Season 4 Episode 2
Trends shaping the 2026 insurance landscape with Pat Sullivan of Risk Information

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Episode Summary

In this episode of The Marketing Rapport, host Tim Finnigan sits down with Pat Sullivan, Senior Editor and Conference Co-Chairman at Risk Information. They explore how shifting consumer expectations, economic pressure, and technology are reshaping both auto and home insurance. Pat shares data-driven insights on why more consumers are shopping for new policies, the rising importance of customer experience, and how independent agents continue to win trust in a market crowded with heavy ad spend.

Pat explains how increased competition and shrinking pools of “perfect” customers are pushing carriers to rethink segmentation and retention. He highlights the growing complexity of auto repairs, the impact of legal challenges on claims, and why customer advocacy now often means turning to lawyers for support. Their discussion also covers home insurance, where climate risk and underinsurance are forcing carriers to recalculate exposure and pricing in real time.

The episode wraps with Pat’s forward-looking advice for insurers: prepare for lower profits, invest in smarter segmentation, and use better data to stay agile. He notes that while AI and automation are making customer service more efficient, a human approach to complex needs remains vital.

Guest-at-a-Glance

Key Insights

• Shopping Is Up, but Retention Takes Work
  Insurance carriers face a new normal: more consumers are shopping for policies, but customer loyalty is harder to keep. Price increases and heavy ad spend have pushed even high-value customers to explore new options, making retention a strategic priority. The pool of “perfect” customers is shrinking, raising the stakes for every renewal. Carriers need to invest in better segmentation, smarter lead management, and proactive retention tactics. Renewal activity tools, re-underwriting, and cross-selling can help, but carriers must act quickly. Training and culture often resist change, yet the current market leaves little room for hesitation. Winning teams will blend data-driven insight with a clear understanding of shifting consumer priorities—balancing the push for growth with the need to hold on to their best business.

• Claims Complexity and Customer Advocacy Shift the Landscape
  Modern vehicles are packed with technology, making repairs more expensive and claims more complex. At the same time, legal involvement in claims is rising fast, with half of all auto claims now involving lawyers. This shift puts pressure on insurers to rethink their approach to customer advocacy. Consumers want an ally who can navigate complicated, often stressful claims processes—something they don’t always see in their insurer or agent. As a result, more customers turn to legal support. Insurers who want to stay ahead must focus on transparent communication, quick claims handling, and better service at every touchpoint. Data and analytics can help identify pain points and reveal why cases are lost in court. In this climate, building trust and delivering a smoother claims experience are critical to long-term success.

• Climate Risk and Underinsurance Demand New Data Strategies
  Home insurance faces a growing challenge from climate-driven events, especially in regions like the Midwest, California, and Florida. More frequent and severe storms, floods, and fires are changing the risk equation for carriers. At the same time, underinsurance is on the rise, with many homeowners carrying limits too low to cover actual rebuilding costs. This gap exposes both customers and insurers to greater risk when disaster strikes. The solution starts with regular, data-driven reviews of property values and replacement costs—not just relying on broad indexes. Carriers must educate policyholders about the real cost of rebuilding and adjust coverage to match local realities. By combining active communication with updated data, insurers can offer better protection and help customers make informed choices in a volatile market.

Episode Highlights

Consumers Are Shopping Beyond Price
Timestamp: [00:00:00 – 00:01:00]
The insurance market has seen a surge in consumer shopping activity, but today’s buyers are not focused on price alone. Many now seek better service and more personalized experiences, which has fueled growth for independent agents at the expense of direct and captive channels. Expertise and the ability to guide customers through complex insurance choices matter more than ever. Companies that deliver reliable support and build trust earn loyalty, even as big brands pour money into advertising.

“People are back in the marketplace, and they’re not just looking at price; they’re looking at where they’re going to get the right service and where they’re going to get the right experience they want. That’s one of the reasons the independent agent channel continues to grow at the expense of direct and captive over the last couple of years: people want an important product, and people want expertise.”

