Insurance Journal examined industries experiencing changes, challenges, expansions and growth in the past year. Here are five industry sectors and insurance market sectors that could offer opportunities for agents and brokers in the property/casualty insurance industry in 2019.
The telemedicine market will generate significant growth in the next few years due to the rising geriatric population, growing demand for accessible healthcare services especially in remote areas, and technological improvements related to mobile and the internet. Telemedicine is transforming the healthcare industry and is expected to become the most used method of diagnosis and prescription worldwide. The U.S. telemedicine market alone is projected to surpass $64.1 billion by 2025, according to a new research report by Global Market Insights Inc.
As the U.S. market for telemedicine continues to expand, so does demand for insurance coverage for these providers, according to Beazley, which launched its Virtual Care product in 2017. Telemedicine has been an exciting industry to insure, Jennifer Schoenthal, Beazley Group's healthcare underwriter/specialty lines, told Insurance Journal. Every day is a new risk in telemedicine, she says. "And no two accounts are alike," she said.
"Think 'tele massage' and a device that can detect concussions during sports games."
Beazley's Virtual Care insurance product targets companies falling into the three main categories of telemedicine: platform and tech product designers, providers, and companies utilizing platforms and contracting with providers.
"The policy was designed to be very versatile so that we were able to capture most of the companies that are in the telemedicine field," Schoenthal said.
The market continues to evolve and expand. "We are seeing both standalone telemedicine companies and current allied health companies that are starting to add telemedicine to their suite of services," she said. "I don't see this slowing down anytime soon, especially as telemedicine continues to become a more main stream way of delivering healthcare services."
Telemedicine is also increasingly being used by workers' compensation insurers, although usage in workers' comp lags behind the commercial health setting, according to Dr. Stephen Dawkins, medical director at Cadaceus USA, an Atlanta, Ga.-based provider of medical management services in occupational health.
However, Dawkins, a panelist at a recent Workers Compensation Research Institute event, thinks that may be changing. He has seen an uptick in interest by workers' compensation carriers for virtual physical therapy, also known as telerehab, which provides virtual access to physical therapy and is intended to be a replacement for an in-person visit to an outpatient facility.
While telemedicine has benefits for both users and the healthcare industry, it presents a few challenges for insurance professionals looking to target the market.
"I think the biggest hurdle is that while there are many brokers out there that either focus on tech or on healthcare, the number of experts in both of these lines is somewhat limited," Schoenthal says.
That's where specialty insurers can help, she adds.
"We include affirmative coverage for bodily injury from technology failure and we don't limit how medicine can be delivered," she said. "Because of this we can write both tech companies that are designing technology for this field and allied health companies that are delivering medicine in this fashion."
Despite its potential, telemedicine is currently a specialty niche. A study published in December in the academic journal Health Affairs combed 2016 survey results from the American Medical Association to find that only 15.4 percent of physicians worked in practices using telemedicine.
But that may change. Private health plans, Medicare, most state Medicaid programs, and the U.S. Department of Veterans Affairs all cover some virtual doctor's visits and the majority of states now have laws requiring private insurance companies to reimburse providers for care delivered remotely.
A search on MyNewMarkets.com showed limited availability specifically for telemedicine classes, but Ultra Risk Advisors listed it as part of its imaging program that provides broad coverage and loss control services for stand-alone diagnostic imaging facilities and radiologists.
Breweries and Cideries
Craft brewers and cideries, especially the smaller "local" shops, represent a growing niche market.
While overall U.S. beer volume sales were down 1 percent in 2017, craft brewery sales continued to grow at a rate of 5 percent by volume, reaching 12.7 percent of the total U.S. beer market by volume. Retail dollar sales of craft brew also increased by 8 percent, up to $26 billion, and now account for more than 23 percent of the total $111.4 billion U.S. beer market.
Craft production grew the most for the "local" and microbrewery space.
Small and independent American craft brewers contributed $76.2 billion to the U.S. economy in 2017, according to the Brewers Association for small and independent craft brewers. The industry also provided more than 500,000 total jobs, with more than 135,000 jobs directly at breweries and brewpubs, including serving staff at brewpubs.
Cider grew faster than beer, wine or spirits last year but remains less than 1 percent of the overall alcoholic beverage market share. Even so, cider retail sales were up 8.4 percent in 2018, generating more than $500 million in sales. Cider retail sales dollars are 10 times more than they were 10 years ago, according to the U.S. Association of Cider Makers.
Today the growth is driven by a focus on local, Paul Martinez, program manager for Brewery PAK Insurance Program, told Insurance Journal. The Brewery PAK program insures around 1,000 craft breweries in 42 states.
The program has been operating for the past eight years with steady growth of around 25 percent each year. Last year was a banner year -- the program grew by 51 percent in 2018, driven primarily by growth in the smaller, local, or nano-breweries, Martinez said.
