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Nationwide is latest major US insurer to pull-back, citing cat weather losses & inflation - Artemis.bm
Nationwide Mutual Insurance is the latest major US carrier to announce that it is pulling-back, due to catastrophic weather losses and inflation among other reasons, planning to cease writing certain new business as it looks to get a handle on its exposure and claims frequency.
We’d been hearing rumours all weekend that an announcement was coming from Nationwide and we’re told this has literally just gone out to agents working with Nationwide now.
A statement from the insurer says the company is taking actions across its property and casualty insurance business.
“Strong headwinds brought on by the economic environment, catastrophic weather events and the impacts of inflation continue to impact the entire insurance industry,” the insurer explains.
“As a result, Nationwide has announced specific business actions it is taking to mitigate risk and manage the personal and commercial lines portfolios in the current environment,” it continued.
Nationwide said that it will now require pre-quote documentation for new personal lines business from June 14th, for some products in select states.
State Farm, Allstate California news: US insurance woes to get worse
Smoke descended on New York City, oceans are rising, arctic ice is melting. But one of the most significant and undeniable ways Americans will be impacted by climate change is far less dramatic: Insurance.
Insurance companies across the country are increasingly altering where and how people can live in flood, storm or wildfire-prone areas. State Farm and Allstate have made national headlines recently for their decisions to not offer new homeowner policies in disaster-prone California, and other companies have pulled out of or dramatically raised rates in Louisiana, Florida and Colorado.
In other words, whether or not you believe climate change is a problem, your data-driven insurance company already does — and it's responding, in most cases faster than government regulators. A 2022 report by USA TODAY explored a looming financial catastrophe caused in part by government assurances that people can rebuild where they previously lived, instead of being prompted to relocate somewhere safer.
A recent poll by Ipsos found that 90% of Democrats report being concerned about climate change, compared to 34% of Republicans, many of whom live in disaster-prone states like Florida and Texas.
"What you're really getting into is having to adjust how and where we build to make things are insurable," said Craig Fugate, the head of FEMA during the Obama administration. "The argument has always been that building restrictions make homes unaffordable. But the new question has to be: Is it insurable?"
Bad Press, Claims Issues, Halt on New Business Giving Industry Another Black Eye?
It’s no secret that the U.S. property/casualty insurance industry does not always enjoy a sterling reputation among consumers. As one insurance professor recently put it, the industry’s rank in public opinion is somewhere between that of a personal injury lawyer and used-car salesmen.
But a barrage of developments and negative press reports in the last year, especially in Florida, Louisiana and California, may have exacerbated the ill feelings nationwide. The president of the American Property Casualty Insurance Association called this “a critical inflection point for the industry.”
The current climate has some stakeholders calling for changes. Ideas range from a national education and advertising campaign that could remind the public of the benefits that come with insurance policies, to requiring more responsiveness and transparency by carriers after disaster claims.
Some insurance agents have said the seemingly relentless publicity coming out of Florida, after 10 insurer insolvencies in the last 30 months, soaring premiums, stories of hurricane claims that have not been paid, national news reports of insurers altering adjusters’ damage estimates – along with the recent State Farm, Allstate and AIG pullback from new business in California and other states – has given the industry another black eye and has hit agencies hard.
“It has made it tremendously more difficult for us as agents,” said Brian Chapman, of Fort Myers, who owns one of the largest agencies in southwest Florida.
As insurers have gone bust or have stopped writing, agencies and brokers have had to work harder to find new carriers for jilted policyholders – often at lower commissions, or have lost longtime clients altogether, agents have said. Some homeowners without mortgages, we well as business clients, have said they’re dropping coverage completely because they simply can’t afford it. The Insurance Information Institute reported late last year that about 13% of Florida homeowners have elected to go naked – almost twice the national average, according to a Florida news report.
The country’s largest insurance agent group has recognized the concerns and has taken some recent steps. Trusted Choice, the national-brand marketing arm of Big I, the association of independent agents and brokers, is now working on producing a toolkit for agents. Ideas include agents stressing good communications and strong relationships with insureds, and hammering home the benefits of good risk management.
J.D Power 2023 U.S. Auto Insurance Study: Auto Insurance Customer Satisfaction Plummets as Rates Continue to Surge, Participation in Usage-Based Insurance Programs Reaches Record High as Customers Seek Lower-Cost Policies
Nearly one-third (31%) of U.S. auto insurance customers say they experienced a rate increase during the past year as the industry raises rates an average of 15.5%1 and insurers continue to fight the forces of record high loss ratios.
Auto insurers lost an average of 12 cents on every dollar of premium they collected in 2022—the worst performance in more than 20 years—leaving them few alternatives but to raise rates at the expense of customer satisfaction.
