Current Trends & Challenges in Auto and Homeowners Insurance. Brandywine Valley CPCU Society Chapter: Industry Day October 23, 2015

Transcription

1 Current Trends & Challenges in Auto and Homeowners Insurance Brandywine Valley CPCU Society Chapter: Industry Day October 23, 2015

2 Today s Agenda Sharing Economy Autonomous Vehicles & Auto Trends Homeowners Challenges & Trends

3 Car Sharing vs. Ride Sharing

4 Car Sharing vs. Ride-Sharing Car Sharing Car owners share their car with other drivers Analogous to car rental Ride-Sharing Drivers use their car to transport passengers Analogous to taxi service

5 Car Sharing: Potential Exposure Considerations Potential frequency of rentals Insurer awareness ISO s auto programs generally cover permissive users Typically a commercial risk Personal vehicle sharing programs typically cover risk (required in some jurisdictions) New ISO Personal Auto exclusion for car sharing arrangements available in 47 jurisdictions 5

6 Ride Sharing What is it? Smart phone app connects drivers with passengers Transportation Network Company (TNC) Social network sites Evaluate drivers/review passenger experiences Operations in 200+ cities worldwide Payment/tip submitted through app Potential challenge to taxi industry 6

7 Ride Sharing Potential Exposure Considerations Insurer awareness Operator awareness Frequency of operation Coverage applicability Typically commercial auto risk Criteria may include: Territory travelled; miles driven; frequency Potential wide appeal Young adults, students, teachers, seniors, unemployed 7

8 Ride-Sharing Arrangements Insurance Applicability Phase TNC Coverage 1. Driver logged into TNC App but not "matched" with a passenger Contingent liability coverage IF personal auto coverage declined/not available ($50/100/25)* 2. A "match" is made but passenger is not in the driver's car Primary liability, UM/UIM coverage at a higher limit ($1M)* Contingent comp/collision coverage 3. A passenger is in the driver s car Same as Phase 2 *According to publicly available information, as of 6/2/2015 8

9 Ride Sharing ISO Activity 1. Advisory policyholder notice 2. Reinforced Public or livery exclusion Personal Auto & Umbrella 3. New coverage options 4. Rules and rating information 5. Circulars: LI-PA LI-PA ISO Ride Share Resource Center & White Paper 9

10 Reinforced Public or Livery Exclusion Insurance Services Office, Inc.,

11 Ride Sharing Coverage Options Pre-Phase 1 Phase 1 only App off Driver logged into the TNC App but not "matched" with a passenger Phase 1 and 2 Driver logged into the TNC App but passenger has not entered the vehicle 11

12 Ride Sharing Coverage Options Rules and Rating Information Separate loss cost determined Based on: Territory representing majority of TNC activity Mileage attributable to covered TNC activity Use of the vehicle in TNC capacity Otherwise applicable rating factors for the vehicle 12

13 Home Sharing

14 Home Sharing: What is it? Arrangement where host temporarily shares space with travelers Homeowners and apartment dwellers supplement income Operations in 34,000 cities worldwide Potential challenge to hotel industry 14

15 Home Sharing Potential Exposure Considerations Insurer awareness Host awareness Frequency and length of stays Presence of owner on site Local/municipal ordinances Landlord restrictions Risks may be similar to those of a bed and breakfast Wide appeal: Young adults, retirees, unemployed, transient workforce House, apartment, spare room Host, landlord and traveler exposures 15

16 Potential Exposure Concerns Host Property Loss to host s property/ furnishings Loss of use Liability Damage to property of: traveler, guests landlord s furnishings Bodily injury to traveler, guests 16

17 Potential Exposure Concerns Landlord Property Loss to landlord s furnishings Liability Damage to property of traveler, guests Bodily injury to other tenants, traveler, guests Comment A landlord may act as a host (vacant unit) A Homeowners Policy may be issued to the owneroccupant(s) of a 1, 2, 3 or 4 family dwelling 17

18 Potential Exposure Concerns Traveler Property Loss to traveler s property Liability Damage to host s and landlord s furnishings Bodily injury to guests, building s other tenants, visitors Personal injury due to poor reviews Comment Similar exposures currently exist for travelers at hotels, B & B s, guest houses 18

19 ISO Homeowners Policy Terms Used Property Property of roomers, boarders, other tenants Insured s property in an apartment regularly rented to others Liability Rental or holding for rental on an occasional basis Rented in part to not more than 2 roomers or boarders 19

