Memos From Madison

MEMOS FROM MADISON

Hopefully, you have a written employee handbook that includes sections on employee conduct...

PETE HANSON, CAE, CISR Executive Director, PIA of Wisconsin

CATS AND DOGS

What do Spike the dog and Fluffy the cat, have in common? For one thing, both are insurable. The first pet insurance policy in the U.S. was written in 1982, but only recently has that market really taken off. Between 2018 and 2021, according to the North American Pet Health Insurance Association, pet insurance more than doubled in North America. There were 4.4 million pets insured at the end of 2021, totaling $2.83 billion in premium. With proliferation, comes regulation. Enter the NAIC with the 2022 Pet Insurance Model Act. The model legislation aims to standardize pet insurance policies so that consumers will better know what they are getting. The goal isn’t mandating a bunch of coverages, á la the Affordable Care Act. The goal is standardizing definitions, coverages, exclusions and other policy provisions – so that when these things are present in a policy, consumers and agents alike will know what to expect. The model act also contains training requirements for producers, but rest assured the PIAW Legislative Committee and staff will look at those provisions and the rest of the legislation closely to ensure the requirements are not burdensome. As with all NAIC model legislation, it will be debated in Wisconsin in the coming years and we will keep you apprised of its progress.

UNBUNDLING

The economy is swooning while insurance premiums are swelling, so consumers are looking for new strategies to reduce their premiums. With auto premiums up 19% in September, compared to September of 2021, it’s no surprise that more consumers are reducing or dropping coverage. A recent Nationwide survey asked consumers what they were doing to fight inflation. 32% reported they were buying cheaper products; 38% said they were eating out less; and 56% said they were shopping to save on home and auto insurance.

They are also looking outside the bundle. Policyholders who previously trusted that their bundled-policies discount was getting them the best deal available, are looking online for lesser-valued policies and are looking at use-based (UBI) products. The UBI products are most attractive to consumers who say their credit rating is “fair” or “poor.” According to JD Power, 22% in this group are already using UBI programs. Also from the JD Power survey: 40% of consumers are now offered a telematics-monitored policy and 65% of those opted for them. Since unbundled policies have lower retention rates, agents and carriers alike are facing higher acquisition costs. Ironically for consumers, all this moving around adds to the upward pressure on premiums.

ATV/UTV FATALITIES

On October 15th, with the ATV season wrapping up, the Wisconsin DNR announced that ATV/UTV fatalities in Wisconsin had reached 17 thus far in 2022. The 2021 total for the full year was 47 fatalities, but that represented a record high that was likely associated with the COVID pandemic. Although fatalities are down significantly from last year, the DNR reports that this number is still unnecessarily high because most riders killed in accidents are not wearing helmets or using seatbelts (in UTVs). In addition, 63% of operators involved in crashes had not taken the ATV safety course and 40% of fatalities involved alcohol or drugs. The top 5 rules to make ATVing safer are: • Wear a helmet and seatbelt • Don’t use alcohol or drugs before or during a ride • Travel at speeds appropriate for terrain and visibility conditions • Do not operate on public highways • Take the ATV safety course (available online!)