Casey Kempton highlighted critical challenges facing the personal lines sector and spoke at length about opportunities for innovation and improvement during her recent live on stage session at Insurtech Insights USA 2024.
The President of Personal Lines for Nationwide underscored the significant role of personal lines insurance, during her fireside chat with Lisa Wardlaw, describing it as the largest market within property and casualty insurance, with premiums totaling approximately US$475 billion annually. “It touches every single one of our lives,” said Kempton, as she spoke at length about how personal lines shape individuals’ experiences with insurance.
“We’re seeing savings being depleted, more credit card debt, and people only able to make minimum payments without reducing their balances. Insurance then becomes one of those expenses people question: “Do I really need this now?”
Casey Kempton, President Personal Lines, Nationwide
Economic and Environmental Drivers
Discussing macroeconomic influences and the challenging post-pandemic economic environment. “Overall, economically, it’s a tough environment,” she stated, pointing out the impact of inflation on both insurers and consumers.
“We’re seeing savings being depleted, more credit card debt, and people only able to make minimum payments without reducing their balances. Insurance then becomes one of those expenses people question: “Do I really need this now?” With rising insurance costs, some might consider suspending their policies temporarily, hoping to reinstate them later.”
The escalating frequency and severity of weather events due to changing climate patterns has also added further challenges to customers and insurers, Kempton said. Last year alone, the personal lines industry faced significant challenges, including a 111 combined ratio and numerous catastrophic events, each costing billions in losses. “These are unprecedented numbers. Weather impacts are no longer isolated; they’re nationwide. As an industry, we must focus not only on our financial stability but also on educating consumers about protecting themselves from these increasing risks,” she told the 600+ strong audience.
Media coverage can sometimes stir up fear and misunderstanding too, said Kempton, as she spoke about the role of technology and data in assessing risk. “Drones and satellite technology are vital tools for assessing property conditions and preventing losses. For example, a local DJ in Iowa joked on air about getting a new roof after a hailstorm, reflecting a common misconception about insurance. People often think insurance is a maintenance policy rather than a risk transfer tool.”
“We need to educate consumers that insurance is there to help them recover from losses, not just maintain their property. By partnering with consumers and helping them understand their coverage, we can change this mindset. It’s about making insurance a collaborative process where the policyholder is more engaged and informed.”
The Role of Carriers in Mitigating Risks
The critical role of insurance carriers in enhancing prevention and preparedness efforts was also discussed, with Kempton highlighting the need for better education regarding risk prevention. Beyond merely providing coverage, carriers must educate consumers about potential risks, she said, citing a recent survey that showed that 25% of homeowners didn’t expect to ever have a weather-related loss – and highlighting a critical gap in consumer awareness.
“Consumers need to think about maintaining their homes proactively—things like maintaining roofs, managing overhangs, securing property in tornado zones, and more. Technology also plays a vital role here. For example, drones and satellite technology can help identify potential issues before they become major problems. Using such technologies can help both consumers and insurers manage risks better.
“Additionally, sharing more risk with consumers through higher deductibles and involving them in loss prevention efforts can lead to better outcomes for everyone.”
Regulation and protecting pricing
As the industry changes at pace, offering technical innovation and more data points to assess escalating risks – especially within an unstable economic climate, Kempton said that regulators were under increasing pressure to deliver the best outcomes possible to both customers and insurers.
She said: “Regulation is indeed a lightning rod topic. Regulators have a duty to protect consumers by ensuring insurance remains affordable and fair. This becomes challenging with increasing weather events and population shifts, particularly in high-risk areas.”
“Regulators must balance protecting consumers with allowing insurers to adjust their models based on new data and trends. Some states are more open to dialogue and understanding the evolving risks, while others are more rigid.”
She added: “It’s essential for carriers and regulators to work together, ensuring long-term stability and fairness. Open communication and a willingness to adapt are key to navigating these challenges.”
Reporting by Joanna England
