One in Three Policyholders State They Went From Being Fully Insured to Under or Uninsured During the Pandemic
May 13 2021 - 8:00AM
One-third of consumers stated they went from being fully insured to
under or uninsured during the COVID-19 pandemic. Only a small
minority of this group adjusted their policy or payment plans. This
is one of the challenges facing insurers today as they navigate
through the pandemic, and it was among the featured topics in the
just-completed TransUnion (NYSE: TRU) 2021 Virtual Insurance
Summit.
The two-day Summit included more than 150 insurance executives
from across the country. Key trends discussed during the meeting
included best approaches to support policyholders during the
K-shaped economic recovery, how migration patterns could affect
insurers and the effects of backlogged court cases to the
industry.
“It’s clear that COVID-19 has complicated the consumer
experience as well as the affordability of insurance policies,”
said Mark McElroy, executive vice president and head of
TransUnion’s insurance business. “The research presented at our
Summit stressed the importance for insurers to lean in to
comprehensive data that provides a holistic view of the consumer.
Doing so helps insurers better understand consumer needs and
accurately price, quote and deliver personalized policies and
solutions for their customers.”
TransUnion examined several trends during the Summit, three of
which are highlighted below:
Trend #1: Helping Policyholders Climb out of the
K-shaped Economic Recovery
In response to the financial hurt brought on by the pandemic,
the U.S. government provided trillions of dollars in assistance.
Among the assistance offered were accommodation programs allowing
borrowers to delay payments on certain loans.
The number of accounts in accommodation peaked in the summer of
2020, and TransUnion research shows that there continues to be more
accounts exiting accommodation than those entering. However, those
who remain in accommodation are likely struggling, compared to
those who entered in the early days of the pandemic. This group
also likely needs the most assistance with their insurance
payments.
A TransUnion survey of more than 2,000 U.S. consumers conducted
in March 2021 and presented at the Summit elaborated on the
challenges faced by some insurance policyholders. The survey found
that 70% of respondents said it was important to have auto
insurance. Yet, 34% stated that they went from being fully insured
to under or uninsured during the pandemic. One in five (18%)
respondents said they missed one or more payments; 27% said they
canceled a policy.
Furthermore, of this group, many did not take advantage of every
lever of affordability on their auto policy. Only 20% adjusted
payment plans, 32% increased deductibles to lower premiums/regular
payments and another 32% reduced coverage. “The results clearly
point to opportunities for insurers to better support their
policyholders. Insurers who engage their customers, especially
those in a difficult predicament, can forge long-lasting
relationships once the economy recovers,” said McElroy.
Trend #2: Migration Patterns Influencing Insurance
Needs
Despite COVID-19, the housing market has experienced large
growth over the last 12 months. Existing home sales are up from 5.7
million in February 2020 to 6.2 million in February 2021. As a
result, there has been a 16% increase in average home prices
between February 2020 ($270k) and February 2021 ($313k).
As the housing market remains active, TransUnion research found
that many consumers are fleeing cities for less dense areas. For
most major cities, the pandemic simply accelerated an already
downward trend wherein large metro areas are becoming increasingly
less popular.
The implications to insurers are plentiful. Most noteworthy,
there will be changing mobility and risk distribution by territory,
as more people populate these new areas. The migration patterns
will also have an impact on vehicle demand and driving. Adjusting
insurance policies for these individuals will be critical.
Trend #3: Backlogged Court Cases and the Impact to
Insurers
Another consequence of COVID-19 and shutdown orders were
operational delays in the judicial system. Courts are experiencing
backlogs, which are affecting the recency of violations returned
and conviction rates.
The average time to adjudicate increased by 16 days in 2020 over
the prior year. Although certain court proceedings have resumed,
many traffic-related cases remain backlogged. This action will
likely have a lasting impact on the auto insurance industry in
regards to premiums and pricing.
For instance, the impact of COVID-19 has reduced personal auto
conviction surcharge revenue by an estimated 9% and contributes to
negative premium drift; however, carriers can mitigate some of that
impact by using court records. A TransUnion analysis found that
there could be a 35% increase to surcharge revenue through the
deployment of court records.
“The impacts of COVID-19 are certainly not over, and this means
there are consumers on each end of the ‘K-shape’ – those who have
been able to bounce back and others who still face significant
hardship. In the year ahead, it will be more important than ever
for insurers to consider the resources, partners and solutions that
will allow them to have meaningful interactions with consumers and
help them identify the coverage and adjustments to best meet their
needs,” concluded McElroy.
Insurers seeking more information about the research and other
tools to respond to the pandemic can complete the form found on
TransUnion’s COVID-19 insurance website.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that
makes trust possible in the modern economy. We do this by providing
a comprehensive picture of each person so they can be reliably and
safely represented in the marketplace. As a result, businesses and
consumers can transact with confidence and achieve great things. We
call this Information for Good.®
A leading presence in more than 30 countries across five
continents, TransUnion provides solutions that help create economic
opportunity, great experiences and personal empowerment for
hundreds of millions of people.
http://www.transunion.com/business
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TransUnion |
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