In comparison to other industries, the property and casualty insurance industry has been a slow adopter of technology. Some of this can be blamed on carriers that prefer to operate as they always have. Another reason is the aging population of insurance agents. Research shows that the average insurance agent is 59 years old, and a quarter of these agents are expected to retire in 2018. Generally speaking, this makes this demographic less inclined to learn about the new technology coming out.
We're currently experiencing a crowded and highly competitive market for property and casualty insurance carriers. We've talked about how the industry is evolving and how insurtech companies are transforming the insurance space. This increased competition is making it more challenging for carriers to reach profitability goals. However, some carriers are shifting their focus from writing more premiums to improving underwriting practices to protect profitability.
Hurricanes Harvey and Irma have caused billions of dollars in damage over the past few weeks, resulting in a historic humanitarian disaster. The flooding that Harvey brought to homeowners in Texas was especially devastating as many of the affected properties did not have flood insurance as they were outside of the hundred-year floodplain. Although the monstrously large Irma wreaked havoc on Florida homeowners, properties in this region are generally well-insured for flooding and hurricane damage.
We are most certainly in the midst of hurricane season. It's estimated that Hurricane Harvey will inflict as much as $30 billion in damages on homeowners. While the effects of Harvey are devastating, Hurricane Irma is projected to cost insurers up to $65 billion in claims.
We live in a world that is more uncertain than ever. From an insurer's perspective, there are a number of new factors that must be taken into account to appropriately underwrite risk. It's critical that property underwriters are trained to address these potential exposures and think outside the box about additional coverage that may be needed.
Generally, insureds have limited interaction with insurance carriers, which can make it challenging to build relationships and foster loyalty. Our team at Insurance Risk Services has been partnering with insurance carriers for more than 35 years to provide underwriting support, and one way that we're able to overcome the relationship building obstacle is by conducting an in-person insurance inspection.
With so much data available, insurance carriers would be negligent not to incorporate data into their underwriting processes to make intelligent decisions. However, can data alone help to accurately underwrite insurance risk?
Lead poisoning has been a hot topic among parents for a number of years, and for a good reason. Approximately 500,000 children living in the United States have been impacted by lead poisoning, which is known to affect the brain and nervous system and cause developmental delays, slowed growth, and behavioral problems.
There has been a lot of buzz lately about the National Flood Insurance Program (NFIP) as we approach the renewal date for the program (September 30, 2017). The NFIP was enacted in 1968 and enables property owners in participating communities that do not qualify for traditional flood insurance to purchase alternative protection to receive disaster assistance in the event of a flood.
In August of 2016, Federal Aviation Agency Rule 107 went into place, which allows non-recreational operators to fly drones in U.S. airspace assuming that they complete a certification process. While this opened up the door for insurance carriers to consider using drones as inspection technology to strengthen underwriting, it also opened up the floodgates for millions of other drones to fly the skies. In 2016, the commercial drone market grew by 86 percent. The FAA estimates that there could be as many as 2.7 million commercial drones in use by 2020.