How AI Is Reshaping the Insurance Industry: Efficiency, Innovation, and Customer Focus

It’s no secret that the insurance industry is ripe for disruption. Customers expect personalized experiences. Competitors are finding ways to offer better service for lower premiums. Legacy systems make staying agile a significant challenge.

Thankfully, the industry’s evolving embrace of Artificial Intelligence (“AI”) offers a meaningful solution.

From enhancing the insurance product development process to improving experiences for your customers and staff members, AI has the power to transform the insurance landscape, driving efficiency, innovation, and customer-centricity.

Streamlining Operations and Reducing Costs with AI

AI can automate many repetitive and labor-intensive tasks across the insurance value chain. From claims processing to policy underwriting, AI can analyze data, make informed decisions, and reduce the workload on your human team. Imagine AI-powered chatbots that provide 24/7 support for customers or algorithms that automatically identify fraudulent claims. 

The potential cost savings are substantial, allowing insurance companies to optimize their bottom line and stay competitive.

Fueling Innovation with AI-Driven Insights

Historically, insurance product development has relied on static risk models that don’t always capture individuals’ and businesses’ complex and ever-changing risk profiles. 

AI changes all that. 

With real-time data from sources like telematics, wearables, and even weather patterns, AI can personalize risk assessments, leading to the development of new, innovative insurance products and premiums best aligned to the actual risk. Think usage-based insurance for drivers, dynamic cybersecurity insurance for businesses, or health insurance that promotes preventive care.

Elevating the Customer Experience with AI

In today’s crowded insurance market, customer experience is everything.

AI allows insurers to deeply understand their customers, personalize their offerings, and provide proactive support. Consider virtual assistants that answer questions and guide policyholders through processes, as well as sentiment analysis tools that proactively identify and address potential customer dissatisfaction. This results in loyal, happy customers – essential for retention and growth.

Successful AI Implementation: The Role of Strategic Guidance

While exciting, implementing an AI-driven solution in insurance carries its own complexities.

Data quality, legacy systems, regulatory compliance, and employee adoption all need careful consideration. This is where partnering with experienced AI consultants can make a tremendous difference.

The right partner helps you develop a clear AI strategy, prepare your data for AI success, ensure regulatory adherence, and get your team on board for a smooth AI adoption process.

Get the Full Picture: Download Our White Paper

This blog post has offered a brief glimpse into the transformative power of AI for the insurance industry.

However, if you’re ready to explore the possibilities in greater detail, we invite you to download our comprehensive white paper, The Transformative Power of AI in Insurance: Unlocking Cost Savings, Innovation, and Competitive Advantage.

In this white paper, we’ll dive into specific use cases, proven strategies, and crucial considerations for navigating your AI journey.

Download the white paper today and discover how AI can revolutionize your insurance business.

New Ideas for Supplemental Health

By: Jennifer Choe and Juliann Schiano

March 2023 marked ten years since the Affordable Care Act (ACA) was signed into law, and much has changed over the last decade. Health coverage has evolved in response to ACA-related regulation, challenges associated with COVID-19, and a new post-pandemic “normal” that has impacted everything from employee working conditions to vacation plans. 

States are changing their requirements for health-related insurance products – and your company’s portfolio should reflect current regulations. For example, the excepted benefits in your current benefit structure may no longer be considered “excepted.” Another example is that rates in Washington state must be refiled every seven years.

As the leading providers of life and health actuarial consulting and product development to insurance companies throughout the nation, we are seeing some key trends in supplemental health coverage. If your company has not updated these products lately, now is the time to take another look.

Critical Illness

Health insurance providers are broadening the suite of what critical illness covers. Here are some opportunities that might enhance your portfolio:

  • Extended hospital expense coverage
  • Transportation benefits for travel to and from a hospital
  • Reconstructive Surgery benefits if certain conditions are met


Supplemental health benefits due to accidents have changed in recent years as people are vacationing and working differently. Here are some emerging product types that our product design and actuarial consulting experts have identified:

  • Accidental Death Recreational Vehicle Travel benefit if death occurs as a result of an injury while the insured is a driver or passenger in a recreational vehicle, while in a vehicle pulling a fifth wheel, or while at a campground
  • Work From Home benefits such as alternative workspace, psychological trauma counseling, and temporary childcare
  • Telecommuting Coverage benefit for insureds when they telecommute and work from home

Hospital Indemnity

New hospital indemnity coverages are also gaining traction:

  • Pregnancy Indemnity coverage when the insured becomes confined in a hospital due to pregnancy


Today’s supplemental products for life insurance further ease some of the burden on loved ones after a death. Here are some products that are gaining in popularity:

  • Charitable Giving benefit that allows the owner to select a charitable beneficiary to receive a charitable gift amount defined as a percentage of the policy death benefit
  • Final Expense coverage that provides a set death benefit and fixed premiums through a type of whole life insurance coverage and is intended to cover funeral and burial costs and medical bills such as hospital stays and nursing home expenses
  • Travel or Reunion Expenses coverage for benefits or reimbursement for travel expenses so that family members may be able to attend the funeral

Other Supplemental Health Benefits

Finally, here are some additional emerging supplemental health benefits identified by our insurance product development experts that reflect the changing times:

  • Telemedicine benefit to provide coverage for remote or virtual care from a physician
  • Inflation Protection benefit, which automatically increases the benefit amounts with a certain percentage for each insured
  • Military Pilot coverage, which provides a benefit for loss that occurs from a flight in a military airplane while the insured is acting in the capacity of pilot or crew member
  • Firearm Accident benefit, which is paid when death or injury is caused by a firearm accident
  • Term Life rider, which allows the insured to purchase additional term coverage on top of an existing life insurance policy

Partner with Experts to Update Your Portfolio

Updating your portfolio can be a time-consuming, detail-heavy process, especially if your company writes policies in multiple jurisdictions. Working with life and health actuarial consulting experts and experienced insurance product development teams like those at Perr&Knight can streamline your path to approvals.

Here are some of the services we offer to support insurance companies, insurtechs, and those looking to expand their product offerings in the A&H space.

Competitor studies: We have access to the most comprehensive filing database in the industry, enabling us to check policies and rates against comparable competitor filings. We use this insight to ensure coverages and rates align with industry standards and that our clients offer the most competitive programs possible.