According to the J.D. Power 2023 U.S. Auto Insurance Study, released today, satisfaction with auto insurance has dropped 12 points (on a 1,000-point scale) year over year, the largest decline in the past 20 years. The decline is largely driven by lower satisfaction with the price customers pay for insurance, a factor that has declined 25 points this year.
UBI sees record adoption: Participation in usage-based insurance programs has more than doubled since 2016, with 17% of auto insurance customers now participating in such programs. Price satisfaction among customers participating in these programs is 59 points higher on average than among non-participants.
Florida's Citizens seeking 13.4% average rate increase
Citizens Property Insurance Company, Florida’s state-backed insurer, is looking to increase personal property rates an average of 13.4% and commercial rates 11.7%. The proposed increases still require approval by the state’s insurance department.
During the past three years, Citizens has increased rates an average of 15%, while private market players in the state had a cumulative rate increase of 39% during that period.
While it was set up to be non-competitive with the private insurance market, Citizens’ rates are priced considerably below market. According to Tim Cerio, Citizens president, CEO and executive director, Citizens’ HO-3 policies are 44% cheaper than the nine competitors that hold 24% of the market.
Citizens anticipates its policy count to reach as high as 1.7 million by the end of the year. Should it hit the projected number, its total insured value would reach $654 billion.
According to Cerio, Citizens policy growth increased the losses it saw from hurricanes Ian and Nicole, driving the insurer’s surplus down 33%. He said that should a moderately sized storm hit Florida this season it would likely result in an assessment being levied on consumers across the state.
“The larger we grow, the greater our exposure. The greater our exposure, the greater for the potential to put a financial burden on the taxpayers of Florida,” Cerio said at the rate hearing.
He said Citizens must work to depopulate its book of business to reduce the risk of assessment, and achieving rate adequacy is the best way to reach that goal.
According to Brian Donovan, Citizens chief actuary, recently passed insurance legislation has already lowered the insurer’s premium need by more than $900 million. These savings were included in the rate indication calculations.
However, even after the savings from the legislation and the proposed rate increase, Citizens would still need an additional $1.3 billion to be actuarially sound, Donovan said.
US Senate budget committee opens investigation into major insurers
Democrats on the U.S. Senate Budget Committee launched an investigation on Friday into major insurers including American International Group Inc. and Travelers Cos. Inc., pressing them on their “support” for new fossil fuel projects.
“By underwriting and investing in new and expanded fossil fuel projects, U.S. insurers are helping Big Oil bring us closer to the worst runaway climate scenarios,” the Committee's chairman Senator Sheldon Whitehouse said.
Besides AIG and Travelers, Chubb Ltd., Berkshire Hathaway Inc., Liberty Mutual Insurance Co., Starr Insurance Cos. and State Farm are also under the committee’s scanner.
Some insurers have also started to dial back coverage in areas prone to climate risks such as wildfires, citing increasing costs of claims.
Some insurers have started to dial back coverage in disaster-prone areas, citing increasing costs of claims.
Late last month, State Farm said it would stop selling new insurance policies to homeowners in wildfire-prone California.
The companies did not immediately respond to Reuters' requests for comment.
The insurers were also asked if they have clear policies to obtain consent from indigenous communities before underwriting or investing in projects that disproportionately impact such groups.
Besides Senator Whitehouse, Senators Ron Wyden and Bernie Sanders are part of the group that launched the investigation.
The companies were asked to provide information by June 16 and supporting documents by June 23.
How Outsourcing is Reshaping the Future for P&C Insurance Firms
In the ever-evolving P&C insurance industry, delivering exceptional solutions to policyholders remains paramount. As the sector experiences a significant shift in customer experience, new product delivery, and pricing models, it’s crucial to prioritize building strong relationships.
According to the 2023 Gartner CIO and Technology Executive Survey, a majority of insurance CIOs are increasing their investments in technology. This reflects the industry’s acknowledgment of moving beyond manual processes and legacy systems.
To embrace the digital era and remain competitive, P&C insurance companies are gradually embracing digitalization and turning to insurance BPO services. This rise in BPO services has become imperative to redefine strategies and operations to keep pace with the evolving landscape.
Why the sudden surge in BPO services? Insurers are realizing the value of outsourcing solutions in reducing their workload and maintaining a sustainable workflow.
Surviving and thriving in this digital era requires embracing change and exploring innovative solutions. Let us assist you in navigating this transformation and driving your business toward a successful future.
This blog will help you understand how to leverage the power of outsourcing to propel your organization to new heights of success.
Read more: https://www.digitaljournal.com/pr/news/cdn-newswire/how-outsourcing-is-reshaping-the-future-for-p-c-insurance-firms#ixzz84MMxx78m
Best’s Ranking: State Farm Group Top US P/C Writer by NPW for 2022
Net premiums written rose 8.6% for U.S. property/casualty writers as several writers saw dramatic NPW gains.