After the Pandemic: A Volatile Market and Growth Tensions
Timestamp: [00:06:40 – 00:10:28]
Following the pandemic, the insurance industry experienced both record losses and an intense drive for growth. Carriers raised rates to offset rising claims and climate risks, which led to a profitable rebound. Yet, as shopping activity spiked among all risk groups, the market became crowded and competition fierce. Economic headwinds now threaten consumer confidence, forcing carriers to balance growth ambitions against shrinking profitability. The industry faces an uneasy calm—better than the chaos of the pandemic years, but far from stable.

“You had two of the worst years in the history of auto insurance. Carriers pumped a ton of rate to try to make up for the surge in frequency, the surge in severity in auto insurance, and the growing climate risks and climate damage. As a result, shopping has been heavily elevated over the last 18 months. That led to record profits and a ton of growth. They’re entering this year with an appetite to grow more, but it won’t be as much fun as it was the last 18 months.”

Climate Risk and Regulation Reshape the Homeowners Market
Timestamp: [00:23:51 – 00:26:03]
Homeowners insurance faces rising pressure from climate risk and regulatory complexity. While high-profile disasters in California and Florida draw attention, the Midwest has become a hotspot for frequent, less-severe events like hail and straight-line winds. These changes make it harder for insurers—especially regional players—to price risk and remain solvent. Regulatory frameworks in some states lag behind new perils, compounding the challenge. As risk grows, insurance becomes more vital for society, even as it puts pressure on the industry’s bottom line.

“The real challenge in the industry has been in the Midwest—straight-line winds, hail, flood. Every region has its own unique climate risk, and they’ve really grown, just skyrocketed over the last couple of years. The important thing about insurance is that it’s a very complicated product, and the more risk there is, the more important insurance is, the more important the product is, and the more valuable it is.”

AI in Insurance: Beyond the Chatbot Hype
Timestamp: [00:28:54 – 00:32:22]
Artificial intelligence is finding practical footing in insurance, especially through focused voice systems in call centers. While large language models grab headlines, targeted AI delivers more value by answering high-volume, straightforward policyholder questions. Adoption is strongest in non-standard markets, where personalized service isn’t the priority. Industry caution has led to slow uptake of web chatbots, which often frustrate users. Instead, well-trained voice AI can free up human adjusters for more valuable work and handle routine requests more efficiently, but it requires careful, ongoing training to get right.

“We’ve long thought it’s not a silver bullet. The more focused an application is, the better it does at insurance. People are using it as part of call centers. It’s great for high-volume, low-complexity questions. It makes a ton of sense. You save a lot of time. The more experience it gets, the better these things are going to be.”

Top Quotes

Pat Sullivan [~00:07:03]
“Coming out of COVID, you had two of the worst years in the history of auto insurance. We have a lot of data in our hands and do a lot of analysis of rate filings and statutory data. We went as far back as we possibly could, into the seventies and into the sixties, to look for years that were worse. The best we could do was the second time someone priced a Model T and got it wrong. That was the last time insurance was as bad as it was, as far as profitability, coming out of COVID.”

Pat Sullivan [~00:19:14]
“The relationship used to be carrier to claimant, and now it’s carrier to lawyer to claimant. That’s a big shift that’s happened over the last couple of years. I’m not talking about just general lawyers; I mean firms like Morgan & Morgan, TopDog Law—the kind of billboard attorneys you see everywhere. They’ve been very successful. I think carriers need to do more data and analytics around that, trying to figure out where they’re wrong, why they’re losing in court, and what’s actually happening.”

Pat Sullivan [~00:00:33]
“If Amazon doesn’t deliver your cat food, you can just go get it. But this is a complicated product, an important product, and people want expertise.”

Pat Sullivan [~00:17:44]
“The faster you can review and approve a supplement, the better service you’re gonna give your customer.”

Pat Sullivan [~00:18:35]
“Cars are harder to fix. They’re not as easy—you can’t do it yourself with a wrench anymore.”

Pat Sullivan [~00:18:55]
“On the BI side, about half of all claims show up with a lawyer. Whether they’re right or wrong, whether it’s fraudulent or not, they’re winning in court.”

Pat Sullivan [~00:35:17]
“More and better data yields better outcomes is the underlying message of every vendor in the space.”

Tim Finnigan [~00:03:31]
“There are so many dynamics in play right now, and so much pressure on profitability, the bottom line, costs, and macroeconomic issues.”