"So as long as you have a local presence, in the local community, they like your beer, they're behind you," he said. The bonus, "I find the smaller the brewery is, the better their beer tastes because they're making it on such a small scale and they're putting their heart and soul into it as opposed to when breweries get larger, they get larger systems, the quality gets sacrificed."
Nano-breweries and cideries are finding their place in the market, Martinez added. "They're not really looking to take over the world. They're just looking to make great product, make great friends and make a little money in the process," Martinez said.
An online search on MyNewMarkets.com for breweries, revealed three other markets targeting the specified class of business: Glencar Underwriting Managers Inc., Philadelphia Insurance Companies, and Worldwide Facilities LLC. These include individual coverages as well as broad offerings for this segment.
Intellectual property theft is a little understood and often overlooked financial risk to businesses, and with new and emerging technologies being introduced all the time, the risk is increasing.
According to the World Intellectual Property Organization (WIPO)'s "World Intellectual Property Indicators 2018" report, intellectual property filing activity around the world reached 3.7 million in 2017, representing a 5.8 percent increase over 2016. In the U.S. specifically, there were 606,956 patent applications in 2017, up from 605,571 in 2016.
According to WIPO, the U.S. holds 19.2 percent of the world's patents; China is the leader with 43.6 percent and Japan falls below the U.S. with 10.1 percent.
The growth of new technologies such as 3D printing, as well as the increasing digitalization of society and business, continue to increase liabilities for businesses and insurers, according to Thomas Varney, regional manager, Americas, for Allianz Global Corporate & Specialty, in a piece for Insurance Journal.
"...[I]n today's and tomorrow's world of connected industries, where intangible assets such as data, networks, customer relationships and intellectual property can represent the major source of corporate value, more is also at stake if things go wrong," Varney wrote.
A shift among businesses from tangible to intangible assets makes protecting intellectual property more important than ever. According to Aon, $19 trillion -- or nearly 85 percent of the value -- of the S&P 500 is represented by intangible assets. IP alone accounts for more than 45.5 million U.S. jobs, Aon said.
Aon launched a new Intellectual Property Solutions (IPS) team in March as part of its New Ventures Group formed at the end of 2018.
"Firms need to both identify and manage risks surrounding business-critical and proprietary data and develop and execute strategies for maximizing shareholder value from their [intellectual property] portfolios," Aon said in a statement.
The IPS team, headed up by Chief Commercial Officer Brian Cochrane, has developed consulting, valuation and risk transfer offerings to help clients secure their intellectual property.
Marsh is also investing in its intellectual property offerings for U.S. companies. In February, it launched the IP Protect product backed by Ambridge Partners. The policy offers defense coverage for losses relating to patents, copyrights, trademarks, and trade secrets (by endorsement). More than $60 million in primary coverage is available from Ambridge with additional capacity available from excess liability insurers.
"As the importance of IP rights and their related expenditures continue to rise, many organizations have sought an effective solution to protect their IP assets, products, and services, only to find inadequate coverage at a high cost," said Jason Sandler, a vice president in Marsh's U.S. Financial and Professional Practice. "With IP Protect, we now are able to provide clients with the broad coverage and meaningful limits they have been seeking -- at a more affordable price."
An online search on MyNewMarkets.com for intellectual property revealed three other markets targeting this specified class of business: New Empire Entertainment Insurance Services, Cooper & McCloskey, Inc., and Intellectual Property Insurance Services Corp. These include individual coverages as well as broad offerings for this segment.
The greenhouse and nursery market is blossoming after enduring a disappointing period during the Great Recession.
The horticulture industry, which also includes garden centers and landscape design firms, began to rebound in 2013, according to a report by the American Society for Horticultural Science.
Direct industry output for all sectors was estimated at $136.4 billion, the report said. Greenhouses, nursery and floriculture production accounted for 240,809 jobs in the U.S. and $20.3 billion in revenues.
"Although the green industry has grown slowly in recent years, it remains an important contributor to national, state and local economies," the report stated.
In its state of the industry report, Nursery Management magazine found that about 66 percent of nursery owners expect sales to improve in 2019 versus last year. More than a quarter (35 percent) expect a 1-9 percent increase in gross sales compared with 2018 while about 16 percent expect gross sales to be 10-19 percent higher this year.
One segment of the industry set to take off is cannabis growers. According to a 2018 article by Forbes, in Arizona, Colorado, California and Oregon, "cannabis is being cultivated in greenhouses in excess of 250,000 sq. ft. that are capable of yielding more than 50,000 pounds of flower."
Though obtaining insurance for cannabis operations, particularly large scale ones, can be difficult, more insurers are offering products for growers as more states legalize the plant.
