The #10YearChallenge is sweeping across the web. It cannot be avoided, and it does allow all those who participate to take stock of the changes that have occurred to them over the past 10 years. It’s a trend - and since the insurance industry follows, analyzes and calculates trends, here’s a quick snapshot of the P&C Industry changes over the past decade or so.
First - Let’s Crunch the Numbers
Although the final numbers are not in yet, there are strong indications that 2018 will end up being a good year for P&C Insurance, with projected written premiums for 2018 likely exceeding $620B. This is a significant increase compared to $424.2B in written premium in 2009. Employment in the P&C sector continues to rise, as it has year-over-year since 2013 to the point where the number of employees in the P&C industry has almost matched the 646,000 employed in 2008.
The Changes in the Landscape
The last decade has seen a significant change when it comes to the landscape of P&C Insurance, especially on the MGA/MGU level. Particularly accentuated by developments in the last few years, there seems to be a dual trend occurring. The first part is the booming business in the M&A sector, with large national MGAs expanding their reach through acquisitions and the occasional merger. The second part is the proliferation of niche specialists and program managers, leaving the general business to the bigger companies and focusing on a few lines where they can take advantage of their knowledge.
There has also been an increased use of automation, that trickled down even to the production level. Even 5 years ago, importing data from an .XML file to your policy issuance processor of choice was a relative novelty. Now, the vast majority of carriers has either fully transitioned or is transitioning to a Quote/Bind/Issue systems.
The Changes in the Risk
Perhaps more than anything else, the world around us has changed in the last ten years, and the insurance industry had to follow. What is a common coverage that more and more agents and insureds are considering now was science fiction 10 years ago. Just think about Cyber Liability Coverage - which is slowly becoming an almost obligatory feature on all GL policies… if it hasn’t already been included. 10 years ago Drone Coverage could have been confused for a title of a Hollywood action blockbuster, but now it’s gaining more and more traction as drones become more and more present in everyday commercial activities. Regulatory change has affected the risks around us as well. Cannabis-related coverage was a sure indicator the policy is covering one of the few states that had decriminalized medical marijuana. Now it’s as common as any other type of coverage.
And let’s not even start talking about the coverage for all those amazing possibilities that the 21st century will bring - all those activities and products that are just around the corner. Self Driving Cars! Space Travel!
So, how much has the P&C industry changed in 10 years? Almost entirely, if you sum it up. The practices, procedures, regulation, cat modeling, risks, and processing - everything has changed more or less, but usually more. There seem to be only two constants that permeate through all these changes. The first is that insurance is still keeping up with the world, despite the rapid changes. The second is that Commercial Auto is still losing money.