Maybe a dozen years ago, I spoke on a panel with a founder of Opower, who told me something about motivating customers that could help insurers encourage policyholders to make their properties more resilient in the face of growing threats from wildfires, hurricanes and more.

He had begun his career as a political consultant – he told me ruefully that he turned out to be very good at getting a candidate to finish second… meaning it was time to find a new career. He did learn one key thing, The best way to increase voter turnout was to put a note in a mailbox telling the residents how often they had voted in the past and – this is the genius part – how they stacked up versus their neighbors. People are competitive. They may not feel motivated to vote, but if that couple next door can find the time….

That insight led him and a college friend to start Opower, which took on utilities as clients and told customers how their electricity and gas usage stacked up against comparable homes in their area. Customers responded. Energy efficiency improved. Utilities rolled out Opower’s reports nationwide, and Oracle bought the company in 2016 for more than half a billion dollars.

(I certainly take the reports seriously, and you may, too. I take pride in being at least in the 90^th percentile on both gas and electricity. In the unlikely event that I’m not, I double down on efficiency the following month.)

The potential application to insurance of the Opower approach is tantalizing. Insurers know a lot about which homes in an area haven’t fortified their roofs, removed inflammable landscaping from near their homes, etc. They may even communicate that knowledge to consumers via premiums, but that communication is opaque. It takes a lot for a policyholder to see a premium and tie it to the presence of bark right next to a house – a practice that Dave Tobias, general manager, insurance, at Nearmap, says in this month’s interview is akin to setting matchsticks next to the home. But what if Nearmap and others could put their aerial imaging in front of policyholders and let them see how they stack up against their neighbors? Might that not drive some action?

The technology to do that is already here. Nothing has to be invented. The issue is just a matter of insurers rethinking what they do with the troves of information they gather, as the world shifts away from “repair and replace” and toward Predict & Prevent. Do insurers just gather information and use it within their four walls to quantify and price risk, or do they share with customers in ways that reduce risks?

I know how I vote. And Dave underscores the need to communicate better with policyholders to reduce risks, while also describing how quickly insurers were able to respond to the SoCal wildfires because of the kind of aerial imagery Nearmap provided. I hope you find the interview as interesting as I did.

I also encourage you to read the latest on Predict & Prevent from Pete Miller, the CEO of the Institutes. The piece does a lovely job of describing recent progress and the stakes involved for all of us.

Cheers,

Paul   

Insurance Thought Leadership:

How do your hurricane monitoring and tracking methods differ from your wildfire surveillance?

Dave Tobias:

With hurricanes, we typically know they're coming and can plan accordingly. Even before the hurricane hits, we can identify which properties will be most susceptible to damage.

The Predict & Prevent aspect is crucial. With hurricanes, you can see fascinating examples where two neighboring properties experience the same storm conditions -- identical wind speeds and everything -- yet one roof survives without a scratch while the other gets completely ripped off. This demonstrates how taking preventative action, like installing fortified roofs, can prevent hurricane disaster damage.