Autonomous Vehicles Are Coming to a Street Near You. How Will We Insure Them?  June 12th 2023

Autonomous Vehicles Are Coming to a Street Near You. How Will We Insure Them?

As AVs continue to improve, the push to adopt them will grow stronger, and insurers will lead the way — but issues surrounding product safety and liability are yet to be resolved.

The promise of cars that drive themselves has been just over the horizon for years now — one of those breakthroughs that’s always coming yet seemingly never arrives. That’s changing, though, and rapidly.

“In the future, product liability exposure will need to be factored in when assessing liability in a loss,” said Joey Daryanani, vice president, CSAA Specialized Services, CSAA Insurance Group, a AAA Insurer.

“Ideally, this will need to be considered at the time the first notice of loss is reported. Given that, in most cases, less experienced personnel handle the initial claim intake, we will need to enhance training programs to include product liability, preservation of evidence and when to consider hiring an expert early in the liability investigation.”

While the prospect of charging into uncharted technological and legal territory may be risky, it’s not without promise.

In the short term, as the courts determine how liability will shift from drivers to manufacturers, we can expect some uncertainty (and volatility) to persist. “At this point, historical data is very thin,” Daryanani said. “Carriers will need to keep an eye on loss trends and be prepared to respond quickly.”

For AV manufacturers, “finding a trusted and nimble insurance partner is key,” Daryanani said.

“In my experience, we have had to keep the lines of communication open and better understand the autonomous vehicle company’s growth and risk mitigation strategy … I recommend brokers look for insurers (like Mobilitas Insurance) that are specifically set up and targeting the new forms of mobility. In addition, look for insurers that are already insuring autonomous vehicles today.”

David Agnew, associate editor, Risk & Insurance®

New Research Report: The Connected Decade: Insights Into What’s Driving Connected Living

Assurant’s latest annual Connected Decade research yet again highlights the importance of connected devices to consumers. The new Connected Decade report, which has been published annually since 2017, illustrates the criticality of keeping consumers connected.

The smartphone is regarded as indispensable, not only as a communications device, but also as a remote control to orchestrate other connected devices that span a growing ecosystem.

“It’s great to see the increased device usage and addition of new devices in the home in the wake of the heavy investments consumers made in connected devices during the pandemic. It clearly shows just how reliant we have become on our devices and the benefits that connected living provides,” said Jeff Unterreiner, President, U.S. Connected Living at Assurant. “As consumers hold on to their connected products for longer in the face of economic uncertainty, service providers and retailers have an opportunity to deepen relationships by offering support and protection solutions that give customers reassurance and peace of mind.”

AIG and Farmers join other insurers in pulling back from climate and cat exposed property risks

Large insurers AIG and Farmers Group are pulling back from climate and catastrophe exposed property risks, joining other insurers that have either reduced or ceased offerings altogether in U.S. regions vulnerable to floods, storms, and wildfires, reports the Wall Street Journal (WSJ).

The publication has reported that AIG is planning to cut its offerings of homeowners’ policies in as many as 200 ZIP codes at high risk to floods or wildfires, including areas like New York, Delaware, Florida, Montana, Colorado, Idaho, and Wyoming. The carrier has already reduced new business in California, which is once again being heavily impacted by wildfires.

At the same time, reports the WSJ, Farmers Group has stopped offering new policies in hurricane-prone Florida, with the insurer noting historically high catastrophe costs and the impacts of inflation on reconstruction expenses.

Climate Change and Homeowners’ Insurance Are on a Collision Course

A summer that has already seen water crises and wildfire smoke is rapidly becoming an inflection point in the pitched battle between climate change and the price of homeowners’ insurance in the US.

American International Group Inc., which has already pulled back from new California business, is now set to curb home-insurance sales for affluent customers in around 200 ZIP codes across the US, including New York, Delaware, Florida, Colorado, Montana, Idaho and Wyoming. The decision was first reported in the Wall Street Journal on Thursday, citing people familiar with the company’s plans.

AIG’s decision comes on the heels of both State Farm and Allstate Insurance Co. announcing plans in recent weeks to stop writing new policies in fire-prone California. In Florida, meanwhile, the past 13 months have seen seven of 47 local property insurance businesses go under, and another 24 are now on a regulatory watch list.

Business and Technology Trends for Property/Casualty MGAs in 2023

While they’re not a new type of distributor, the way MGAs function in the market is changing. Here we share a few key trends to keep an eye on.

Managing general agents, or MGAs, are not just run-of-the-mill insurance agents—they are a type of retail or wholesale insurance distributor. Affiliated MGAs enable greater insurer agility by allowing them to place business with other insurers. MGAs can also allow insurers to take advantage of niche market expertise to expand their distribution and grow their business without building the necessary infrastructure internally.

And the benefits of MGAs have not gone unnoticed by insurance carriers: MGA business (measured in premiums) is growing faster than the overall property/casualty industry. While they’re not a new type of distributor, the way MGAs function in the market is changing. Here a few key trends to keep an eye on:

• MGA formation and consolidation are both increasing.
• Vendors are increasingly targeting MGAs
• Certain technology areas are higher priority than others.

To learn more about recent trends in the property/casualty MGA marketplace, including examples of recent MGA technology investments, read Aite-Novarica Group’s recent report Business and Technology Trends 2023: Property/Casualty MGAs. You can also reach me directly at skaye@aite-novarica.com.

Steven Kaye, Head of Knowledge Management at Aite-Novarica Group