The needs of your personal lines clients are transforming. So even if the personal umbrella market is relatively steady right now, don’t be surprised if that doesn’t last.

Pricing Trends

John North, vice president of personal lines at Harleysville, expects personal umbrella pricing to “remain pretty stable for the foreseeable future”—particularly in 2014. Why? “Results have been pretty stable across the industry for both frequency and severity,” he explains.

According to Mike Stone, president and chief operating officer of RLI Insurance Company, PUP pricing changes in either direction will be “based on experience” as well as geography. “Some states are more problematic than others,” he explains.

In the next couple of years, North believes personal umbrellas will continue to change in response to an increasingly tech-savvy world—especially as tools like social media continue to empower insureds to expand their knowledge base on their own terms.

“Consumers are a lot better informed, and quite frankly they’re helping to mitigate risk through that knowledge,” he explains. “I think that’s helped to level out a lot of these results and keep the trends somewhat manageable in all aspects. Consumers are a lot more educated and more aware of the potential personal exposures they have.”

On the Horizon

As the reach of the Internet continues to expand, expect issues like cyber bullying to become a bigger concern in the personal umbrella area—particularly when it comes to preparing clients who are parents, Stone says.

On the auto side, smarter cars could translate into lower physical damage costs moving forward, but only time will tell what impact they will ultimately have on insurance. “Obviously that links very tightly with the umbrella since the majority of umbrella claims come through auto,” North says. “Driverless cars are not that far off. That’s going to change the game for auto in particular, but it’s going to trickle down to umbrella as well.”

The world is certainly changing fast—not just in terms of technological advances, but social behavior as well. Multi-generational households, for example, have become a bigger PUP concern in recent years. “It’s not just the children that are moving back to the parents,” Stone says. “In many instances, it’s the parents moving in with the kids and bringing their assets into that arrangement.”

Whether it’s a child leaving home to attend college, a new pet or toy, home business concerns or rental and secondary properties, personal exposures are always in flux. “Every family is different relative to their exposures,” North says. “We need to ask our insureds lots of questions not just when we sell them a policy, but in future renewals to make sure we uncover every potential exposure. Every day of a policy provides an opportunity for an exposure to change.”

Jacquelyn Connelly is IA senior editor.