No End in Sight to the Growth of Specialized Insurance Lines

As new types of businesses emerged in the global technology boom, and ever-greater lawsuits emerged in the litigation boom, the number of specialty insurance products has grown exponentially. These highly specialized products are aimed at niche markets. Specialty products have long been offered to unique industries and types of properties, such as aviation and health services, and even more esoteric insurance has evolved, such as coverage for golf courses and amusement parks. Today, new products have been developed for the relatively new sectors and/or risks of online services, data center management and electronic data loss. Environmental risks coverage is another relatively new, fast-growing field.

Insurers are creating specialty products to meet the needs of students, the self-employed and specific types of professionals. Specialty health products are a terrific growth area—witness the supplemental health coverage policies, such as cancer insurance, sold by Aflac. Growth in specialty products outside the U.S. looks particularly appealing. For example, Aflac has seen phenomenal success in Japan. Specialty products can be tailored to meet the needs of any group in diverse nations—even religious groups. The Muslim population is one of the fastest-growing demographic segments worldwide. Muslims who strictly adhere to their faith may prefer to purchase insurance that meets requirements of the “Takaful” concept which follows cooperative tenets in keeping with the Muslim faith. Such insurance may be operated in a mutual fashion for the joint benefit of all members. Several insurance firms worldwide are attempting to create products for this market. (Insurance firms that endeavor to meet the needs of other religious groups have existed for years, including firms that focus on Lutherans or Catholics.)

While many specialty insurance lines are aimed at businesses, there are also a growing number for consumers and households. For example, dog owners are getting into the insurance act, with Covered Canine policies which cover dog bite liability. One of the newest categories is wedding insurance. Since U.S. weddings often cost from $30,000 to $100,000 for grand events, some couples are protecting their investments with special insurance. Wedding policies may pay off in the event of catastrophic weather such as an ice storm, a death or critical accident within the immediate families or a failure of certain suppliers to perform, such as a preacher who doesn’t show up. Other covered items might include slip and fall and other liability coverage with a $1 million cap. Policies cost in the $150 to $750 range.

Cyberinsurance is one of the fastest growing insurance products in the U.S., spurred on by data breaches such as the attack against credit reporting agency Equifax, in which 143 million Americans’ personal data was hacked. New companies, including Resilience Cyber Insurance Solutions LLC, Coalition and Cowbell Cyber, Inc. have raised hundreds of millions of dollars in funding to develop AI-based platforms that analyze cyber-attack risk.

The ever-evolving world will continue to call for an ever-evolving list of specialty products, and underwriters that are quick to catch on to trends and new potential risks could profit greatly. Specialty lines frequently face less competition, enjoy faster growth and earn higher profits than traditional lines.

With the significant rise in the number of remote workers, increased scrutiny of cybersecurity by insurers in on the rise. Carriers are taking harder looks at IT practices for those workers, who may be more vulnerable to data breaches, ransomware and hacking than in-office workers.

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