Developing new forms and rates: We have resources that can help with creating appropriate policy forms and associated forms, as well as pricing benefits, including those for whole and term life.

Filing: Our state filings teams possess unmatched experience in filing forms and updates in all fifty-one jurisdictions. We can provide support to your filing department at whatever level you require.

Whether you want to refresh your company’s portfolio with new products to increase your competitive edge or update existing filings to ensure regulatory compliance, our life and health actuarial consulting teams can support the entire process of insurance product development, filing, and beyond. 

Contact Perr&Knight today to start the conversation. 

Lessons from the Super Bowl: Why Insurance Products Fail (and Four Tools to Avoid the Same Fate)

Breaking into the insurance industry can be intimidating for new entrants, venture capital firms looking to invest in insurance startups, the startups themselves, and even established businesses looking to embed insurance into the goods they sell. One of the most important aspects presented by the insurance industry is the unknown cost of the insurance product itself. When key variables are still unknown during the insurance product development stage, estimating appropriate risk poses a challenge.

For most trades, the cost of the final product is understood before the goods are sold or the services provided. However, in the insurance industry, the cost of the indemnity itself is very much unknown when the product is initially sold. It may be years before an insurance carrier has a good handle on the costs of the underlying insurance product. Additionally, the majority of an insurance product’s expenses, such as commissions, acquisition costs and taxes, are tied directly to the cost of the underlying insurance product. 

Actuaries do their best to estimate the frequency, severity, and timing of claims using historical data or other proxies. With so many variables, determining accurate indemnity costs is extremely challenging. Even with a statistically significant set of reliable data anticipated to be predictive of future events, actuarial estimates are exactly that: estimates. 

Our insurance product development experts possess decades of experience helping insurance carriers assess risk to protect profitability. Here are some of their insights into why insurance products fail – and how your organization can sidestep costly consequences.

Lessons from a Streaker

We’ll begin by examining an industry that faces similar cost uncertainty. Specifically, the world of professional gambling. 

Like the insurance industry, casinos and sportsbooks make estimates related to the likelihood of Team A beating Team B, or the two teams scoring over or under certain point totals. Accurate estimates mean the money wagered on each side of the bet will approximately even out. Sportsbooks are acting more like market makers, primarily making a profit by matching bettors on opposite sides of the ledger. 

However, if their estimates are off – and people placing bets know this – then more dollars will bet on one side versus the other, and the sportsbooks’ likelihood of losing money increases significantly.

Sportsbooks tend to offer many unique and unusual bets for the Super Bowl. Prior to the start of Super Bowl LV in 2021, a sportsbook offered a wager that would pay +750, (i.e. a $100 bet wins $750, plus a return of the original wager) if a fan ran onto the field during the game.

Unfortunately for the sportsbook, there indeed was a man who ran onto the field during the game wearing not much more than a pink leotard.

This streaker, however, had done his homework. He and his friends made a series of bets, totaling around $50,000, that someone would streak the field during the Super Bowl. With the odds on this bet being +750, he was looking at a payday of over $370,000 – all because he knew more about the likelihood of this event than the sportsbooks did1.

This example outlines another challenge presented to insurance carriers: we live in a world of imperfect information. The purchaser of an insurance product may know more about their likelihood of needing to use the coverage than the carrier selling it. In the same way the sportsbook was tricked by this Super Bowl streaker, insurance companies must account for a similar unknown. 

Historical Premium Information Isn’t Enough

Let’s shift to another example: pet insurance. The policyholder pays a premium calculated based on factors such as pet type/breed, pet age, etc., in return for a policy that covers veterinary procedures. 

If a dog owner discovers their pet needs a $3,000 surgery, and their insurance policy has a monthly cost of $100, the pet owner could easily save $2,900 and shift that burden to the insurance company. Theoretically, the pet owner could then cancel the policy immediately after the completion of the surgery. 

This example shows that historical premiums are not adequate to cover the prior claims. Actuaries reviewing such data may suggest increasing the product’s overall premium level.

However, increasing the premium discourages owners of healthy pets from purchasing coverage, continuing this cycle and eventually leaving only the owners of unhealthy pets as the entirety of the market participants. At some point, the premiums get too high, even for the owners of unhealthy pets, and the product completely fails, causing significant losses to the insurance industry.

Strategies to Overcome the Unknown

Thankfully, there are some ways to address the issue of imperfect information head-on:

Define Coverage Limits

Insurance products typically apply limits of coverage (both per claim and in aggregate), contain deductibles, and/or require coinsurance. It is important to clearly define how much the policy will pay an insured for each claim and how much could be paid in total (aggregate) throughout the policy period. 

While this won’t define an exact cost of offering insurance, these coverage restrictions give us a better idea as to the expected cost to the provider. 

In the pet insurance example, had the policy contained a $2,500 per event limit, with a $100 deductible and a 25% coinsurance, the cost to the insurance company would have been reduced from $3,000 to $1,800 [= ($2,500 limit – $100 deductible) x (1 – 0.25 coinsurance)].

The application of policy limits, deductibles, and coinsurances has the added benefit of encouraging policyholders to shop the market to locate a vet who will perform a similar, but less expensive, surgery. In the example above, the insurer pays $1,800 and the remaining $1,200 is the responsibility of the pet owner. 

Say, for example, the owner shops around and finds a vet willing to do the same surgery for $2,000. In this scenario, the insurer will be responsible for $1,425 = [($2,000 procedure – $100 deductible) x (1 – 0.25 coinsurance)]. While the insurance carrier’s costs are reduced by $375, it’s the policyholder who receives most of the benefit, as their costs drop down to $575 vs. $1,200 previously.  

Outline Policy Prerequisites and Coverage Triggers

A policy prerequisite allows the insurer to establish a condition or series of conditions that must take place before coverage is provided. Policy prerequisites act as an additional form of underwriting and can dissuade customers from purchasing coverage for a specific event they know will take place. Similarly, a coverage trigger allows an insurer to reduce coverage to only certain pre-specified events or otherwise specifically exclude coverage for a pre-determined list of events.

