The Future of Insurance – Bryan Falchuk on The Economic Viability of Insurance

I'm joined my Insurance and Underwriting veteran and thought leader, Nick Lamparelli, for this episode as we discuss the ideas in the new white paper I'm publishing, "The Economic Viability of Insurance," available starting today for free at http://www.future-of-insurance.com/profit.

Highlights from the Show

• The approaches we have been using to stresses on underwriting profit historically have been cutting costs (focusing on expenses), taking rate, pulling out of markets or segments
• These approaches proved insufficient to deal with the scale of macro-level pressures insurers faced in 2023, and I would argue will continue to face going forward, like
  • Severe Convective Storms (SCS, or, mainly, hail) and other Natural Catastrophes driven by Climate Change
  • Social Inflation
  • Supply Chain and Labor Constraints
  • Inflation
  • and more
• We should be looking at new approaches, including
  • How we think about and respond to risk – tools we use to understand risk, select it intelligently to compete on, and harden it when we do choose to offer coverage
  • Move to next-generation approaches to rating that are more dynamic, allowing us to stay ahead of the need for rate change rather than respond far too late and insufficiently
  • Rethinking the products we offer to cover what have been come extremely different exposures from the ones our current products were designed for
• These solution can take the form of insurtech software or services; E&S/non-admitted product development; Parametric solutions to coverages no longer viable as indemnity products; and so much more
• Now is the time to really engage in the idea of doing things differently as we are seeing increasing difficulty in aligning prices that are affordable to buy coverage at with prices that are economically viable to sell it at, meaning the market may begin to fail to clear
  • If that happens, other capital can come in and solve for the need for coverage, increasing the pressure insurers have seen on the decreasing percent of risks that are insured against (measured by NatCat losses that are insured vs. not), as one method)
• Download the paper today, and share it with your network to get more people talking about how we can push our industry ahead.

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