20 ISO Homeowners Policy Policy Provisions Property provisions which may generally limit or exclude coverage Loss to property of roomers, boarders, other tenants Loss to property/furnishings in an apartment regularly rented to others Theft of personal property from that part of a residence rented to others 20

21 ISO Homeowners Policy Policy Provisions Liability provisions which may generally limit or exclude coverage Bodily injury or property damage arising out of a business Bodily injury or property damage to others when a rental occurs more than occasionally Loss to property rented to, occupied or used by or in the care of an insured 21

22 ISO s Current Plans 1. Policyholder Notice Guidance for policyholder to contact insurer 2. Exclusion Reinforced exclusions/limitations Applicable to host, landlord 3. Coverage option Property and liability coverage for loss/damage/injury arising out of home sharing Applicable to host, landlord 22

23 ISO s Proposed Plans Additional coverage considerations Loss of Income Wrongful loss of security deposit Personal/advertising injury Rating Considerations Frequency of hosting Number of homesharing spaces Owner on-site/off-site Right to use yard; kitchen facilities 23

24 What Sharing is next?

25 The Sharing Economy Sharing economy has emerged quickly Driven by technology and potential for people to make/save money Opportunity for insurers to serve new markets and innovate Requires: Adjustment to traditional coverage provisions Creative coverage and rating options 25

26 What s Next? Other sharing services: Bicycles Tools Cameras Kitchenware Restroom facilities Delivery of personal items Pet sitting Private flying/boating services What else?! Technology Imagination! 26

27 Autonomous Vehicles & Trends Technological Advances All-electric and hybrid vehicles In-car entertainment (ICE) systems Collision Avoidance Systems Distracted Driving Cell Phones/Texting Technology Autonomous Cars Automaker production State regulatory environment 27

28 Distracted Driving

29 One Insurer s Research Study Fatal car crashes caused by: Daydreaming 60 to 65% Using cell phone 10 to 15% Distractions outside a vehicle 5-10% Other passengers inside vehicle 5-10% Using or reaching for something 5-10% Other (including eating and drinking) 0 to 5% 29

30 AAA and University of Utah Study on Hands-Free Systems Complexity of task Time on task Where to look Accuracy of system Quality of voice (no system) 30

31 Technological Advancements

32 Cars of Today Forward collision warning Blind-spot detection Lane departure warning Adaptive cruise control Pedestrian detection Self-parking 32

33 Gradual Adoption Percentage of of Vehicle with ESC, by by Calendar Model Year 100.0% 100% 90.0% 90% 80.0% 80% 70.0% 70% 60.0% 60% 50.0% 50% 40.0% 40% 30.0% 30% 20.0% 20% 10.0% 10% 0.0% 0% ESC Standard ESC Standard or Optional Source: VINMASTER and ISO Loss Cost Filing Model Year Exhibits 33

34 Autonomous Vehicles

35 Autonomous Vehicle What is an Autonomous Vehicle? A vehicle that can generally be described as able to guide itself from an origin point to destination desired by an individual 35

36 Anticipated Benefits of Autonomous Vehicles Reduce accidents More efficient use of resources Transportation for all 36

37 Levels of Vehicle Automation Individual yields near-full or partial control to autonomous vehicle technology Level 0 No Automation Level 1 Function- Specific Automation (e.g. cruise control) Level 2 Combined Function Automation e.g. adaptive cruise control and lane center Level 3 Limited Self- Driving Automation (e.g. drivers can cede safety-critical functions) Level 4 Full Self- Driving Automation Source: U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA) 37

38 Where are we today? Auto manufacturers today sell vehicles at level 2 and 3, having features such as: Adaptive cruise control Driver assist/collision avoidance systems Lane departure warning Blind spot detection Automatic parking Night vision 38

39 Where are we headed? Google has target of 2020 At least one auto manufacturer has stated desire to sell a vehicle by 2020 Aftermarket providers have started to talk about product availability 39

40 Differences in Philosophy Google transportation for all designed so driver rarely needs to drive car Auto Manufacturers driver will be able to take control, as driving should continue to be fun 40

41 What do you think? 1. Self-driving car OR drive yourself? 2. Would you send your child to school in a selfdriving car -- Yes OR No? 3. What would you program a self-driving car to hit first deer or other car? 41

42 Liability Consideration Today Liability based on your actions How you manage conditions How attentive you are How you maintain your vehicle Proximate cause of accidents Other drivers actions 42

