The phrase “the new normal” has suddenly become ubiquitous—it's getting hard to open a newspaper, turn a TV channel or click around the Web (is there an app?) without bumping into those words.

So what does the new normal look like for the insurance industry in a post-financial-crisis (maybe), warming (maybe), more technologically advanced (definitely) world?

On the negative side, one of the oft-discussed characteristics of the new normal is an America with an ongoing unemployment rate markedly higher than the recent historical average—especially among males with only a high school education. More people out of work, for longer stretches at a time, means, of course, people will have fewer assets that they need to protect with insurance.

One obvious and glaring example of this is the decline in U.S. homeownership—now at about 66 percent (where it was in 1998), down from its peak of nearly 70 percent in 2004. That 4-percent drop translates into millions of fewer homeowner policies. And with many housing prognosticators suggesting that a return to the 70-percent mark may be a long time in coming—if ever—insurers may want to start figuring out how to lure a higher percentage of renters to secure policies at higher premiums.

On the catastrophic-risk side of the new-normal equation, there are plenty of scientists (and insurers) who fear that rising temperatures will deliver stronger winds and more damaging floodwaters to (more heavily developed) coastal areas. In addition to property damage, climate change poses possible risks across a whole host of coverage types—from crop insurance to business interruption to civil unrest.

But the new normal also promises some upsides. The sharp decline in crime, and the insurance costs that go with it, has been going on now for well over a decade and seems clearly to qualify as a secular, not a cyclical shift.

And automobiles and trucks are getting substantially safer year by year—parking for us, keeping us awake, diligently watching for risks behind us, ahead of us, and in our blind spots. It's not too farfetched to imagine a near-term future where a car “accident” is the rare result of an almost willful act of negligence on the part of a driver.

Workplaces, too, are becoming ever safer (though the healthcare costs of workers' comp claims may be outpacing the upside of fewer and less severe injuries). Again, it's not impossible to imagine near-future construction sites where the combination of pre-fabricated components and robotic installations make notoriously dangerous building projects about as deadly as a Boeing or Ford plant is today.

And while certain blue-collar segments of the U.S. population may not, in the new normal, have the same insurance needs as even their parents did, the world, as a whole, is becoming a more prosperous place. Forget the huge insurance opportunities in the BRIC countries—I've heard at least four different carriers, in just the past month or so alone, talk about Africa as a land of untapped insurance opportunities (flip to page 6 for just one example).

But what about you—what's your take on what the new normal looks like? And is it a better or worse place for the insurance industry? Is the world becoming a safer place or a riskier one? Append a comment to this article online—or send me an email at brousseau@sbmedia.com.

Bryant Rousseau

Editor in Chief

Special Reports /

The New Normal: A Riskier/Safer, Poorer/More Prosperous World

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