A policy prerequisite for pet insurance could require a diagnosis from a qualified veterinarian to identify the pet’s pre-existing conditions. From there, policy exclusions can list any procedures that would not be covered by the pet insurance policy. This would exclude coverage from the surgery presented above.

Enact Coverage Waiting Periods

An insurance company can also establish a coverage waiting period between the date a policy is purchased and the date coverage is enacted. This waiting period can keep an insured from purchasing a policy immediately before they know a covered event will take place.

In the case of the pet insurance policy, a coverage waiting period could possibly have prevented the insured from buying a policy as soon as they found out surgery on their pet was required.

Establish Fully Earned Premiums 

One final tool in an insurer’s arsenal is to fully earn the policy’s premium, where allowed by statute. This prevents a policyholder from canceling coverage – and, more importantly, receiving a return premium – just after a covered event triggers. This is more common for policies such as warrantees, extended reporting periods on claims-made coverages, special event policies, etc.

In the end, the streaker from Super Bowl LV did not get his winnings as his bets were voided by the sportsbook after he bragged a bit too loudly about his master plan. Although insurance companies need to account for instances where the policyholder knows more about their likelihood of using an insurance policy than the carrier does, insurers do have some tools and strategies to prevent a situation like the sportsbook example above.

Can your insurance products can stay afloat and ward off metaphorical Super Bowl streakers?

Contact the insurance product development experts at Perr&Knight today to help. 

Pet Insurance Policies: Top 3 Form Compliance Issues

Pet ownership in the U.S. is on the rise. As of 2023, 66.6% of U.S. households own a pet1. Dogs are the most popular pet in the U.S. (65.1 million households) followed by cats (46.5 million households)1. As a result, the popularity of pet insurance has grown rapidly. At the end of 2022, 4.84 million pets were insured in the U.S.2. Gross written premium reached $3.2 billion by the end of 20221.

Why is pet insurance legislation necessary?

With the growth in the market comes a need for clarity and oversight in the pet insurance marketplace. Market conduct findings in recent years identified issues with unlicensed sales, illegal inducements and rebating, improper use of rates, and unlawful claims practices. 

In April 2019, the National Association of Insurance Commissioners (“NAIC”) created a working group tasked with reviewing an NAIC White Paper, A Regulator’s Guide to Pet Insurance. A request for model law development related to pet insurance was adopted in 2019, and the Pet Insurance Model Act was adopted by the NAIC’s Property and Casualty Insurance Committee in August 2022.

Until recently, only California had statutes in place to address pet insurance. NAIC’s model adoption has attracted the attention of state regulators and is slowly gaining traction. Maine was the first state to adopt the model, and an additional six states (as of this writing) have adopted the model in part or in whole. The model addresses a number of issues including consumer disclosures, sales practices for wellness programs, and insurance producer training.

What are three key form compliance issues?

The model includes form considerations insurers must keep in mind during insurance product development for domestic animal owners.

1. Disclosures: Insurers need to disclose several items to consumers through both a link on the insurer’s or program administrator’s website and at policy issue. Items to be disclosed include identification of exclusions for pre-existing conditions, hereditary disorders, congenital anomalies or disorders, and chronic conditions. The disclosure must also advise the insured of a 15-day period to examine and return the policy. Another key component of the disclosure is the basis on which claim payments are determined. Insurers paying claims on a reasonable and customary basis need to describe how that determination is made. 

2. Waiting periods: The model limits waiting periods to 30-days for illnesses and orthopedic conditions not caused by accident. There is no waiting period for accidents or orthopedic conditions caused by accident. The model further states that an insurer utilizing a waiting period must include a provision that allows the waiting period to be waived upon completion of a medical examination. Pet insurers can require the examination by a vet after the purchase of the policy. Waiting periods may not be applied to renewals.

3. “Wellness programs” vs. insurance policies: The model provides a definition for wellness programs, stating that a wellness program is separate from an insurance policy and would seemingly be exempt from insurance code. However, if the program meets triggers as defined by each adopting state, the program meets the standards of transacting the business of insurance and is subject to the insurance codes of the states. It must be clear to consumers whether or not a wellness program is insurance. 

How does this impact your organization?

Current pet insurance programs should be reviewed to determine necessary changes based on state adoptions of the NAIC Pet Insurance Model Act. Amendatory endorsements or revised policy forms should be filed to address changes in definitions, terms and conditions, and waiting periods. 

In recent filings, some insurers have followed the model requirements for waiting periods while others have eliminated waiting periods altogether. Insurers should prepare and, in some states, file a disclosure to include required elements. 

Finally, insurers should review their wellness program and triggers for benefits. Insurers should contemplate both new and in-force policies when developing a plan to address needed changes. 

The upward trend in pet ownership unlocks more opportunities for insurers looking to capitalize on the emerging pet insurance market. However, new regulations require close scrutiny of both existing products and new product development. Understanding the nuances of the Pet Insurance Model Act will save insurers from slipping into non-compliance or developing new policies that are destined to receive objections.

Partner with product development experts when developing new insurance products. Contact Perr&Knight today. 


1: American Pet Products Association press release (March 2023)

2: North American Pet Health Insurance Association (May 2023)

10 Questions to Answer Before Launching a New Insurance Product

Throughout our decades of designing, developing, and providing actuarial support for insurance products, we have seen firsthand what it takes to bring new insurance products to market. Unfortunately, a good idea isn’t enough. Even established companies are often surprised at the depth of detail and scope of supporting documentation required when developing a new insurance product.

Here are ten critical questions from the experts at Perr&Knight to consider throughout the insurance product development process, whether you are a traditional insurance company, InsurTech firm, startup, Managing General Agent (“MGA”), Managing General Underwriter (“MGU”), Program Manager, captive owner, insurance agent / agency, or insurance entrepreneur.

1. Who is your target market?

Upfront legwork like this will help you establish whether there is indeed a need for this product in the marketplace. Clearly defining your target buyer will also aid in determining how to market the product and how big of a return you can expect.

2. What is your projected premium volume?

Before diving into the product development process, it’s helpful to assess the size of the market for this product. Depending on the product type, this information might be easy to compile – or it might require deeper research. Experienced actuarial consulting partners like the team at Perr&Knight can help draft reasonable estimates for premium volume.

