Personal lines insurance is more diverse than ever before. During a recent Personal Lines Product Council, hosted by AAIS, Member carriers and other key stakeholders discussed several key issues affecting the market, from cryptocurrency and solar panels to container homes, “swimply”, and e-biker and scooters.
AAIS established Product Advisory Councils to bring Member carriers and other industry stakeholders together to identify the burgeoning issues concerning insurers and the broader insurance industry today. While not all issues raised can be solved through product or program developments, we believe discussing emerging issues as well as working together within the AAIS Community can spawn new ideas and usher resources to meet today’s challenges. A general overview of several emerging issues is discussed below.
With 13% of Americans buying or trading cryptocurrency in the last 12 months, it is garnering a lot of attention both in and outside insurance circles. As it evolves and becomes more commonplace, there is a need to properly define associated risks within insurance policies. While a concrete definition of cryptocurrency and a limit to the exposure is one option, there are still additional considerations concerning the physical presence of crypto. For example, the impact of a lost password that results in a loss of access to the cryptocurrency one owns can create questions. Additionally, there is concern regarding the assessment of loss due to large increases and decreases in value in relatively short time frames.
A related topic is non-fungible tokens (NFTs). NFTs are digital assets, such as digital art, that are unique and provide proof of ownership, stored using blockchain technology, and traded online using cryptocurrency. As NFTs increase in popularity, there may be a need to define such related risks in a policy.
Swimply may be a new term for many, falling into the short-term rental category with the likes of Airbnb and other companies in the sharing economy. With Swimply, homeowners can rent access to their pool at hourly rates. Conversely, renters can use pools just like they would rent a home through Airbnb or VRBO. Many believe this is just the tip of the iceberg in the sharing, collaborative or on-demand economy. Storage buildings, campsites, and hunting plots are all just part of this growing trend and it’s inevitable that new and yet designed apps will make these types of rentals more commonplace and make exposures in the short term rental arena more complex. While most homeowners’ insurance contracts define and limit coverage for activities that fall under the definition of business, it is important the homeowners are aware what their coverage needs would be to protect them from a liability perspective.
E-Bikes & Scooters
With regard to e-bikes and scooters, it is important to check your applicable insurance policy regarding what constitutes a “motor vehicle” especially considering features such as ‘pedal assist' can be present on many bikes. There could also be a need in the insurance industry to differentiate between e-bikes mechanized by a manufacturers versus "hand made" bikes built by the insured themselves.
Tiny homes, which are just as described, can vary in many important ways, presenting unique insurance questions. They are typically between 100 and 400 square feet, and generally easy to move. Many homes have wheels while others are anchored to a permanent foundation. If the home is on a foundation, a standard homeowners or dwelling property policy could apply. If the home is on wheels, the home would likely not be insurable under a typical homeowners policy, and would require a separate policy such as mobile-homeowners policy, RV, or specialty tiny home policy.
Container homes are constructed from shipping containers and can be both simple to build and cost effective. They can be ornate and multi-story. Due to a potentially shorter lifespan than a standard home, there could be issues around placing value on these homes, and if they depreciate. New containers present less issues initially, while used containers can cause immediate concern around rust and the materials previously kept in the container. The cost of repairs is another unique issue, since a welder is often needed, not a carpenter. Regarding design, valuation, and target market, container homes are closer to a mobile home than a typical house. For these homes, it’s important for companies to be diligent in asking the correct questions in order to cover the home with the appropriate policy.
Many homes are now converting to solar heat to save money on utilities and support the environment. However, there are added risks associated with solar panels, from the high cost to replace panels, to the stress it puts on the roof and even the possibility that fire departments won’t enter through the roof due to the risk of falling through. The industry needs more information to validate claims history, and the resistance of solar panels to hurricane, tornado, and wind. Tesla has developed solar roof tiles that are more appealing than typical solar panels, but come with a high price point of $50,000 to $100,000. In addition, if the solar panels are leased, who owns the panels and is therefore responsible for the insurance coverage must be considered.
If you are interested in joining the Personal Lines Advisory council as we discuss these types of issues or to learn more about AAIS products, get connected with an AAIS Personal Lines Advisor by reaching out to our Member Engagement team.