43 New Problems and Issues Are these things safe how do we know? Who will be held liable driver, car manufacturer or technology provider? Hacking risk/ Software updates failure to update/why Cost of technology Mixture of vehicles on the road Anticipated frequency 43

44 The Liability Issue Who Pays? Tort or No-fault Product liability system rules of product liability can be exacting Alternative liability systems example is vaccine liability treatment 44

45 Rating/Underwriting the Risk Today Who is the driver, driver characteristics and attributes How does the driver drive accidents and violations/ubi Where does driver drive/garage car What kind of vehicle 45

46 Flood

47 Flood Option ISO Commercial Property coverage option Considering voluntary flood option for ISO Homeowners Program Potential insurer appetite Considerations relating to governmental subsidies and incentive 47

48 Water Back-up Option Water that: 1. Originates from within the dwelling and backs up through sewers/drains 2. Overflows or is discharged from a sump, sump pump, or related equipment Claims settlement considerations Potential enhancement: Flood coverage for minimal limits 48

49 Drones

50 Drones Technology and Design Fixed-wing Quad-rotors and octo-copters Micro air vehicles (MAVs) Kxd6Wg/0/M/Interpolitex2013part06-47-M.jpg 50

51 Drones Technology and Design Model or Hobby Aircraft can range in price from $50 to over $1200 Some models include cameras, radio transmitters and WiFi technology CAMERA-14-MP-EXTRA-BATTERY-/ #ht_8868wt_

52 FAA Guidelines Criteria published by FAA (9/2/2015) that must be met for unmanned aircraft to be considered model aircraft 1. Hobby or recreational use 2. Operates in accordance with community-based safety guidelines and within programming of nationwide community-based organization 3. No more than 55 pounds 4. Does not interfere with manned aircraft 5. When flown within 5 miles of an airport, the operator provides the airport with notice. Any unmanned aircraft that does not meet these criteria may not qualify as hobby or recreational and could be subject to additional regulations 52

53 Drones What Are Potential Exposures?

54 Homeowners Policy Coverage Considerations Model or hobby aircraft Property coverage Bodily injury and property damage liability coverage Personal injury coverage 54

55 Medical/Recreational Marijuana

56 Medical/Recreational Marijuana: Legality of Marijuana by State (as of 9/1/2015)* 4 states and DC have legalized recreational and medical use of marijuana 25 states have legalized or decriminalized possession or some form of medical use Alaska Hawaii 21 states still consider all forms of use and possession of marijuana illegal Legal Medical & Recreational Medical use allowed, possession decriminalized Possession decriminalized, medical use not allowed Medical use allowed, possession is illegal All forms of use and possession are illegal While the federal government has allowed states to implement their own laws, possession and use are still illegal under federal law Sources: * National Conference of State Legislatures (ncsl.org) 56

57 Medical/Recreational Marijuana: Potential Exposure Considerations Marijuana Plant Full grown plant up to $6,000* Damage due to improper cultivation, weather related perils, theft Harvested Marijuana Improper disposal Could be considered personal property potential covered loss Minor s use of marijuana owned by insured Edibles including accidental ingestion by others Theft Inconsistent Laws Across the Country To date, 29 states have enacted laws that legalize, to various degrees, the use or possession of marijuana Potential conflict in state and federal laws Sources: * 57

58 Medical/Recreational Marijuana: Coverage Considerations The discrepancy between federal & state marijuana laws can potentially lead to differences in the application of coverage. Especially as to whether or not it exists at all. Current Policy Language: 1. No explicit exclusion for harvested marijuana, marijuana plants, related equipment 2. Liability arising out of use, sale, manufacture, delivery, transfer or possession of a Controlled Substance as defined by the Federal Food and Drug Law is excluded. o Does not apply if the controlled substance is prescribed by a licensed health care professional Possible Coverage Options: 1. Explicit exclusion regardless of legality or use 2. New endorsement to afford liability coverage for injury or damage arising out of the use or possession of marijuana (where legal) 3. New endorsement for increased limits to marijuana plants grown on the residence premises for personal use (subject to state requirements)

59 Contact Information Sandee Perfetto Personal Auto Product Development Kevin Poll Personal Property Product Development

60 No part of this presentation may be copied or redistributed without prior written consent of ISO. This material was used exclusively as an exhibit to an oral presentation. It may not be, nor should it be relied on as reflecting, a complete record of the discussion.