3. Who are your competitors?

Competitive research is valuable for many reasons. First, it lets you know if the market is already saturated or has room for more players. Second, you can learn from the successes or failures of similar existing products. Finally, if a similar product is already available, you can use this information to determine on what basis you can compete.

4. What type of insurance will your product provide?

Will your product fall under the scope of Property & Casualty (“P&C”), Accident & Health (“A&H”), or another type of coverage? Will you be providing group or individual coverages? Different coverages are subject to different regulations that also vary by jurisdiction. The answer to this question establishes a foundation that will inform nearly all other decision-making during product development. The structure of the product once again comes down to its type and use: commercial vs. personal, will your product be based on policy language already in use by bureaus, or will you need to develop independent policy language? Articulating your product’s structure will help set realistic expectations for timelines and cost estimates.

5. What triggers a claim under your product?

Defining the parameters to trigger a claim can tell you much about your product. Determining what doesn’t initiate a claim is equally important. Your actuarial consulting team will use this information to calculate the frequency and severity of potential claims, helping you to determine how the product will help potential policyholders cede insurance related risk.

6. How will the rates be supported?

How will the rating work? Can you base your rates on existing data, or will your actuarial consulting team need to obtain independent data? Are there similar products in the marketplace offering analogous coverages or will your actuaries need to use other data as proxies for the frequency and severity of losses?

7. Do you plan to retain risk or cede it off?

Many new entrants will not initially retain risk and will only make a commission on the product’s sale. However, over time, as premium volume grows and the market becomes well established, you may decide to retain risk and make a profit on underwriting. Structuring the right deal upfront with the insurance carrier is essential.

8. In which states will you offer this product?

This question is particularly important for overseas companies, who don’t fully appreciate the magnitude of difference between insurance product regulations in 51 independent U.S. jurisdictions. This is where partnering with actuarial consulting and insurance product development experts like those at Perr&Knight is critical. We understand all state-specific regulatory nuances and will help you sidestep avoidable pitfalls.

9. How challenging is the regulatory environment?

Again, each jurisdiction has a different set of regulations and expectations. Waiting until you’re deep in the filing process to discover state-specific requirements can create a last-minute runaround that can slow your time to market or even result in disapproval. Insurance experts like the team at Perr&Knight can explain well ahead of time what to expect so you can prepare all documentation before it’s time to submit to regulators.

10. Do you plan to write in the admitted or alternative market?

Products in the admitted market are often more “every day, run-of-the-mill” exposures. It’s the insurance product development process most people in the insurance industry are already familiar with. The advantages of writing business in the admitted market are that the taxes are often lower. However, the regulatory environment could make the approval process much more challenging.

Meanwhile, never-before-seen products have the advantage of being first to market. Although, there are some considerations when writing business in the alternative (or non-admitted) market. You will have to demonstrate that there is no admitted market for this product, which can require obtaining three declinations for standard types of insurance. The tax reporting requirements are also significantly more challenging. This isn’t to say that writing in the alternative market doesn’t have major advantages – avoiding much of the rates, rules, & forms regulatory process and cornering the market from the get-go can be a huge upside. It’s important to be aware of the challenges of the alternative market before you get too deep into product development.

Developing a new insurance product is an exciting process. However, failure to thoroughly think through the details of your product, target consumer, market, and regulatory environment will present hurdles that can be avoided. Adequate planning, preparation, and partnership with experts increases your chances of success.

Contact Perr&Knight’s accredited actuaries and experienced product development team to discuss your new insurance product.

P&C Carriers: A Strategy for Entering the A&H Market

By Susan Cornett, FMLI, AIRC, CFE and James Vallee, FSA, MAAA

P&C insurance carriers recognize the opportunity to expand product lines and increase revenue by expanding into Accident & Health products. However, the differences between P&C and A&H product development are significant and what applies to P&C may not apply to A&H from a regulatory standpoint. Understanding those differences will allow P&C carriers to enter the A&H market with faster speed-to-market along with high-quality products.

During decades of providing insurance product development and actuarial support for insurance companies across the US, Perr&Knight has zeroed in on a low-risk A&H entry product for P&C: blanket accident policies.

Why develop a blanket accident policy?

Commercial entities, schools, universities, and other organizations often need supplemental blanket A&H policies to fill gaps in medical coverage to further support their staff or students. With fewer mandated benefits, these policies are the perfect starting place for P&C companies looking to break into the A&H market and provide additional coverage options to existing clients. Blanket Accident policies also fit nicely with General Liability policies and allow brokers/agents to offer comprehensive insurance protection from a single carrier.

Differences between P&C and A&H product development

Established P&C carriers may think they have the requisite experience to develop A&H coverages. However, a few significant differences between these two types of insurance product development are worth noting.

  • Rate support: Rate support requirements in A&H are different than P&C, usually requiring an actuarial memorandum describing the benefit in the rate structure as well as a signed certification attesting that the rates are reasonable in relation to benefits.
  • Forms and rates standards: On the P&C side, rates tend to receive more scrutiny. On the A&H side, regulators examine policy forms more closely. Though some states are outliers, we find this is a reliable trend.
  • Bureau forms: Many P&C carriers adopt ISO or other bureau forms as part of their P&C portfolio. For most lines, A&H doesn’t have this option. Most insurers rely upon proprietary forms.
  • Statistical reporting: Data reporting is important on the P&C side. But except for a few lines of business, statistical reporting requirements aren’t widespread on the A&H side. Besides ad hoc data calls, most supplemental A&H coverages don’t require such detailed stat reporting.
  • Rate certifications: Although a few states require certification of the rates or rate filings on the P&C side, some states require carriers to attest to their ability to meet target loss ratios for A&H lines.
  • Variable benefits: A&H policies typically rely on the use of variable language to allow inclusion or exclusion of benefits, terms and conditions. It’s not unusual for a blanket A&H policy to be 50+ pages because the benefits are included in the policy and not attached as optional endorsements. From an implementation perspective, this means programming one form with many options instead of 75 forms with no options — another way these policies diverge from P&C.
  • Verbiage differences: Terms and definitions vary between A&H and P&C. For example, P&C uses the phrase “loss costs” while A&H calls these “claim costs”. Unfamiliarity with terms could lead to filing errors.

