Seddrick Hubbard began his career more than twenty-four years ago as a design engineer. Before joining The Cincinnati Insurance Companies in 2003, his portfolio of duties showcased an intriguing combination of responsibilities. Back in the day as an underwriter, Hubbard successfully managed heavy territories, before leading a team of associates as the underwriting manager. Today, at The Cincinnati Insurance Companies, he is working to build a better communication flow and maximize profitability.
In this Insurance Business Review feature, Hubbard emphasizes the degree of changes absorbed by the insurance industry as well as the ongoing hurdles of consumers and carriers. He goes through the 101 of insurance policies and how it’s an essential component in dealing with inflation, the hard insurance market and more.
What do you see as the most significant challenges or opportunities in the field of underwriting?
Presently, one of the aspects that we are dealing with regularly is weather events, especially catastrophic (CAT) events. With the increasing frequency and severity of such events, insurers face significant challenges in accurately predicting and assessing potential losses.
To address these challenges, advancements in technology play a crucial role. For instance, sophisticated modeling tools powered by artificial intelligence (AI) and machine learning (ML) algorithms can analyze vast amounts of historical weather data, satellite imagery, and other relevant information to forecast the likelihood and intensity of weather events. These models can provide insurers with insights into the potential impact of hurricanes, tornadoes, floods, and other natural disasters on specific geographic areas.
Additionally, remote sensing technologies such as drones and satellites enable insurers to assess the extent of damage quickly and accurately after a catastrophic event occurs. This rapid response facilitates faster claims processing and helps insurers better manage their risk exposure.
While technology cannot provide a crystal ball to predict the future with absolute certainty, it significantly enhances insurers' ability to understand and prepare for potential weather-related losses. Underwriters can make more informed decisions, price policies accurately, and ultimately, better protect their policyholders and shareholders against the financial impacts of catastrophic events by leveraging tech.
As there is a wider shift in the insurance industry to become more customer-centric, there is a requirement to minimize isolated conversations and maximize emphasis on customer information. Do you find that this shift is adaptable?
the integration of technology has brought about significant advancements, making processes easier and more adaptable. With the continuous evolution of technology, we witness the emergence of various platforms and software solutions, empowering policyholders with greater flexibility and control over their insurance decisions. These innovations not only enable policyholders to obtain quotes but also facilitate price comparison with other carriers.
This accessibility fosters awareness among policyholders, creating a level playing field within the insurance industry. It provides them with the leverage to choose the carrier and coverage that best suits their needs and preferences.
Today, numerous platforms offer comprehensive online services, allowing policyholders to seamlessly navigate the insurance process. From obtaining quotes to paying premiums, everything can be done online. This increased accessibility and engagement empower policyholders to be more involved and informed in the insurance process, ultimately enhancing their overall experience.
Is there a specific checklist you consider when looking for technology partnerships in insurance?
While technology cannot provide a crystal ball to predict the future with absolute certainty, it significantly enhances insurers' ability to understand and prepare for potential losses.
Each carrier has its unique approach and audience it aims to serve, whether it's standard market coverage, high-risk coverage, or surplus lines coverage. Therefore, the suitability of a technology partner largely hinges on the requirements of the policyholder.
However, certain essential qualities are non-negotiable when selecting a technology partner. Firstly, the partner must stay abreast of the latest technological developments and trends. They should have the flexibility to adapt and pivot swiftly in response to the dynamic changes within the insurance industry. Recent events such as inflation and shifts in supply and demand have highlighted the importance of agility in navigating the claims process.
Moreover, experience is a crucial factor in choosing a technology partner. An experienced partner brings industry expertise and insights gained from years of immersion in the insurance sector. They understand the unique needs and challenges of the industry and can deliver tailored solutions accordingly.
Ultimately, selecting the right technology partner requires careful consideration and alignment with the carrier's objectives and priorities. By prioritizing qualities such as technological expertise, flexibility, and industry experience, carriers can forge successful partnerships that drive innovation and meet the evolving needs of policyholders.
Do you feel that the updates to the regulations in the past few years have had a big impact? Should insurance leaders prioritize agility while developing their new strategies?
In recent years, there has been a noticeable surge in the occurrence of nuclear verdicts within the legal landscape, leading to substantial increases in average payout amounts. Over a decade, from 2010 to 2020, statistics indicate a significant escalation, with payouts soaring from $2.3 billion to $23 billion. This upward trajectory underscores the pressing need for comprehensive tort reform across various jurisdictions to address the challenges posed by escalating claims. While certain regions demonstrate more favorable conditions, there remains a widespread recognition among insurance leaders of the imperative for reform to mitigate the impact of such excessive verdicts. Efforts to advocate for reform have gained momentum, with industry stakeholders actively engaging legislators to implement measures aimed at enhancing transparency, particularly in areas such as litigation funding. By empowering consumers with greater awareness and understanding of the legal landscape, these initiatives seek to foster a more informed and equitable environment for all parties involved. Despite the formidable challenges posed by escalating claims, there is a sense of optimism within the insurance sector, fueled by the proactive measures being undertaken to address these concerns and safeguard against the adverse effects of disproportionate verdicts.
Any predictions from your end as to what the industry can expect, in the next 12 to 18 months specifically in underwriting?
Currently, the insurance industry finds itself in a challenging phase, particularly within the realm of property insurance. The market conditions remain firm, with indications pointing to a continuation of this trend over the next 12 to 18 months. This prognosis is informed by heightened predictions concerning catastrophic (CAT) events, which have notably increased from the previous year, manifesting in a significant surge in CAT claims activity. As a result, rates are poised to continue their upward trajectory, with a heightened emphasis on prudently managing capacities, albeit without stringent restrictions. In this environment, vigilance in determining appropriate limits becomes paramount.
The advancement of electric vehicles is yet another brimming trend impacting the insurance industry. As it is relatively new with limited statistics and instability circling lithium-ion batteries, there is plenty of room for data mining and testing. It is going to take time to develop an optimal approach that covers these exposures.
Do you have a quick piece of advice about the industry for our readers?
The insurance industry has often found itself under a cloud of negative perception, perpetuated by widespread misconceptions among consumers. When surveyed, the average individual tends to harbor skepticism towards insurers, largely due to a lack of clarity regarding the nature of insurance itself. It is imperative to debunk these misconceptions by elucidating the essence of insurance—an agreement wherein a carrier pledges to indemnify a policyholder in the event of covered losses. Many mistakenly view insurance as akin to a maintenance plan, leading to frustration when claims are denied. However, it's crucial to recognize that insurance policies are specifically tailored to cover certain risks, excluding factors such as wear and tear. By fostering a deeper understanding of these principles among the public, insurers can bridge the gap between perception and reality, thereby mitigating distrust. The industry has made strides in this regard, particularly highlighted by the response to the COVID-19 pandemic. Amidst the uncertainty surrounding coverage, insurers have taken proactive measures to clarify policy terms and delineate coverage parameters, thereby bolstering transparency and enhancing consumer confidence. Moving forward, continued efforts in public education and communication will be pivotal in reshaping perceptions and fostering a more positive relationship between insurers and policyholders
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