How COVID-19 is Impacting the Home Insurance Industry

By Bill Martin

Accidents at home don’t disappear in a pandemic, but they do require home insurers to make some critical adjustments. The auto insurance industry has been busy developing relief plans to return unexposed premiums and support their customers financially through COVID-19. Home insurers have a different opportunity to help. Homeowners are taking this time to reevaluate their home insurance carriers; therefore, now is the time to differentiate and illustrate their value.

Amidst the health crisis, financial stress has grown for homeowners and now hurricane season has started targeting seashores. It’s clear home insurance has risen to an essential spot in shrinking wallets.  Homeowners need to protect their biggest asset – their house – even if other spending is waylaid.

Here are my key takeaways for how the crisis is impacting all things home insurance – and how insurers, agents and homeowners can best address the changes.

INSURANCE CARRIERS

As long as people stay home to prevent the spread of the virus, and the weather cooperates, insurance carriers will see a shift in the severity of claims their customers are filing. The number of large-scale, man-made disaster claims will trend downward, and smaller – albeit significant – claims will rise.  People are spending more time in their house and are more likely to have in-home accidents than ever before – more activities inside cause more incidents that can lead to losses. However, because homeowners are at home and not traveling, working or attending events, they are present to prevent or mitigate the worst problems before they grow to be significant losses. For example, the ‘drip-drop’ of a faucet leak is more likely to be heard, and the smoke of a flame is more likely to be smelt, seen and extinguished.

With an uptick in smaller personal property claims, insurers can expect to receive more claims as vacation homes sit unused and neglected.  As stay-at-home advisories ease in the coming months, we may see homeowners depart from their primary homes for extended-vacation stays. When that happens the vacancy risk switches to the primary residence. In the end, wherever the water damage occurs in their absence, they’ll need their insurers’ assistance to remedy. As financial pressures mount, how an insurer acts will be under a microscope.

For insurance carriers to successfully handle stay-at-home or extended-vacation claims, the key will be to leverage self-service technology coupled with reporting and small claim settlements. By using virtual and video-chat claims technology, insurers can respond to customers as efficiently as an on-site visit. In many instances, the claimant appreciates the ability to become personally involved in the claim evaluation and resolution, rather than report the damage and wait for each update via phone call. To comply with bans on in-person service, insurers need to alter the process of filing claims by deploying and expanding tech-enabled strategies like live stream interactive appraisals. Self-home inspection pictures and videos and AI-driven analysis tools  can produce hyper-accurate identification of damage and repair costs. With such tools in place, insurers will be well positioned to face business disruptions from a distance.

INSURANCE AGENTS

The day of leaving digital and remote service to the “big boys” (i.e., direct-to-consumer mega-brands) is over. Many individual insurance agents are finding they can do much of their work from home. The bans on public gatherings have impeded some agents from what many consider to be a cornerstone of their practice – like social and face-to-face networking and meetings – causing many to pivot technologically to maintain these personalized interactions. As agents know, talking about their businesses with neighbors at local events – like their child’s soccer games – is marketing gold, and the personal interaction often fosters relationships that blossom into a loyal customer relationship. However, many are now asking themselves if new business will slow without the in-person marketing advantage.

As more and more agents are finding that digital is the new face-to-face, they should also realize that they have the opportunity to lean on the insurers they represent to assist. Carriers can often provide tools for digital networking and meetings, making insurers who have invested in virtual insurance products an agent’s most reliable support system. They can deliver quick quotes and easy binds to mutual customers, leaving the local agent more time to focus on coverage advice and relationship building.

HOMEOWNERS

The current pandemic has slowed home buying – the dominant motivator for shopping for home insurance. However, some homeowners may now have the incentive to research alternatives that provide better coverage at a lower price. Carriers who can provide quick quotes and online binding for their agents will have a better chance of winning their business.

Some homeowners may feel compelled to find a new insurer following a poor experience with their existing one. Perhaps while at home, they were more engaged in the claim handling process and watched closely as their insurer helped with the last accident. Maybe they listened closely to the carrier’s response when they missed a payment in the original stay-at-home confusion. Now especially, a home insurer’s response to their customers’ coronavirus concerns may lead one homeowner to reconsider whether their current policy is, in fact, the best fit.

For example, a thoughtful insurer will acknowledge the current economic hardships of many of its customers and allow its service representatives to halt late fee penalties. They will also commit to being responsive and available for their customers during this period of heightened stress.

NEW NORMAL

Businesses across all sectors and industries are adjusting to new a new sense of normal, and insurance is no exception. To combat operational disruptions, carriers need to equip themselves with self-service tools that will allow them to respond to customer needs quickly and effectively from afar. Likewise, savvy agents should align themselves with insurers taking such measures as it will ease pressures if they can pitch attractive, engaged carriers to their customers.

Homeowners can use this time to research whether their current policies are the best fit for them, as well as recognize whether their carrier isn’t fulfilling expectations. The home insurance carriers and agents that customers will gravitate towards – and, subsequently, the ones that will sustain the most business growth through and after the coronavirus pandemic – are those who proactivity facilitate coverage-review, shopping and handle claims adjustment virtually. After all, the goal for the carrier, agent and homeowner is to thrive, not just survive. 

Bill is the President and CEO of Plymouth Rock’s Home Insurance Group where he oversees the business’ operations and reinsurance program.