Commonly asked questions

P&C carriers eager to enter A&H should know a few basic things before moving forward. Here are the most commonly asked questions from P&C insurers.

“Does our license cover A&H?” Short answer, maybe. P&C carriers may already have the ability to write A&H lines of business depending on what is included in their Certificate of Authority. Licensing requirements vary by state. Our licensing experts can help determine whether anything additional is needed. There are important differences in insurance product development and approvals, even for supplemental health policies, so P&C carriers should proceed with caution even if currently licensed to write the business.

“Can we offer blanket A&H on a non-admitted basis?” Simply, no. In the world of A&H, the concept of surplus lines is virtually non-existent. Companies may develop an A&H program thinking it will be available under surplus coverage guidelines, but state export lists rarely include any A&H coverage. The consequences for non-compliance can be steep and may jeopardize a company’s good reputation with state regulators.

“Can we ‘me too’ our A&H policy development?” Unlike P&C, “me too”-ing rating information from competitors’ existing programs is generally not acceptable. Different requirements for rate filing and support are a prime example of a P&C process that has no transferable correlation to A&H.

Start with blanket accident, then expand

After developing a blanket accident policy, companies can easily expand into other supplemental health lines. After getting your feet wet with blanket accident, product lines such as hospital indemnity, critical illness, disability income insurance, and gap medical generally follow the same product development process.

Work with experts

Developing a blanket accident policy may seem straightforward on the surface, but there are lots of opportunities to fall into little-known traps. Partnering with experienced insurance product development partners like Perr&Knight can save P&C carriers from wasting time and money on mistakes.

With our deep experience providing insurance product development and actuarial support services for carriers across both P&C and A&H lines, our professionals act as the “decoder ring” between the two. Working with knowledgeable professionals helps insurance companies step into a new world with greater confidence and ease.

Ready to test the A&H waters with a blanket accident policy? Contact Perr&Knight for help.

A New Wave of Insurance Products – Protecting Digital Assets

A little over 100 years ago the steel, oil & gas, and mining industries represented over half of the assets of the top 50 largest companies in the United States. Companies such as U.S. Steel, American Telephone & Telegraph (AT&T), Standard Oil, and Bethlehem Steel dominated the corporate world. What made these companies unique and valuable was that they were large manufacturing entities that owned hard assets such plants, machinery, inventory, storage facilities, phone lines, etc. These companies sought insurance coverage to protect these hard assets in the form of traditional insurance coverages such as commercial property, inland marine, machinery/equipment, etc.

Fast forward 50 years and industries such as technology, telecom, and film, along with oil & gas, now make up over 50 percent of the assets of the top 50 largest companies in the US. It’s also the first time companies in the medical industry have begun to make their way onto this list. Another shift takes place when the assets of these large companies start to become ‘softer’. Intellectual property begins to make its way onto the balance sheets of these larger firms. The film and medical industries were largely able to protect their assets through copyright and patent laws. Additionally, most telecom and technology firms still manufactured hard assets such as computers and phone lines. As such, the insurance industry remained largely unchanged in the coverages that were offered.

After the turn of the millennium, there is a significant change in the makeup of the top 50 list. The largest industries are now led by technology, financial services, and medical companies. Interestingly, the steel industry, which was by far the dominant industry in the early 1900s does not have a single company in the top 50. Now, five out of the top six firms are technology companies, but unlike their predecessors, today’s tech companies’ main assets include intellectual property such as software and data; otherwise known as digital assets. A digital asset is anything that is stored digitally and is uniquely identifiable that organizations can use to realize value. Examples of digital assets include consumer data, documents, audio, videos, logos, slide presentations, spreadsheets, and websites.

Unfortunately, the insurance industry hasn’t caught up with the ever-changing landscape of protecting companies’ digital assets. Crime coverage protects assets that are held by a custodian or investor, while cyber insurance covers first-party losses and third-party liability associated with system failure events, network security, and data privacy. However, most of these policies do not cover the actual loss of data or access to the data. For companies looking for coverage in the emerging digital asset space, it can be challenging to find reasonable insurance capacity at affordable pricing.

At Perr&Knight, our insurance product development experts have designed, developed, and supported numerous products for unique and debutant industries. Our clients have received approvals and started writing numerous products in practically all states. We can assist with actuarial rate and rule development, as well as drafting and reviewing policy language. We also offer compliance services such as licensing and filing work. If you are thinking of expanding into offering a digital asset protection program, please contact us today to discuss your strategy.

The digital asset insurance world is still uncharted territory with a lot of work to be done. However, if you take your time and proceed carefully, you’ll be in the best position to break in early to this market opportunity. Refer to our “From Concept to Reality” brochure for tips on navigating the successful launch of your new insurance products.


Guidelines for Filing Program Business

Insurance carriers have become more and more interested in writing “program” business over the recent years. In addition, many carriers only have a single carrier to work with, at least at the onset. Every carrier writing program business wants to have as much flexibility as possible to continue to add new programs and program administrators. Based on the experience of our actuarial consulting and state filings experts with various Departments of Insurance (“DOIs”) across the majority of lines, we describe below the most efficient way to set up nationwide filings and minimize the possibility of material compliance concerns.

What is program business?

According to the Target Markets Program Administrators Association, Program Business is defined as insurance products targeted to a niche market or class, generally representing a book of similar risks placed with one carrier. The administration of the program is done through Program Specialists, often referred to as program administrators or managing general agents (“MGAs”), who have developed expertise in that market or class. Although administrative responsibilities are negotiated between the Program Specialist and carrier, the responsibilities of the Program Specialist include underwriting selection, binding, issuing, billing, and oftentimes marketing, premium collections, data gathering, and claims management/loss control.

Bureau “Base” Program Filings

For the standard commercial lines, program business typically uses Insurance Services Office (“ISO”) or other rating bureaus for loss cost/rates, rules, and forms, but program business can be more than the standard commercial lines and can span across almost all Property & Casualty lines of business.

Some carriers choose to set up a “Base” program (usually for commercial lines) that any program administrator can use. For example, a Base program, such as commercial general liability, might adopt all the bureau loss costs, rules, and forms. There is no need to make a filing that is specific to a single program administrator or target market/class of business. This gives the program administrator the ability to start writing immediately rather than waiting for program filings to be prepared, submitted, and approved for their specific program.

