Sentry Transformation Saves ‘Tens of Thousands of Hours’ with AI in Claims  February 24th 2025

P&C Insurance: Mind The Gap(s)

The last three years are arguably the most challenging the P&C insurance model has faced, and a worrisome series of gaps has taken shape. 

The expression, "Mind the Gap," dates to the 1960s, when it was first announced on the London Underground. The purpose was to warn passengers of the potentially dangerous gap between the train door and platform, which are not perfectly aligned. The expression has since evolved to become a general warning about the danger of open space or gap between two points.

It applies especially well to the many risks and headwinds faced by the insurance industry today. If unattended, the gap may be irreversible or much harder to close.

The P&C industry is, by design, resilient, with layers of financial insulation. Reinsurance, surplus capital and low-risk and liquid investment portfolios are just some of these layers, with individual state oversight to monitor financial stability. The insurance model has been tested during high inflationary periods and catastrophes and alternating hard and soft market cycles. However, the last three years are arguably the most challenging, because of fluctuating inflation and worsening climate risks. Meanwhile, there are emerging and widening gaps that both threaten and are reshaping massive segments, such as real estate and homeownership.

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Aland Demers ad Stephen Applebaum as featured in Insurance Thought Leadership

Accounting Matters as Vendor Ownership Models Shift

Changes in how the vendor world operates may be less obvious and yet have important implications for how insurance carriers manage large, transformational, efforts in the future.

For CIO’s and the IT organizations they lead, understanding the consequences associated with accounting methodologies is both critical and increasingly complex. The internal issues associated with cost accounting, including depreciation methodologies and the implications of moving from capital to operational expenses, are fairly clear. Changes in how the vendor world operates, however, may be less obvious and yet have important implications for how insurance carriers manage large, transformational, efforts in the future.

One of the important changes in the solution provider community today, when contrasted with a decade ago, is the ownership structure associated with many firms. While at one-point insurers were likely to leverage offerings from large, publicly traded companies, the landscape is now increasingly comprised of firms that are assets in Private Equity portfolios. PE investments are neither good nor bad in this context of course. They are simply a reality of the way in which we have evolved in the ownership and development of assets.

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Rob McIsaac is the President and CEO of RPM Ventures NC, LLC, an organization focused on developing deep and actionable insights that are specific to the insurance industry in North America

What are the rising emerging casualty insurance risks?

For insurance firms, the emerging and often intersecting risks in the casualty space can make for an alarming list. Those risks include climate change, social inflation, human trafficking and PFAS chemicals. Many risk experts keep an eye on the United States to understand the extent to which these challenges could become global issues.

“What we tend to find is that they start in the US,” said Mia Finsness (main picture), Markel's global executive underwriting officer for casualty.

Markel, the insurance division of the giant Markel Group, actively tracks and analyses these emerging risks at a corporate level. New York-based Finsness said PFAS is one risk her firm is “keenly focused on.”

PFAS: “A big one”

PFAS refers to a group of more than 4,000 chemicals used in a wide range of products, including: carpets, sunscreen, cosmetics and fire-fighting foam.

“The PFAS of greatest concern are highly mobile in water, which means they travel long distances from their source-point; they do not fully break down naturally in the environment; and they are toxic to a range of animals,” says the Australian government’s website.