Trends Shaping the Insurance Industry

Professionals in the insurance industry can't complain of boredom this year. Societal and technological changes are transforming how insurers interact with customers and the types of services they offer. And consumers are finding they need to become more involved and better decision makers, especially when it comes to health care.

Anxiety and uncertainty over changes to the Affordable Care Act have everyone waiting and wondering. Brian Wells, president of Tufts Health Freedom plan based in NH, says he hopes any changes to the ACA will be done in a calculated, orderly way. "People do want certainty relative to their health care so this is going to be an unnerving time for them," he says.

While no one can predict how the ACA may change, Wells does see more movement toward higher deductibles in NH and is encouraging patients to become more involved in the management of their healthcare. For starters, he suggests looking closely at options that offset costs.

Insurers across the state are offering consumers tools to compare costs for common but expensive services like knee surgery or colonoscopies. At Anthem Blue Cross and Blue Shield of NH, patients can call or go online to compare prices in their area, and if they choose the cost effective option, they receive a check in the mail. Lisa Guertin, president of the company, finds consumers facing higher deductibles "have more skin in the game," she says, and are more engaged.

Insurers are using technology to promote better health and control costs, including telemedicine-online health care visits-or, like UnitedHealthcare of New England, offering incentives for wearing fitness tracking devices.

Many health insurers in the state are also using more value-based care arrangements, where medical providers are paid based on showing they have improved the health of the patient and not on the volume of care they deliver, as in the traditional fee for service model.

Mark Butler, Cigna's president and general manager for New England, hopes to have 50 percent of medical costs running through the value-based model by 2018. Preventative care also reduces costs, he adds, and Butler has seen employers bring in independent, onsite clinics so employees don't have to miss work.

The ACA put more emphasis on dental insurance by mandating the insurance be offered for children. Tom Raffio, president and CEO of Northeast Delta Dental in Concord, says regardless of what hap- pens with the law this year, the company will continue to participate on the public exchanges should they continue to exist. In NH, Northeast Delta Dental covers 350,000 people (about 15,000 through exchanges).

The company has teamed with Tufts Health Freedom plan to entice employers to offer both insurances by giving a discount on medical and dental premiums. In NH, about 60 percent of employers offer dental insurance, which is higher than rates nationwide that are about 50 percent, Raffio says.

To better serve its clients, Northeast Delta Dental acquired a software company in 2016. At patient cleanings, information asked of patients is entered into the program, calculating the patient's risk for periodontal disease and other dental risks. Depending on their risk assessment, patients may receive more than two cleanings annually as part of their plan. Patients will also receive health recommendations, such as smoking cessation or nutrition counseling. Raffio hopes dentists will use the software with clients who are covered under other policies as well.

Auto Insurance

Not all insurance technology is eagerly embraced. To help customers become better and safer drivers, some auto insurance companies offer user-specific auto insurance, which monitors drivers through a telematics tracking device installed in the vehicle. Auto insurance prices are then based on the way customers drive. Though Marc Berube, president of Eaton & Berube Insurance Agency in Nashua, says his customers are shying away from the idea of "Big Brother" looking into their driving abilities.

Whether rate increases will lead to drivers being more open to that technology remains to be seen. And increases in auto insurance are coming, Berube says. As more drivers are on the road, likely because of lower gas prices and higher employment rates, more auto claims are being filed. According to the Insurance Information Institute, collision claims have become more frequent and more costly. Between the first quarters of 2014 and 2016, claim frequency increased by 2.6 percent, and severity rose by 8.2 percent.

"We are to expect some rate increases," Berube says. "We haven't said that about auto insurance in a long time." Only time will tell if the hands-free law in NH will lessen the number of auto accident claims, but, Berube adds, it cannot hurt as distracted driving is a big problem.

Property & Commercial

On the other hand, Berube sees good news for property and commercial insurance rates. Homeowners and renters insurance will level out after about five years of increases. Severe weather played a part in recent increases, with bad winters leading to more claims from ice storm damage, ice dams and frozen pipes.

However, due to the mild winters this year and last year, prices should level out. "We won't see increases like the past five years in 2017," Berube predicts.

While the market is strong for renters insurance, demand for homeowners insurance is weaker as millennials are choosing to rent and putting off home purchases. In fact, the national homeownership rate hit 62.9 percent in 2016, the lowest since 1965, according to the U.S. Bureau of the Census.

There also appears to be some rate relief for commercial insurance as well. After commercial insurance rates saw hikes as high as 10 percent between 2009 and 2014, Berube says the market is flattening, and there may even be rate reduction of 3 percent to 5 percent this year.

Workers' compensation insurance is where Berube is seeing the most significant reductions in pricing. Kathryn Barger, deputy commissioner for the NH Department of Labor, does not know exactly why rates for workers' compensation are down, but she is glad to see the decline. While the department is not seeing a drop in the number of workers' comp claims, she says employees tend to be out of work for a shorter time. Many employers have return to work programs in place to help employees and allow staff to return to light duty.

The rise of the gig or sharing economy is providing opportunity for insurers as many people participating in that new economy don't realize those activities are not covered under their personal insurance policies, and they need extra or alternative insurance, whether it is pet sitting through rover.com, driving for Uber or renting their lakefront home on sites like VRBO.com, says Shaun Ralston, branch manager of Arnica in Concord.

"The sharing economy is moving very fast. We are trying to cover some of those grey areas so the consumer is covered," Ralston says. "It's a very exciting market to be in these days."