According to our actuarial consulting experts, the Base program generally has rating flexibilities such as multi-tiering and a schedule rating plan, so the carrier can appropriately price the various markets and classes of business written by the carrier’s program administrators. If there are specific rates and forms that are required for a target market or class of business, the carrier will prepare and submit filings for these program-specific rates and forms. Generally, these are miscellaneous items that can be added on to the Base program and are simpler / quicker from a state filings standpoint compared to one with a complete program.

One of the drawbacks of the Base program filing approach is that changes have the potential to impact all program business. If a carrier is adopting an ISO loss cost change, one of their program administrators may not want to adopt the loss cost because of the impact on their specific niche market. Under this scenario, the carrier may file an exception in the Base program and carve out this specific market by having independent loss cost or rates for the impacted class of business. For the Base program approach, every time the carrier is filing a change to the Base program, they need to assess the impact on all their program business.

Program Business Filings

Rather than have all the program administrators use the same Base program filing, a carrier may elect to file each program separately. If a carrier chooses to also file a Base program, the program business filings are typically underneath the main Base program. This means that eligible risks are written in the program business filings and other risk are written in the Base program. The program business filings and the Base program filing are independent of each other in terms of bureau loss cost, rules, forms and company exceptions. When carriers have program business filings, they generally give the program business filing a special program name, like “Small Contractors Program”, with distinct eligibility guides to distinguish it from other programs the carrier may already have in place.

Under the program business filing approach, new program filings (rates, rules and forms) are needed for each new program administrator and it takes longer to get the program to market.  However, our actuarial consulting experts have stated that structuring it this way makes the process much cleaner for rate revisions and program changes as no program filing is connected in any way to another under the same line of business.

Having your program filings connected to the Base program, although it can be done, generally causes issues. First off, many DOIs do not permit references (or links) to another program which makes tracking of these “links”, and lack thereof, difficult from a compliance perspective. In addition, if you make a change to the Base program, it could impact all linked programs which could potentially result in the same drawback mentioned for Base program and the change may not be desired by all program administrators.

Concerns with overlapping programs

Based on the experience of our actuarial consulting experts, multiple states have issues with a single carrier having multiple programs under the same line of business that could potentially offer the same insured different premiums for the exact same coverage. Many times the argument is made that these “programs” are independently run by separate management teams, so there is no insurance offering to the same insured by the same individuals. This argument does not always work and is problematic in California along with some other states. In addition, there are some states, such as California, that take this one step further in that no program can overlap within an entire insurance group, not just the individual carrier. When writing multiple programs for the same line of business under a single carrier, there are typically a few ways to differentiate programs in order to not run into state filing issues, which include the below.

  1. Mutually exclusive underwriting guidelines

You are permitted to have multiples programs in all states if the underwriting guidelines are mutually exclusive, meaning no exposure overlaps between any approved program. For example, you could have a long haul trucking commercial auto program and a public auto commercial program, or from a personal lines standpoint, you could have one program that requires a usage-based insurance (“UBI”) device connected to the vehicle that tracks mileage, speed, breaking, etc. which impacts the driver’s premium and a regular program that does not have a UBI device requirement.

  1. Material mandatory coverage differences

Multiple programs with similar exposures may be allowed to the extent that the programs have material mandatory coverage differences.   For example, you could have an HO-5  (Comprehensive Form) homeowners program and an HO-3 (Special Form) homeowners program, since an HO-5 program is meant to be more expensive because the policy form is much broader than the HO-3 policy form.  Issues can arise if the HO-5 premium is lower than HO-3 for the same risk.  Additionally, if an applicant is eligible for both programs, the carrier must make both programs available to the applicant.

  1. Different Distribution channels

Carriers may use distribution channels to differentiate programs, which include commission-based programs written by independent or captive agents and direct programs, with no commission, which are often sold on the internet.

Multiple Carriers

If an insurance group has more than one admitted carrier, the same, or similar programs can be filed under each carrier with none of the above issues occurring, except in a few states, based on our state filings experience. As was mentioned above, there are some states that look at the entire insurance group, not just the carrier.

Workers Compensation Issues

This line of business is different than other lines. In most states, due to statutory or other requirements, carriers may only have one program and must offer the same rates to everyone for standard (guaranteed cost) business. Therefore, a carrier that might have multiple commercial auto programs under the same carrier, can only have one program for workers compensation. In some jurisdictions, carriers can file to enhance the bureau rating structure, vary the rates offered within their single program, and individually rate certain qualifying risks.

Do you need guidance on maximizing the number of programs you can write under a single carrier in your personal or commercial lines rating plans? Our actuarial consulting and state filings experts at Perr&Knight are here to help.

Travel Insurance: A Changed Landscape

The travel landscape has shifted dramatically over the past two years. From travel disruptions resulting from coronavirus variants to the recent surge in gas prices to the abrupt decline in both travel insurance sales and claims, it’s been a wild ride for travelers and insurance companies alike.

Here’s what has changed in the travel market over the last two years, how these changes have influenced today’s travel insurance product development, and what we expect to see moving forward.

Flights as a measure of travel insurance health

Looking specifically at the number of flight bookings is the biggest indicator of what’s happening in the travel market today. Flights are a key indicator because historically, travel insurance was purchased more often when a flight was involved.

In 2019, we saw 2.5 million travelers a day pass through TSA. The initial landfall of Covid-19 in March 2020 threw the market into near-instant havoc, experiencing a sharp decline seemingly overnight. Since then, the travel industry has shown great strides in rebounding.

What’s important about today’s counts is the behavior or seasonality characteristics noted at the end of the year (“holiday season”) that mimic pre-pandemic travel, except at a lower level. However, Americans’ appetite for travel is gaining momentum quickly, resulting in numbers that are nearly back to 2019 levels in two short years.

We are also seeing similar travel behavior from 2019 mimicked in the first four months of 2022—further proof that the market has a strong foothold on the path back to “normalcy.”

