdened workforces.

These additional stresses could increase the risks of on-the-job injuries and, in some cases, jeopardize the ongoing well-being of the business. The good news for business owners is that those companies willing to proactively refine and manage their workers' compensation program can take steps to mitigate losses, thus keeping their workers safe and protecting their business interests.

Economic uncertainty

The impact of high rates of unemployment on the health of a workers' compensation policy is well documented. Regular references to the Great Recession are commonplace in today’s discussions, and it was not that long ago that families looked to unemployment insurance as a lifeboat. Economic turmoil resulted as the number of unemployed Americans doubled from 7.6 million in December 2007 to over 15 million in September 2009.

In April 2020, just months into the COVID-19 pandemic, unemployment numbers went from 15.9 million to 23.1 million, and every state reached unemployment rates greater than their highest unemployment rates realized during the Great Recession. Today, businesses are more prepared, smarter, more innovative and less afraid of change management. They have learned the art of pivoting, have improved process management, and have made the needs of their employees much more of a focus.

Potential workforce impact

While the hope is that the economy will improve in 2021 and after, there is little doubt there will be turmoil that comes from the changing depths of uncertainty and speculation. For example, businesses have reduced employment to some degree across all industries, and there is real exposure in worker turnover. Companies may be using inexperienced or unaccustomed workers to perform tasks, which can result in workers' compensation claims.

The decline in employment by industry has shifted away from construction and manufacturing, while the retail, hospitality, restaurant and education industries are seeing significant unemployment variance from where they were prior to the pandemic. The latter industries may be more likely to use temporary or short-term workers as the startup continues or look to potentially hire and retrain full-time and part-time workers. If these new workforces are less experienced in their new field, it stands to reason that there could be a greater number of workers' compensation claims for the foreseeable future.

It will also become important to watch for existing workers managing longer hours to compensate for rising service and sales demands. Workers putting in excessive hours or working on tasks they may not be familiar with are most definitely an increased hazard for the business.

Employees are searching to feel security in the workplace. To this end, some may exhibit behaviors such as hiding workers' compensation injuries or even creating fraudulent claims. While workers' compensation has always possessed elements of fraud, there is no question that late-reported claims or fraudulent claims may be an opportunity to secure wages for the immediate future. It also should be noted the personal stress from a recession and fighting the potential of unemployment have monumental effects on workers. It is common to see anxiety, disorganization, depression, as well as loss of self-esteem. Quite simply, the significant nature of employee distraction puts them at greater risk both on and off the job. A distracted worker in many cases is a dangerous worker.

Then there is the rapid move to telecommuting. While this was a mandatory practice for most businesses during the shutdown period, it is now becoming a more permanent and growing part of the workforce. This creates a need for clear telecommuter policies and detailing the scope of work within the work-from-home structure. Companies may also want to consider the characteristics of a safe home-work environment with a safety checklist and study the Fair Labor Standards Act to understand the stringent requirements that will govern remote work time, especially for hourly wage earners.

A resilient and effective workers' comp program

All of these factors lead to a change in the status quo when it comes to workers' compensation programs. Successfully managing a workers' compensation policy requires the business, the broker and the carrier to work in sync to promote workplace safety, claims excellence, loss control expertise and policy accuracy. To survive, and even thrive, during uncertain economic environments, businesses should strive to be flexible and be willing to change their best practices for the safety of the workforce.

A combination of human resources expertise and loss control support is imperative. Policies, procedures, job descriptions and a safety-first culture will promote business success while under the stress of this recessionary environment. These measures are also the best safeguard for a disciplined and compliant hiring process, which will help ensure that businesses hire and retain the best workers for their specific needs. Having the right employees on staff will help offset and combat risks during any environment.

Here are some other tactics businesses can implement to promote success:

Mandate return to work. Getting people back to work is the silver bullet for managing a workers' compensation program. It is the humane way to treat injured employees and fulfill their desire to work. In many cases, return-to-work programs reduce employee stress and help minimize the potential for litigation. The leading workers' compensation claims teams have specific and actionable return-to-work programs. This not only helps get employees back on the job sooner but also has proven to improve employee retention and lead to future cost savings on insureds’ workers' compensation programs.

Communicate clearly and constantly. Employee communication is paramount when your employee is injured. It is imperative that businesses work with carriers that have effective notice of loss procedures and guidance. To best serve injured workers in today’s environment, look for and seek out telemedicine opportunities embedded within the network and the claims process, such as virtual nurse case triage. Services such as telemedicine can quickly establish and promote communication in a convenient and comfortable manner for injured employees.

Study lost-time claim patterns. Learn, correct and document opportunity for changes. Take the time to understand employee turnover and put effort into training and published job descriptions. Plan for operational changes that will no doubt come about in a recessionary environment.

Understand claim frequency and severity. Partner with insurance agents and carriers. Look for opportunities to have claim review meetings to monitor and manage your workers' compensation claims. Report new claims quickly and work to understand how better triaging claims during the first report process can change the cost of outcomes. Use these interactions to also help identify potential trends in workers' compensation claim fraud.

Use loss control services. Manage the potential for loss rather than the actual loss. Business owners must look beyond the direct cost of a claim and understand both mitigation strategies and the cost of containing or preventing a loss. Safety policies and standards promote a safety culture and opportunities for employees to be educated about sound workplace behaviors. Simply reacting to hazards and accidents is not a long-term answer. Businesses will maximize their opportunities to protect their employees and reduce claims when they anticipate and plan.

There is no question the foundational structure and strength of the business safety culture can help minimize any and all hazards. Building formal programs and policies that are creative and proactive will make a huge difference.

A robust workers' compensation program is a basic tenet of any successful risk management effort, and the resulting safe work environment will allow for the continuation of the only true sustainable competitive advantage—employees.

 

About the author

John Lacy is assistant VP of workers' compensation at The Hanover.