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Risk Control Trends for 2021

Technology isn’t just mitigating claims; it’s helping prevent them in the first place

January 12, 2021 Photo

It goes without saying that 2020 presented some unique challenges for all of us in the risk-control field. COVID-19 drove the narrative for much of the year. To top it off, the insurance industry experienced a brutal year in terms of natural disasters.

With all of the emergent risks of 2020, it was easy for innovation to take a back seat. But, hopefully, you were able to keep your innovation engine chugging along in the background while juggling the urgent needs the year threw at you. Looking ahead to a new year, here are some insurance industry risk trends I see for 2021.

Using Technology to Prevent Losses

With the current pace of technological advancements and discoveries, this is an exciting time to be a risk-management professional. Rapid developments in technology—particularly the emergence of IoT devices and sensors in the commercial setting—present great opportunities to help us protect our customers and mitigate risk by providing actionable, real-time data about conditions at insured locations.

For instance, Church Mutual provides sensors that monitor moisture and temperature in an insured’s building and alert the insured by text, phone, email, or push notification when moisture or temperatures reach predetermined levels. The sensors have proven to be a huge benefit to insureds, particularly since their buildings are unoccupied much of the time.

Existing technology and devices like this can be expanded for multiple uses, too. For instance, the network that monitors moisture and temperature changes can be used in conjunction with another device to provide an armed-intruder emergency service. When this device’s “pull” switch is engaged, the device automatically notifies authorities of an armed-intruder event at the customer’s location and police are dispatched. The service results in a 78 percent reduction in the time taken to contact and relay critical information to local authorities. With these types of events, saving even seconds can mean saving lives.

With examples like this, it’s clear that smart-home technology and related IoT devices are going to become standard in the risk-control toolbox. Take smoke alarm “listeners” as an example. These smart smoke detectors can alert homeowners to a possible fire threat, even when they are not home. In addition to residential properties, how many of your commercial policyholders are still relying on consumer-type smoke detectors to protect their properties from fire? Getting smart detectors into insureds’ buildings can provide a big benefit when it comes to early detection. There are even smart batteries that turn traditional smoke alarms into connected devices.

Computer Vision and AI

The combination of computer vision and artificial intelligence (AI) will help insureds “see” the events and causes that lead up to an accident, eventually moving into prevention, as has been the case with SafelyYou and senior-living customers.

SafelyYou is a memory care-focused health care technology company that leverages AI-enabled cameras placed in a resident’s room to detect falls and help prevent future accidents. Care staff use fall event videos to determine a root cause, the need for an emergency-room visit, resident-specific care strategies, and lessons that can be applied globally to reduce falls. Clinical studies conducted by SafelyYou demonstrated an average reduction in falls of 40 percent, which can help decrease the long-term cost of insurance premiums.

Another example of how the combination of computer vision and sensors can benefit insureds is by helping reduce the risk of fire losses due to adjacent building vacancies. Fires in vacant buildings are more likely to spread beyond the structure of origin because the fire gets a head start before being detected and reported. The combination of these technologies could identify potential fire risks well ahead of current methods and could even be useful in situations where the vacant property isn’t owned by the policyholder.

Privacy, of course, will be a concern whenever video and images are used, but the intelligence that can be created with modern-day AI techniques and algorithms can ensure only the relevant footage is recorded once the risk is identified.

Taking the Lead

I expect to see a continued shift toward insurers becoming more involved in protecting their customers from risks that traditionally were mitigated by local municipal services. Proactive fire protection is one of those areas in which insurers can use technology to prevent claims.

Municipal fire departments do a great job of mitigating fire losses. However, local budgets are strained, and natural disasters can be so widespread and fast-moving that protection of every structure is no longer possible. As a result, insurers are stepping in to provide additional intelligence, manpower, and resources to supplement the local public services. Insurers will likely increase their partnerships with industry leaders to monitor wildfires and send alerts to their customers when their properties are in danger.

Some insurers even contract with private fire-protection companies and dispatch them to insureds’ locations when a wildfire threat is imminent. They deploy protective measures, including removing vegetative fuel and spraying fire-retardant gel on buildings. Over the course of the 2020 wildfire season, Church Mutual estimates that these measures saved it more than $100 million in property losses.

After this year’s costly wildfire season, I expect more insurers to go beyond policyholder education and seek new ways to actively protect their customers from this threat as well as others. An approach that combines technology with boots on the ground has worked, and makes the most sense. Getting these programs up and running is an investment, for sure, but the return on that investment can be huge.

As we all know, the only good claim is the one that is prevented. With all of the technology that is available to insurers today, it’s a matter of finding ways to apply it to fit the appropriate need. As we harness that potential, I foresee a lot of exciting innovations coming from our insurance risk-control colleagues in the next year. 

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About The Authors
Guy Russ

Guy Russ is assistant vice president – risk control for Church Mutual Insurance Company, S.I. 

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