insurance changes Archives

The Future of Commercial Insurance

The future is now. We’re researching virtual reality, nanobots for health, and can even talk to coma patients without the use of invasive surgery. With all these advancements, our world is going to change how we interact with the economy, and therefore, insurance.

However, these changes come with some pushback. Not everyone is on board with progress, take Blockbuster for instance. They decided to opt-out of utilizing the internet to disperse their videos and look at them now.

Can the same be said for the insurance world? We as people are shopping differently, working differently, and expecting different results. What does this mean for commercial insurance?

apps on a cell phone changing the way we get insurance — *There’s an app for everything now! Pizza, games, meetups, dating, and now–insurance?*

How Are We Different?

It’s no secret what our demands are now: everything delivered and fast. With the rise of Uber, Shipt, and Doordash, we now can live our lives completely in the comfort of our own home. Why leave? We have Amazon to give us our essentials, and with their rising drone fleet, even that could be delivered on the same day.

We’re changing as a society to having our needs met within the hour they arise. Want a date? Download Tinder. Throwing a party? Order food and play music on your phone. Apps dominate our handheld ecology, further pushing this culture of the world literally at our fingertips.

Why Is This a Problem?

To put it simply, the insurance industry needs to catch up.

Some companies have, like Lemonade (homeowners and renter’s insurance) or Root (car insurance). They are the exception to the rule, however, not the standard. And this isn’t to say companies aren’t creating apps, some are, but the truth is, it only delivers information to people’s fingertips, not the power to change things.

Truthfully, the industry must expand its liability coverage. Not everyone goes to work in an office anymore. With the rise of freelancers comes a need to fit policies to an odd-shaped market. These freelancers are small-business owners, and a whopping 40% are uninsured, barely even looking at liability for their work life. And it makes sense, the policies offered just don’t fit their lifestyle.

Modern insurance contracts are clunky, long, and don’t favor short, bursts of work. For these gig workers, they need a snappy, instant digital certificate to insure them. Who wouldn’t chuck $5 at an insurance company for a BOP-lite policy for a 2 week period?

Small businesses are born online, further widening our technological world. How does an insurance company begin to cover these businesses? Some are fully remote, requiring cyber liability, and while useful, they aren’t optimized.

Designers, writers, software developers, and more use bite-size jobs, but who’s going to cover them?

These business owners can live highly stressful lives, and constant market changes don’t support purchasing a hefty policy. If commercial insurance wants to snag this group of people, it needs to shift its focus to supporting what they need.

What Can Change?

The insurance industry can benefit from the overall interface of companies like Netflix, Doordash, and Amazon, meaning a focus on customer satisfaction and flexibility.

The new generation of small-business owners need policies that they can interact with at the flick of a finger, not another chore to accomplish like a meeting. And further, these policies need to be bite-size enough to not only explain fast but also be able to buy fast. Lowering policy coverage can also make it cheap enough to be a viable option for these small business owners.

Slap on an amazing customer service team with 24-hour availability (with a cute logo), and you’ve got yourself a whole new client base.

How Commercial Insurance is Changed by Risk Management

With all the recent catastrophes (and just plain old inflation), we’ve been watching insurance costs rise across the board. Higher deductibles are something even low-risk individuals are seeing. Unfortunately, insurance companies have to manage their bottom line, and doing this means raising rates.

The biggest problem pushing these rising costs is hurricane season. With their catastrophic damages, coming, again and again, commercial property rates are rising across the board–even affecting locations technically in a safer zone. The risk management is in response to this problem.

chess pieces to teach business owners risk management — Like chess, insurance companies plan out how their coverage is sold.

What Is Risk Management?

According to the Oxford dictionary, risk management (for business) is defined as “the forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.”

Basically, businesses (and homeowners as well) know losses can happen in the future. It’s not a question of “if something will happen,” but “when something happens, what will I do?” The practice of asking these questions and then developing proper procedures is known as loss control.

For most businesses, this practice comes even without insurance, but the underwriting process mostly involves it before signing a commercial policy, especially now.

How Is It Affecting Commercial Insurance?

The first part of these changes come with the vicious backswing of all these catastrophes. With hurricanes alone, the damages swing up into $200 billion. Pairing this with the horrors Malibu saw just earlier this year, and you have an industry drained of its resources.

With all the payouts, it makes sense that the insurance industry has to “refill its coffers” so to speak. However, this comes from all of the people insured. So, the immediate effect is higher deductibles for some, and in places like Malibu, outright declination of coverage because the properties are “too high of a risk.”

The second, more positive result is instating risk management experts in insurance firms. Certain companies can offer in-house advice to businesses when they purchase policies from them. All in all, who can turn down loss control when it comes bundled with your commercial insurance?

What Does This Mean for Me?

For the average business, this could mean higher rates, but that isn’t a new topic of discussion. For people in certain industries, such as manufacturing where there is a high risk, it can mean that you will pay more as well, but you could have a risk management team applied to your policy.

construction foreman with clipboard for risk management — *Some industries like construction are affected by this more than others.*

2020 will most likely be a rough year for everyone, and the only solace is that insurance agents are now pushed to provide more information for businesses signing up. With more focus on controlling risks (that can be controlled) comes safer management in businesses across the board.

Besides that, the only thing we can do is make smart investments to pay for the premiums down the road and provide a solid hand in risk management. Thankfully, insurance agents will have your back with this down the line.

With EZ.Insure, your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure, or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.