As unmanned aircraft become more integrated into the United States’ airspace, the regulatory, operational, and risk landscapes have grown increasingly complex. The Federal Aviation Administration (FAA) regulates how unmanned aircraft may be used and by whom, while privacy expectations and liability exposures introduce new challenges for operators and insurers alike.  

This white paper provides a comprehensive exploration of unmanned aircraft systems through multiple lenses: their uses, history, mechanics, regulatory environment, property and liability perils, underwriting considerations, privacy implications, and future technological evolution.

Click below to download your copy.

The post Unmanned Aircraft and Insurance: Risks, Regulation, and the Road Ahead first appeared on AAIS.

Challenges Facing the Construction Industry and the Impact on Insurance

The construction industry relies heavily on the insurance sector to safeguard its key assets, projects, equipment, and personnel. Rajaraman noted that currently, the industry is seeing robust demand. “This is largely fueled by fiscal policies enacted during the pandemic era and initiatives like the CHIPS Act, which have boosted both residential and commercial infrastructure projects,” he said. “Consequently, construction costs have soared steeply.”

On top of this, the increase in natural calamities has impacted both the frequency and magnitude of insurance claims. New risks are adding to these challenges. “While the industry traditionally faced losses primarily from events like floods, windstorms, and theft, it now confronts novel exposures, such as those related to renewable energy, hailstorms, and other catastrophic events,” Rajaraman stated. “These factors have created a challenging market for construction project insurance.” While many of these challenges are beyond the control of insurance companies, he believes staying cooperative demands they innovate their processes by leveraging technology and reducing costs.

How Insurers Can Optimize Costs Associated with Construction Insurance

There are specific strategies Rajaraman recommends for reducing overall costs related to managing insurance products and programs. “We are seeing an increase in the prominence of MGAs in the builder’s risk space, where they can use their market expertise and favorable cost structures for better risk assessment and pricing,” he explained. “A U.S.-based mutual carrier approached us with a request to set up an AAIS-based builder’s risk program for three distinct MGAs, each targeting different customer segments. We recommended a streamlined approach where programs, such as the AAIS builder’s risk standard, serve as the foundation without necessitating individual implementations for each MGA.” Instead, each MGA’s view of the AAIS builder’s risk program was tailored to align with their program-specific requirements. According to Rajaraman, this model significantly reduced the costs associated with establishing the programs and all three programs were successfully launched within a span of two weeks. Additionally, by circumventing the traditional underwriting process, the carrier also gained visibility into strong and weaker classes of risks, providing valuable insights into opportunities for improvement.

Ensuring Data Security and Isolation for Multiple MGAs or Carriers Sharing the Same Instance

Rajaraman has found that MGAs and carriers want to ensure there is no compromise on their data; they need to keep their data secure and isolated from other insurers on the cloud. “We prioritize the safety and security of each insurer’s data by implementing separate databases per insurer,” he shared. “This means that each insurer’s information is stored in their own isolated repository, completely segregated from other insurance companies’ data. There is also no mixing or overlap of data between insurers, thus maintaining confidentiality and integrity of each insurer’s sensitive information.” This helps insurers enhance their data security and stay compliant with regulatory requirements and industry standards. Rajaraman recommends this approach for carriers and MGAs looking to benefit from the scale of cloud speed and security as well.

To view the full interview with Anand Rajaraman, click on the video above.

The post Methods for MGAs to Cut Construction Insurance Costs first appeared on AAIS.

Current and Emerging Inland Marine Market Trends

“The state of the inland marine insurance market is resilient, robust, and profitable,” according to Colson. “The industry demonstrated remarkable resilience rebounding from the COVID-19 pandemic and recent booms in building and transportation logistics have helped to drive growth.” In addition to collecting more written premium, which increased 14.3% in the U.S. inland marine insurance sector according to AM Best, Colson explained that the market space is enjoying an improving loss ratio, which fell from 63.8% in 2020 to 46.6% in 2022. “So, this translates into increased profitability and a combined ratio that is typically 10 points lower than the overall property and casualty market,” she stated. “And while inland marine insurance is a small portion of the P&C market, it’s maintaining strength and profitability.”

Colson highlighted several notable emerging trends in the inland marine insurance industry. “Inflation continues to be a hot topic and a concern shaping the industry, especially in this tense geopolitical environment, which was still rebounding from the COVID-19 pandemic,” she said. “The Russia and Ukraine war followed by the Hamas-Israel war have further complicated the inflationary environment. And as the cost of doing business climbs, it’s even more important to set an accurate valuation on items being insured.” Colson believes properly doing so can alleviate some of the effects inflation has on the increased cost of claims today versus five years ago.

Other trends include advances in an evolving technological landscape, like blockchain, artificial intelligence, and data analytics. “Innovations like these enable underwriters to become more efficient in the way they underwrite and are modernizing the way claims are managed,” said Colson. Another trend in the industry is a push towards sustainability. “While these trends are benefiting underwriters, risk managers, and claims professionals, they can bring new challenges with them, too,” Colson warned. “Some of these trends are opening doors to emerging risks, including cyber threats, and insurers may need to adjust how they provide coverage to address these risks.”

Effects of Climate Change on Inland Marine

Climate change is impacting inland marine insurance exposures in a variety of ways. One way is the rise in intensity and frequency of natural disasters. “These events are also transpiring across more areas,” Colson explained. “Flooding is no longer limited to just coastal areas. Convective storms, especially hailstorms, are also causing damage to solar farms in the Midwestern states, such as Nebraska and Texas. And this is happening with an increasing frequency.”

One tool Colson touched upon that insurers and reinsurers are using to assess the potential risks caused by natural catastrophes is catastrophe (cat) modeling. “Some newer cat models are beginning to emerge that are attempting to quantify the impact of future climatic risks,” she shared. “These tools can be used to make more informed decisions and to prevent property loss.”

Use of Data Analytics and Technology Tools

Colson explained that the inland marine insurance industry is advancing the use of data analytics and technology by leveraging data to monitor and improve the understanding of potential risks. “Inland marine insurance professionals are increasingly using data analytics to enhance underwriting risk assessments and claims management,” she said. “They’re also using it to streamline processes and improve overall efficiency.” Colson shared that industry leaders are also using telematics to help prevent or recover stolen insured items or to monitor behaviors such as the speed of trucks when drivers are hauling cargo.

What’s New at IMUA?

New developments at IMUA include the All Access Education platform, plans to transition to a new website as well as a new learning management system, and the upcoming Annual Meeting. “All Access Education provides all-inclusive remote education, including unlimited new and archived webinars, seminars, and classes as well as papers for every member at no additional cost,” Colson revealed. “This benefit has been incredibly successful with IMUA’s membership; registrations for remote education have tripled since the inception of this program.”

In fall 2024, IMUA will transition to a new website and database and implement a new learning management system that will give IMUA members a richer, more user-friendly experience with access to more education and an on-demand robust search engine.

Colson is also looking forward to the upcoming IMUA 93rd Annual Meeting on April 28-May 3 in San Antonio, Texas. “This year’s conference will kick off with a unique executive panel featuring industry views from three different perspectives: a broker, an underwriter, and a reinsurer,” she shared. “Other conference topics include recent court filings on a builder’s risk insurance claim, fictitious pickups and double broker loads, the oil and gas industry, convective storms and climate change, and modular construction.” IMUA is anticipating another year of record attendance for its Annual Meeting, with more than 325 individuals already registered. For more details and to register online, click here.

To view the full interview with Lillian Colson, please click the video above.

The post Inland Marine Market Trends, Climate Change Impacts, and Tech Innovations Ahead of Annual Meeting first appeared on AAIS.