In sports terms, 2012 has been what one could call a rebuilding year, as P&C carriers looked to recover from a disastrous 2011 and a string of heavy losses. For many carriers, 2012 was a time to totally reappraise their roster of risks, which meant both exploring new lines of business as well as shedding certain types of perils or getting out of certain regions altogether.

And for the first 10 months, 2012 was shaping up to be a pretty good year. On the technology front, drivers seemed increasingly willing to install telematics devices in their cars—which could result in lower premiums for them and much better risk selection for insurers. AIG continued to make headlines—many of them positive for a change. Overall, rates started to reverse their long decline. 

In the halls of state capitols and Washington, 2012 produced some mixed results. Florida— making a bid to no longer be an insurance basket case—instituted some welcome reforms. And Congress brought some much-needed certainty to the National Flood Insurance Program. 

The biggest difference between 2012 and 2011 was the relatively benign weather enjoyed by the industry. Until the end of October, a drought in the Midwest was one of the few natural catastrophes to generate big news. But then Sandy struck, delivering a devastating blow to the Northeast—and making sure that the top story of this year would once again be attributable to Mother Nature. 

Here's our look at the Top 10 news events of 2012. See you in 2013.       

 

#10 Telematics: An Idea Whose Time Has Come

Telematics moved further into the mainstream in 2012, with some of the largest Auto carriers—such as Allstate and State Farm—aggressively pushing the concept to consumers with special incentives for early adopters. A speaker at Insurance Telematics 2012, a conference dedicated to the topic, predicted that by 2019, one-third of all U.S. vehicles will be underwritten based on telematics.  

Few, if any, emerging insurance technologies are as potentially transformative—and disruptive—as these devices that measure driver behavior and vehicle usage. For carriers, taking a usage-based approach to underwriting will allow them to select and price risks with an almost omniscient precision—and to better fight fraud. For good drivers, the technology promises handsome rewards in the premium department. Progressive, a leader in the use of telematics, went so far this year as to offer its product, Snapshot, to drivers it doesn't insure for a one-month trial—so they could see what kind of discount they could earn.

But the trend could be much less positive for midsize carriers. A telematics infrastructure is expensive to develop; and storing and parsing the constantly updated data, and developing numerous different policy models in response, is enormously complex. If smaller insurers can't invest in a telematics program—or find viable alternatives—they could be left with a lousy pool of risks. The good news is that tech vendors with a focus on the middle market are already developing other solutions, including ones built around GPS-equipped smartphones. 

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