2017 has proven itself to be anything but predictable, and has certainly kept the insurance industry on its toes. As the year comes to an end and 2018 begins, we can’t help but wonder what the next twelve months may hold. While we can’t predict the future, here are five trends to keep an eye on in the insurance industry.
Employment Practices Liability Growth
It seems like harassment and other unsavory workplace behavior dominated the headlines for a large part of 2017. As more and more cases come to light, we can expect to see more businesses securing employment practices liability insurance (EPLI) in 2018. Regardless of fault or verdict, accusations and lawsuits can cause devastating reputational and financial damage. In such a lawsuit prone society, the question has evolved from “if” your business will be accused to “when” will it happen. EPLI will soon transition from an optional add-on coverage to a must-have.
Cyber-attacks have rocked the business world in 2017. From the crippling WannaCry attack to the Equifax breach, it has become more and more difficult for businesses to secure their networks and protect their clients’ and employees’ information. As cybersecurity continues to evolve, so do the cyber insurance product offerings. We expect to see this continued evolvement in 2018 and the creation of new cyber coverages.
Auto Insurance Changes
From self-driving cars to slim or negative profit margins, the auto insurance industry is bracing for some inevitable changes. The majority of auto insurance companies posted another year of slim to negative profit margins, which means that the likely outcome will be a slight increase in rates. Auto insurers took a large hit from the numerous natural disasters the U.S. faced this year and no one knows what mother nature could throw at us in 2018. Throw in the uncertainty looming behind autonomous cars and how to insure them, and the future is flex for the industry. This is definitely a sub-industry to keep your eye on.
Workers’ Compensation and the Opioid Crisis
The opioid crisis reached an all-time high in 2017. A Workers Compensation Research Institute study of 25 states found that most workers’ compensation claims now involve opioid use. In a number of different states including Texas, Ohio, New York, and California, lawmakers have gotten involved and introduced legislation and/or regulations for drug formularies in workers’ compensation programs. This could be a trend that other states look to follow. In addition, many companies are requiring more advanced drug screenings for existing and potential employees to help identify opioid usage. This sensitive subject is certainly something to watch in 2018 as the industry struggles to balance injury/pain management with addiction prevention.
The world, and the U.S. in particular, got slammed with natural disasters in 2017. From devastating wildfires to horrific hurricanes, the damage was astounding. With billions of dollars of damage, insurance companies are still reeling from the staggering number of claims. This certainly signals the need for long-term risk evaluations in high-risk areas, and higher rates could be on the horizon. In addition, this could signal an influx of homeowners purchasing flood insurance. With low-risk areas being unexpectedly flooded this year, homeowners are reconsidering investing in flood coverage.