A recent A.M. Best report identifies a number of marijuana-related market segments that need insurance coverage. They include cultivation, dispensaries and retailers, infused products and landlords. Some insurers have responded.
Approximately 25 carriers (mostly non-admitted) provide coverage in the space in both the U.S. and Canada, A.M. Best said. The Lloyd's Market offers coverage in Canada but doesn't offer coverage U.S. businesses because the federal government still considers it illegal.
Carriers that have entered the marijuana market are typically partnering with "agencies and producers that have a better understanding of the industry and the needs of cannabis businesses," A.M. Best said. One example: Topa Insurance Group, which supports Cannasure, an Ohio-based MGA and wholesale brokerage solely focused on the cannabis industry.
NIP Group, which offers a GrowPro program for greenhouse growers, nurseries and retail garden centers, recently entered into an underwriting agreement with AXA XL to expand its coverage offerings. The program includes proprietary stock coverages, including hydroponic stock.
Some projections call for legal marijuana sales to reach $22 billion by 2022, with illegal sales of the drug to drop to less than $5 million over the same period, as more states legalize use of the drug.
While there is opportunity for the insurance industry, there is also risk. Ian Stewart, a partner in Wilson Elser and chair of the law firm's cannabis law practice team, told Insurance Journal that he sees a potential wave of consumer class action lawsuits over cannabis as well as increasing risks for doctors.
An online search on MyNewMarkets.com for nurseries/greenhouses revealed three other markets targeting this specified class of business: Agricultural Insurance Management Services, and Mark D. Fredricksen Insurance Services, as well as GP Insurance Brokers LLC which offers coverage for cannabis dispensaries and growers. These include individual coverages as well as broad offerings for this segment.
The cottage-food industry -- foods cooked in a person's home or other designated location and sold directly to a consumer -- is growing.
U.S. local food sales, including cottage-food sales, have jumped from $5 billion annually in 2008 to a projected $20 billion this year.
Every state except New Jersey now allows home-kitchen cooks to make and sell non-hazardous foods with a low risk of causing foodborne illness such as baked goods, jams, jellies and other items that do not require time and temperature controls for food safety. Maine, North Dakota, Utah and Wyoming have gone further, enacting "food freedom" laws to expand upon cottage food laws to include potentially hazardous products like meat and poultry.
These laws are stirring debate at the state level. Part of the debate centers on the economic rights of "small-batch" home bakers and cooks versus public health and safety concerns. These private bakers, canners, and cooks want the liberty to sell their products to consumers free from the licensing requirements required of their larger commercial counterparts, restaurants and food processing plants. At the same time, the existing regulations are designed to protect consumers from foodborne illnesses that can be caused by improperly prepared foods.
While the federal government has authority over food in interstate commerce, it is state law that has traditionally regulated food produced for sale within state lines, according to "Cottage Food Laws in the United States," updated in 2018 by the Harvard Law School Food Law and Policy Clinic.
During the past few years, many states have passed cottage laws to regulate the industry adding increasing risk to cottage food makers.
For example, what would happen if a customer had an allergic reaction to a cottage-made food and sought payment for related medical bills?
Or a customer who might be injured at the home of a cottage food vendor? An insured may be liable and their homeowners insurance coverage may not respond to such risks, according to the experts at the Food Liability Insurance Program, or FLIP, based in Pleasant Grove, Utah.
FLIP, part of the managing general agency Veracity Insurance Solutions, developed a business liability program in 2012 dedicated to insuring exposures associated with home cottage businesses and other food related vendors
FLIP is an online platform where someone can quote, bind and issue their own policy within 10 minutes, says Chris Van Leeuwen, vice president of business development at Veracity Insurance Solutions.
"It's very user friendly and efficient to help those in the food industry to purchase with ease," he said. "A lot of people are buying this coverage on mobile apps."
Great American Insurance is the underwriting carrier.
FLIP isn't just for cottage food insureds. The program is available for broad class codes in the food industry, including caterers, mobile bartenders, mobile food trucks, and other mobile food vendors.
The entire food industry is a market where Van Leeuwen says Veracity has seen consistent growth.
"We have been able to develop specific coverages that respond better to these types of insureds," he added.
One example is its endorsement for stationary trailers.
"A typical general liability policy will exclude trailers in their auto exclusion. But what if someone hits their head on that trailer or trips and falls over the trailer -- coverage could be denied based on the auto exclusion," Van Leeuwen said. "We try to recognize some of the unique exposures and field them if possible."
An online search on MyNewMarkets.com for cottage food listed a large number of markets for food trucks, caterers, push carts, including but not limited to: TAPCO Underwriters Inc., Mobile Food Trucks and Vendors Insurance Program, and McClelland and Hine, a division of Worldwide Facilities LLC.