Flights and cruises are on the rebound

Beginning in 2020, the largest dip in travel behavior was due to the onset of Covid-19 first reaching the United States. Since that initial bottoming out, the market has made increasing trends upward. Domestic travel has started to gain momentum and is increasing at a rapid pace. As of March 2022, U.S. travel is only roughly 5% below 2019 levels, which is heavily weighted toward domestic travel. International travel experienced a more sluggish rebound in 2020 but is strengthening at nearly the same rate as domestic travel in 2021.

The cruising market took a near-instant nosedive once the outbreak of Covid-19 reached the United States. Today, cruising travel is still less than 50% of 2019 levels. During 2021, the cruising market has shown gradual (but slow) growth. Younger travelers are wary of the potential for virus transmission in enclosed spaces and are therefore not eager to board a ship anytime soon. However, older travelers appear to have a high likelihood to start cruising again soon. This is especially good news since the last of the baby boomers are reaching retirement age, meaning they have ample time and money for travel.

More travelers are hitting the road

Increased road travel is altering insurance product development to accommodate travelers’ changing needs. Travel by car and RV is having its day in the sun. According to the U.S. Travel Association, RV or car trips jumped in popularity in 2020 and 2021— a trend that appears to be continuing in 2022. Great news for the industry: 85% of Americans are expecting to travel this summer. Roughly 80% plan to travel in their personal or rental vehicles and 46% plan to fly.

Today’s travel insurance product offerings have been modified to focus on needs specific to road travelers, including medical coverage and rental car collision, as opposed to air travel-centric products like trip cancellation/interruption, missed flights, or lost baggage.

That said, 59% of American travelers believe travel prices are too high right now which has prevented them from traveling in the past month. The travel price index is 16% higher than 2019 levels, mostly due to rising fuel costs. However, this statistic does not indicate declines in future outlooks.

From pandemic to endemic: how coverage is changing

Many carriers considered pandemics like Covid-19 to be foreseeable events, so travel products have historically excluded events such as pandemics and epidemics. As a result, there was immense confusion among policyholders and insurance companies regarding specific coverages and exclusions for insureds who purchased travel insurance both before and after the initial outbreak of the virus.

That said, carriers continued to cover trip cancellation and trip interruption as well as medical expenses and emergency evacuation if an insured became ill, even due to the coronavirus.

As the virus moves from pandemic (actively spreading across borders) to endemic (a constant presence), insurance carriers are adjusting their insurance product development to reflect the “new normal” in the travel industry.


Policies generally do not cover cancellations or interruptions based on fear of contracting the virus, which is why “cancel for any reason” (CFAR) became such a hot topic. CFAR or IFAR (interruption for any reason) covers the cancellation or interruption of a trip under any circumstance. Even if the insured simply doesn’t feel like going on the trip anymore. Insureds who purchased this “any reason” benefit are covered and could recoup at least a portion of their trip. These benefits have since become a very sought-after benefit by insureds seeking peace of mind, which is especially relevant in case a new Covid-19 variant is detected.

Carriers are also reassessing pandemic and epidemic exclusions, opting to include them as covered perils in their policies. This is especially important as insureds start to take a closer look at their policies to determine what is covered and what isn’t.

Government-issued travel advisories

One of the coverages also being called into question today is trip cancellation or interruption due to government restrictions based on the U.S Department of State travel advisories. While cancellation or interruption may not cover the pandemic in general, cancellation or interruption because of government restrictions or travel advisories of level 4 (“Do not travel”) that could potentially include Covid-19 or various other reasons may be covered if the policy includes government restrictions as a listed peril in the policy. This may also include the CDC travel risk assessment of level 3 (“high risk”) which was recently revised and unveiled. Otherwise, government restrictions would not be covered. However, CFAR or IFAR would cover these scenarios.

Increased interest in travel insurance

Fortunately, the United States is essentially “back to normal” for domestic travel within the 50 states with no mandatory pre-arrival testing or quarantines. The federal mask mandate on commercial transit has also been discontinued. Vaccine and mask mandates are now based on state and city ordinances. The number of countries without travel restrictions also continues to climb as 2022 rolls on, which means the government restriction peril may no longer be as valuable as it once was.

A survey from the Automobile Club of America (AAA) found that one-third of U.S. travelers said they are more likely to buy travel insurance for their trips through the end of 2022, specifically because of the pandemic. 69% of travelers said, “the ability to cancel a trip and get a refund” is most important to them when considering travel insurance for an upcoming trip.

As more people become aware of the existence and usefulness of travel insurance, sales have seen a 10% to 20% jump over 2019 numbers with spikes as high as 53% increase over 2019 following news of the Omicron breakout. This increase in sales has resulted in a better claims experience than previously seen since anti-selection is being hedged against broader market sales.

The average frequency of 2021 claims based on internal data was less than half that in 2019. As a percent of total claims, the initial spike of CFAR claims has dampened but continues to be a highly utilized claim which we expect to continue into 2022, given consumers’ new knowledge about its value.

A new landscape

Covid-19 is here to stay. The initial fear of the virus is winding down, but the industry will continue to see spikes and dips as each new variant emerges. Travelers and insurers must learn to live with this new landscape and respond accordingly. Insurance companies must embrace this new landscape and take these shifts into account during their product development.

Another big takeaway for travel insurers is their ability to monitor claims. Claims submitted under CFAR should be categorized to determine those that are really for Covid-19 but may be disguised as something else. Tracking Covid-specific claims will help do just that. Likewise, more insurers have options specific to pandemic coverage and are providing coverage as its own benefit (trip cancellation, trip interruption, medical expense, and evacuations).

As consumers begin to feel more confident in their return to travel, the goal is to provide equal comfort in their protections through travel insurance.

Contact Perr&Knight and let our experienced actuaries and product design consultants help you develop insurance products that match today’s market.

On-Demand Insurance: Insurance for the Sharing and Gig Economies

On-demand insurance is a rapidly growing segment of the insurance market, providing policyholders with many benefits over the traditional insurance model. It can be purchased without directly interacting with a carrier representative, broker, or agent. While on-demand insurance is still new and a small segment of the insurance market, a study by Acumen Research and Consulting estimates the market to grow by nearly 30% by 2026 (1).


