Nationwide’s Sarah Jacobs on the Evolving Role of Insurance: From Repair to Prevention

The insurance industry is on the cusp of a significant transformation, shifting its focus from merely covering losses to actively preventing them. sarah Jacobs, Senior Vice President at Nationwide, highlighted this evolving role of insurance at Insurtech Insights, emphasizing the need for insurers to provide value beyond just paying claims. This proactive approach aims to benefit both customers and insurers by reducing costs and improving overall outcomes.

the Shift to “Protect and Prevent”

jacobs argues that consumers expect tangible benefits from their insurance beyond just financial compensation after a loss. The traditional “repair and replace” model only provides value when a claim is filed. To truly resonate with customers, insurers must adopt a “protect and prevent” mindset, actively working to mitigate risks before they materialize.

Did You know? According to a 2024 report by the National Association of Insurance Commissioners (NAIC), preventative measures can reduce insurance claims by up to 20%.

This shift requires a fundamental change in how insurance companies operate, moving from reactive to proactive strategies. it involves leveraging data,technology,and partnerships to identify and address potential risks before they escalate into costly claims.

Overcoming Cost Challenges in the Insurance Industry

One of the biggest challenges facing the insurance industry is the rising cost of claims, driven by factors such as legal system abuse and fraud. Jacobs stresses the importance of finding ways to reduce these costs to maintain the affordability of insurance products. Passing these costs onto customers through higher premiums or reduced coverage is not a lasting solution.

By tackling issues like fraudulent claims and excessive legal verdicts,insurers can create a more efficient and cost-effective system that benefits everyone involved. This requires a collaborative effort across the industry, working with regulators and other stakeholders to implement meaningful reforms.

Implementing Preventative Measures

Successfully implementing a “protect and prevent” approach requires careful consideration of customer needs and preferences. jacobs emphasizes the importance of making preventative measures simple, clear, and valuable to customers. Insurers need to demonstrate how these measures directly impact rates and provide ongoing engagement to reinforce their value.

Pro Tip: Consider offering incentives for customers who actively participate in preventative programs, such as discounts on premiums or access to exclusive services.

Technology plays a crucial role in this effort, with various devices and models being explored to identify the most effective and user-friendly solutions. Telematics, for example, can provide valuable insights into driving behaviour, while smart home devices can help monitor and prevent property damage.

Improving Communication Between Departments

Effective communication between claims and underwriting departments is essential for identifying and addressing preventable issues. Claims adjusters can provide valuable insights into the root causes of claims, which can then be used to improve underwriting practices and develop more targeted preventative measures.

By leveraging AI and data analytics, insurers can analyze claims data at a macro level to identify patterns and trends that would otherwise go unnoticed. This data can then be used to develop proactive strategies to mitigate risks and reduce future claims.

The Power of Industry Collaboration

Many of the challenges facing the insurance industry, such as legal system abuse and outdated building codes, require a collaborative effort to address effectively. Jacobs calls for greater collaboration among carriers, regulators, and other stakeholders to drive meaningful change at a broader level.

Such as, working with organizations like the Insurance Institute for Business & Home safety (IBHS) can definitely help promote building codes that reduce the risk of damage from natural disasters. Similarly, sharing data and insights with regulators can help address issues like nuclear verdicts and create a more equitable legal system.

Looking Ahead

The insurance industry is at a pivotal moment, with the potential to transform its role from simply covering losses to actively preventing them. By embracing a “protect and prevent” mindset, insurers can provide greater value to customers, reduce costs, and create a more sustainable future for the industry.

What steps do you think insurance companies should take to better protect their customers? How can technology play a bigger role in preventing losses before they happen?