Every insurance vertical has undergone significant changes in recent years, but few have experienced as rapid a transformation as the homeowner’s market.
In light of shifting consumer trends and new technologies, the insurance industry has undergone some pretty dramatic changes over the past few years. The auto and healthcare markets have been particularly fluid, as both rely heavily on technological innovation and remain closely tied to personal risk.
The homeowner’s market, on the other hand, has not been as clearly impacted by advances in technology. Moreover, coverage and risk within the vertical have remained fairly static, as they’re grounded in a longstanding one-size fits all model.
And because the homeowner’s market has been largely insulated from these disruptive forces, it’s typically thought of as a “set it and forget it” line of coverage. But this notion is quickly evolving, as a brand-new set of disruptions are upping the stakes of the game.
Backyard Drones and Smarter Homes
People tend to forget that a homeowner’s policy doesn’t just cover an enrollee’s house and property — it can cover a whole range of events that take place on the property. That poses a major challenge to actuaries as they determine what should and shouldn’t be covered, all while emergent technologies create new risks to consider.
“When we think about new risks and develop new forms and coverages, we work with agents closely to get their reaction to our new plans as well as existing coverages,” Jeff De Turris, vice president of Coverage Products and Operations at ISO, tells Insurance Journal. “We talk with insurers as well to get their reaction and input on what we’re thinking and to see how they view what we’re coming up with.”
In recent years, policymakers have had to grapple with two major developments in tech: 1) the advent and rise of drones and 2) “smart home” technology. Not yet ubiquitous enough to demand action, drones are still growing in popularity — and they come with a new set of risks that simply don’t apply to your average backyard hobby.
As a result, De Turris tells Insurance Journal that ISO’s homeowners policies will address the presence of drones for the first time this year.
Meanwhile, smart home technology offers a potentially major boon for insurers, as the data collected by the home monitoring systems could offer the same type of unique, client-based insights as the driver monitoring systems currently utilized across the auto insurance industry.
Airbnb and Property Sharing
As we all know by now, startups are creating disruption across the nation — and the homeowner’s market is proving no exception to that rule. Specifically, Airbnb has spearheaded a new trend of short-term home rentals, a sharing-based model that’s completely disrupted the traditional vacation rental by owner (VRBO) system that the homeowner’s insurance industry has worked within for decades.
“If you rent a room out to somebody for the weekend, is that a commercial activity? If you rent your house out for a weekend, is that a commercial activity?” Brian Sullivan, editor for Risk Information Inc., muses. “You’re seeing companies work really hard as we speak on trying to figure out the best language for that.”
After a few highly publicized incidents, according to Property Casualty 360, Airbnb now provides a “general commercial liability policy.” But homeowners have still been left dangerously exposed to risk under this policy, and in turn, insurers continue to debate how best to keep their clients covered in these instances.
The back-and-forth over Airbnb shows how crucial it is for agents to keep abreast of new developments in their industry, as well as how those developments could impact both prospective and existing clients’ coverage. Otherwise, a homeowner’s concerns over rowdy renters, rogue drones, and everything in between could pose a serious threat to sustained success — especially as the market becomes even more complex in the future.
(Main image credit: Stefan Stefancik/Pexels)