Insurance Adapts to Technology

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Old Industry Looks to Adapt to Technological Advances

Insurance has never been known as an industry on the cutting edge of technology. According to the Bureau of Labor and Statistics, the average age of an employee in the insurance industry is approximately 45 years old. This means many of the people now working in the industry got their start before technology had taken charge. Their foundation in insurance was built when brick and mortar agencies were the norm and most business was done face to face. Today, insurance agencies are doing business online, via social media, through an automated process, or sometimes over the phone. With this change in the way business is done, the insurance industry is finding a need for new employees with new skills. Here are some of the skills insurance companies are looking for and some of the unique challenges the industry must deal with.

New Types of Skills

With the onset of technology within the insurance industry, the industry needs people with new skills. For many senior members in the insurance industry, technology is very foreign. This is a large factor in the reason the industry has been slow to adapt to the technological age. For many, now is the time to either adapt to technology or be left behind by competitors who use it as an advantage. This means new people with new skills need to be hired to bring the industry into the twenty first century. Three types of skills that are particularly needed include computer skills, communication skills, and being skilled in the use of drone technology.

Computer Skills

Computer skills are needed now more than ever in our ever-connected world. Just about every employee in the insurance industry needs to use a computer to do their job and every business needs employees who can keep those computers up and running. In addition to maintaining hardware, insurance businesses need people to design and maintain effective websites. Coding skills are a must to move the insurance business into ecommerce. People with computer skills are very much in demand within the industry.

Writing and Communication Skills

Because of the move within the insurance industry to have a presence online, they need employees skilled in the art of writing and designing content for their website. Much of the terminology commonly used within the insurance industry has very technical lingo attached to it. Taking this terminology and breaking it down into easy-to-understand terms is a skill in itself. People who can do this effectively are in demand now and will continue to be needed for the foreseeable future.

New Risks = New Opportunity

There are many new types of risk that did not exist ten years ago of even five years ago. It was only 14 years ago when Mark Zuckerberg formed Facebook in a dorm room at Harvard. Now it is difficult for small businesses to do business with out some form of social media presence. Technology has brought new and better ways of doing business, but along with the new ways of doing business have come new risks. These new risks need to be insured. With that need to be insurance has added to companies business liability insurance cost. These new risks present a huge opportunity for some companies in the industry to find a niche, but for many in the insurance industry change is happening at a very slow pace. Here are three issues the insurance industry is being forced to deal with because of technology.

Data Breaches

Insurance coverage to protect businesses when a data breach occurs is an enormous new part of the insurance sector. It is still so young the industry has not yet found formalized names for the types of coverage to combat this risk. For the most part the coverage deals with first party and third party damages. The damage to you and your business is labeled first party coverage and the damage to third parties harmed by a data breach is called third party coverage. Most of the costs covered by these policies is required by law to provide.

For the most part, states govern cyber security. In most states, it is required after a breach to find the source of the breach, fix it, notify anyone who may have been compromised, and offer credit monitoring services for one year. Just these requirements can amount to tens of thousands of dollars if not more. Because of this enormous cost, insurance carriers are struggling to decide how much to charge business for this coverage. No matter what the cost, this coverage is becoming more of a necessity for most business and not just a luxury needed by major corporations or Silicon Valley.

Driverless Cars

Driverless cars create quite a conundrum around the need for liability protection. That is especially the case when determining who is at fault when an accident occurs. Is it the person who was riding in the self-driving car? Is it the owner of the vehicle? Is it the person who sold the vehicle or the manufacturer of the vehicle itself? These are all questions the auto and insurance industry have not yet figured out. For now, who is at fault is being ironed out in the state courts. The courts in the state governments that are currently allowing testing of autonomous cars are dealing with these issues. A few state legislatures are taking proactive steps to deal with these issues, but for now liability for driverless cars is still a bit like the wild west.

The Sharing economy

Companies like Uber, Lyft, and Airbnb have put a unique strain on the insurance industry. Technically Uber and Lyft have coverage for their drivers in place while they are on the clock driving for the company, but depending upon the company and the insurance coverage in place there are exceptions to what is covered. In some cases, the insurance policy covers the driver when they have a passenger in the vehicle with them, but not when they are on the way to picking them up.

In most cases, a personal insurance policy will not cover liability when a driver is using the vehicle for work. It also depends upon the state the driver is operating in. Each state has their own rules and regulations regarding who is at fault when car accidents occur on the job.

Currently most drivers who only have a personal insurance policy are taking a personal risk if they do not have additional commercial insurance for the time spent driving for a ride share company. Similar exclusions apply to home owners when they use companies like Airbnb to rent out some or all of their home to travelers. If something happens to the visitor on the homeowner’s property, they are liable for the damages. Most standard homeowner’s policies do not cover these damages. Additional policies are needed and this is a market that is very much in its infancy within the insurance industry.

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Walt Capell

President and owner Walt Capell started The Insurance Shop LLC in 2005. The Insurance Shop LLC is a rapidly growing national insurance agency with a strong reputation for forward-thinking, out-of-the-box products and solutions for business owners. Walt would like to use his experience in insurance and as a small business owner to benefit the leaders of tomorrow.