According to our insurance product development team, there are numerous advantages that on-demand insurance products have over traditional insurance:

  • Convenience: The application process for on-demand products is typically through a mobile or web application with an easy-to-understand interface, minimal number of questions, and the ability to tailor the coverage to a policyholder’s needs. Traditional insurance often involves lengthy interactions with carrier underwriters, agents, or brokers, which could involve protracted and complicated paperwork. More sophisticated on-demand products can obtain an applicant’s driving or claims history and auto-complete many data questions, further easing the application process for the customer.
  • Control: An on-demand policyholder can change the terms of their policy, add or remove coverages, and make other changes through their mobile or web application without having to make time-consuming and inconvenient calls to an underwriter, broker or agent. More sophisticated on-demand products provide many coverage customization options, putting powerful control of the coverage into the hands of the policyholder.
  • Instant Access: On-demand insurance coverage can be applied for and turned on in minutes. This is a big advantage in today’s economy where consumers are used to instant access (streamed music and video, same-day or one-day shipping, etc.).
  • Claims Handling: Claims can often be filed through a mobile or web application instead of having to contact a claims adjuster, adding further convenience and time savings.
  • Expense Savings: Commissions, brokerage costs, and other acquisition expenses are often lower due to the application process being handled through a mobile or web application. Automating the application and claims handling process can also lower the number of underwriters and claims adjusters needed and removes the need for additional paperwork. These costs savings can be passed onto the policyholders through lower premiums.
  • Usage and Need Based Coverage: Many on-demand products are offered on a short-term basis, from as short as one hour to several months, depending on when the policyholder needs coverage. Often, the policyholder can pause and then reactivate their policies to provide coverage only when they need it. Telematics allows for rating of auto insurance based on the actual miles driven. These features are important to gig economy workers who don’t need full coverage over an entire year, instead only needing coverages when they have a project or gig. Other examples of usage and need based coverages include travel or event insurance, with coverages purchased for a single trip or event.
  • Continuous Underwriting: Many on-demand products feature continuously updated pricing and risk profiles using real time data. Examples include usage base auto insurance using telematics, travel insurance using flight and weather data, and homeowners insurance using data from Internet of Things (IoT) devices.
  • Providing Coverage for Gaps in Insurance: On-demand insurance products can provide coverage for gaps in traditional insurance policies. For example, homeowners policies do not typically cover damages when a property is rented to others (Airbnb, Homestay). Personal auto policies don’t cover “business use” of covered vehicles. On demand insurance products can help provide coverages in both these instances and are especially suited to fill in these gaps on a usage and needs basis.


Of course, in our experience with insurance product development, we know there are also potential downsides and difficulties with products in this emerging market:

  • Moral Hazard: Since the application process is typically through a mobile or web application, it is difficult to audit the applicant responses for accuracy. Applicants can answer questions dishonestly in order to pay a cheaper premium. Insurers need to create better verification and auditing systems in order to ensure that risks are being priced appropriately.
  • Fraudulent Claims: Customers can potentially purchase on-demand coverage after the actual loss or damage has taken place and make a fraudulent claim that the damage took place after they turned on their coverage. Products that allow pausing and unpausing of coverages are especially susceptible to this risk.
  • Concentrated Exposure: On-demand policies will be purchased or turned on before a work shift or project so the exposure is highly concentrated for the policy term, in comparison to a standard annual policy that doesn’t allow pausing of coverage. Higher rates during usage should be charged to ensure that the premium collected adequately covers the concentrated risk.
  • Adverse Selection: Underwriting standards and knock-out questions are important for on-demand products. Less control over the underwriting process, with minimal ability to audit and review the applicant, can lead to riskier insureds being able to obtain on-demand coverage when they haven’t been able to obtain coverage in the standard market.
  • Regulatory Difficulties: On-demand programs have unique rating, form, and other program features that are different than the products that state insurance departments are used to reviewing. For example, short-term on-demand programs often file leveraged rating factors to provide higher premium for concentrated short-term coverages. Mobile and web applications require filing snapshots of each possible screen. Continuous and real-time pricing based on telematics, IoT devices or real-time travel data are difficult to support to the black-box nature of the technologies. This can result in a more difficult path to approval.


Numerous on-demand insurance products are already available in many different lines of business, including:

  • Metromile offers personal auto coverage for a low monthly rate plus a per miles driven charge, tracked by telematics. Coverage can be switched on and off through the mobile application.
  • Thimble offers commercial general liability, miscellaneous professional liability, and inland marine coverages on a short-term, episodic basis. They allow their liability coverages to be paused and reactivated by the policyholders, through their mobile and web application. Thimble also provides coverage for drone/unmanned aerial vehicles liability insurance on an episodic basis. They have recently started offering episodic commercial property and event insurance in select states.
  • Cuuva is a United Kingdoms based insurer that offers personal auto insurance from 1 hour to 28 days in length.
  • Spot offers $20,000 of accidental injury coverage on a per month, subscription basis. This coverage can provided as a supplemental coverage to a traditional health insurance policy or can be the primary coverage for the roughly 30 million people without comprehensive healthcare coverage.
  • Flock provides drone/unmanned aerial vehicles liability and physical damage insurance coverage on an hourly, monthly, or per drone flight basis.
  • Surround offers Starter Pack insurance which includes bundled non-owned auto, renters, and miscellaneous professional liability coverage on a monthly basis, $60 per month. The products are designed for freelancers and other self-employed working professionals.
  • Digital Risks provides various business insurance coverages for small businesses, with a focus on digital assets, on an on-demand basis. Coverages are paid on a monthly basis. Available coverages include business owners insurance, professional liability and directors and officers liability.
  • Bind provides on-demand health insurance. The coverage options can be changed through the mobile application, including activating coverage during the year for less common, plannable treatments as needed.
  • Tapoly offers on-demand insurance coverage for small businesses, sole traders, freelancers, and the self-employed. Coverage options include professional liability, cyber liability, business owners property and liability, and directors and officers liability.
  • Duuo offers commercial general liability coverage on a daily basis, aimed at gig economy workers.
Perr & Knight has extensive experience assisting on-demand insurers with insurance product development. We have prepared and submitted filings resulting in the approval of many innovative on-demand programs across the United States. Contact us for assistance with your program.