Prevention: better than claiming?
Climate change means extreme weather events are only going to become more frequent. Maurice Tulloch, CEO international insurance at Aviva, explains how the insurance industry can lead the way in resilience
When the lightning storm hit my home city of Toronto five years ago, as an insurer I thought: this will be a $400 million event. As a dad, I thought: I better call home. Both professionally and personally, it would have been invaluable if we could have been better prepared.
Our basement pump failed when the power went out and my kids were down there paddling in three feet of water. Luckily, I got them out before the water reached the electrics and, as you might expect, we were insured.
Within four hours a team had arrived to help but it still took several months before we were back to normal. Just three hours of unexpected extreme weather brought worry, stress and a fair amount of chaos.
Preventing bad stuff happening
Our industry exists for moments like this. We are set up to be there for people when bad stuff happens to help them defy the uncertainties of life.
At Aviva, I’m proud that we pay out on 98% of our claims. But as well as working to address the reasons behind the 2% we cannot pay, we’d also much prefer to help customers detect and tackle issues so they don’t need to claim in the first place.
As anyone who has lived through a flood or a wildfire, a serious illness or a car crash will know, however good your insurer’s response might be, it would still be better not to need it at all.
This is why trying to reduce the frequency or severity of problems has always been part of what insurers have done. Aviva’s first ancestor company way back in the seventeenth century even set up its own fire brigade to help protect customers’ property from fire.
The increasing role of data in prevention
What has changed in the intervening generations is data - how much there is, where it comes from and how well we can process it.
Insurers are data experts, with a vast amount of experience, knowledge and understanding of the risks that our customers face. This gives us the ability to help prevent bad events from happening; with that ability comes a duty to act.
Take the internet of things. Increasing connectivity and a plethora of sensors allow for monitoring and measurement across a whole range of risks. Consumers can better understand their health, home, safety and their wider environment at a price that puts it well within the mainstream.
Working in partnership
Like others in the industry, we have been working through partnerships to help our customers unlock this data to prevent or reduce their need to claim.
For example, we now hold a majority stake in Neos, a London-based tech firm. Neos offers customers insurance along with cameras and other sensors to detect things like break-ins or leaks. It can send incident alerts sent directly to the customer’s phone.
In Ireland, along with Accuflow, we have launched Aviva Smart Home, combining home insurance and connected home technology. The policy allows customers to digitally manage every electronic device in their home helping them reduce their risk, lower their home insurance premium and even save on their heating bill.
Developments in autonomous vehicles are going to bring new opportunities too. From camera-assisted parking to avoid car park scrapes to automatic braking for emergencies at speed, people are already experiencing some benefits.
Our Aviva Drive app for UK customers can measure breaking distance, cornering speed and acceleration to raise awareness of driving ability. This not only coaches people to drive more safely and reduce the need to claim but they also get the benefit of lower premiums by demonstrating they are driving more carefully.
Then there’s what might be the biggest risk of all. Climate change means extreme weather events like the one that flooded my home are only going to become more frequent, and more violent. So, we are going to keep working to prevent loss and develop greater resilience in this area too.
This can be through something as simple as sending weather updates to motorists as we do in France with a weather app. Or back home in Canada, which has just endured one of its worst ever storm seasons, we are using data modelling to get help to the worst hit areas sooner.
Planning in this way not only helps those making a claim by limiting the extent of the damage, it’s good for our other customers too as we can plan our resources better to maintain an uninterrupted service.
Virtuous circle
The benefits of prevention form a virtuous circle. Our customers will experience traumatic life events less often. That means Aviva will have to pay out less in claims. In turn, these savings flow back to our customers in the form of lower premiums.
It’s a relationship fundamental to the social purpose of insurance itself and the opportunities to do more in prevention are only going to grow.
With understandable questions and concerns from consumers about the collection and use of their data, we need to maintain the highest standards of security and integrity in how we use the information at our disposal. And we should continue to make the case for the benefits customer get- a simpler experience, lower costs, fewer claims- that are only possible thanks to the insight this data allows.
Our unique position means our industry can lead the way in prevention. But that does not mean we should walk alone.
To better manage the risks presented by a rapidly changing world, there needs to be a collective responsibility to help everyone become more resilient and prepared for inevitable bumps in the road.
We may not be able to change the weather; but we can all work to change the way the weather — and other risks — affects our customers. And we know which way the wind is blowing: prevention is only ever going to become a more important form of insurance, for us, as well as for the people we are here to help.
The article was first published in Insurance Post magazine