The top 10 companies maintained their position from the previous year except No. 1 State Farm Group and No. 2 Berkshire Hathaway Insurance, which exchanged places. State Farm’s NPW rose 11.6% to $77.76 billion while Berkshire Hathaway’s NPW fell 2.1% to $73.56 billion.
Total NPW in 2022 for the U.S. P/C industry was $782.31 billion, according to the Best’s Ranking for the Top 200 U.S. Property/Casualty Writers of 2022.
Net premiums written rose 8.6% for U.S. property/casualty writers as several writers saw dramatic NPW gains.
The top 10 companies maintained their position from the previous year except No. 1 State Farm Group and No. 2 Berkshire Hathaway Insurance, which exchanged places. State Farm’s NPW rose 11.6% to $77.76 billion while Berkshire Hathaway’s NPW fell 2.1% to $73.56 billion.
Total NPW in 2022 for the U.S. P/C industry was $782.31 billion, according to the Best’s Ranking for the Top 200 U.S. Property/Casualty Writers of 2022.
InsurTech/M&A/Finance💰/Collaboration
InsurTechs pull in strong funding in this week’s 32 funding rounds
The companies who blazed a trail this week included Incline P&C Group – a premier insurance program market services firm – who secured funding from Braemont Capital. Elsewhere, Spinnaker Insurance company locked in $110m in funding.
The FinTech sector pulled in $920m in funding this week, this was up from last week’s modest raise of $543.3m.
This week saw the CyberTech sector pulling in the most deals with six in total, with PayTech and AI trailing in joint second with four and WealthTech, InsurTech and FinTech coming in joint third with three. Crypto firms secured two deals, while ESG, PropTech and RegTech firms all brought in one deal a piece.
The US once again led the way in the most deals recorded this week, with US-based firms bringing in 13 of the top deals, while the UK trailing just behind on 7. Three French firms pulled in funding, while Singapore, Israel, Germany, Sweden, India and the Netherlands all brought in one deal.
Here are this week’s funding rounds.
Skyline partners with Spire Global to bring satellite observation to parametric insurance
Skyline Partners, a parametric specialist, has partnered up with Spire Global, a global provider of space-based data, analytics and space services, to bring the capabilities of satellite observation to parametric insurance.
Both firms will work together to develop new risk transfer tools which will ultimately help close the coverage gap for clients in the marine, aviation, and agricultural sectors.
From the ultimate vantage point of space, Spire Global collects previously unattainable knowledge and insights about the Earth and the human activity on and above its surface.
The company gathers detailed information and data on global shipping activity, which includes vessel locations and live port arrivals and departures. Additionally, Spire Global also collects real-time weather data from the entire planet, flight tracking data and other aviation intelligence, and intelligence on climate variables such as sea ice and soil moisture.
This new partnership with Spire Global is one of many that Skyline has entered to unite sectoral expertise and unrivalled data sources in its parametric laboratory.
By working with clients including major firms such as Munich Re, SCOR, Howden, NFU, Intangic MGA, Skyline is creating ground-breaking risk transfer solutions to a wide variety of insurability challenges.
“The combination of computational power, enormous new sources of data, and new risk transfer structures unconstrained by the traditional insurance model allows us to create and administer powerful new cover which breaks the boundaries of insurability,” said Skyline Partners Co-Founder and Executive Director Gethin Jones.
“This new partnership with Spire will fuel the development of a range of innovative products which are currently difficult or impossible to insure adequately using conventional approaches.”
“Our mission is to deliver data and analytics which can only be collected from space, to protect our environment and our communities, transform global logistics, contribute to economic stability, and put moonshot goals within reach,” commented Mike Eilts, general manager of Weather and Earth Intelligence at Spire.
“There are significant potential applications for our data in the insurance sector that align with our mission, and we’re excited to bring those applications to fruition through this new relationship with Skyline Partners for parametric.”
AI in Insurance
Generative AI: Ready To Engage Your Insurance Customers
When everyone from Fortune 100 board members to your Aunt Suzie is talking about ChatGPT—with a fair understanding of what it can do, that’s a big deal. That means it has likely hit a cultural saturation point similar to the early years of the World Wide Web and the mobile phone. It has that same feel. In fact, both of those tech advancements created a sea change in the way we live our lives and do business today.
Similarly, the art and science behind the functionality of ChatGPT—and generative artificial intelligence (AI) in general—have captured the creative imaginations of business leaders and innovators globally. Many are assessing how quickly they can productize generative models and bring this data-driven workhorse into their everyday applications.
For organizations that understand how much generative AI can help them get and stay customer-obsessed, the upside to jumping aboard the generative AI revolution is a high priority indeed. A recent Forrester report (paywall) titled "The Future Of Customer Insights Will Power Next Best Experiences" details how it is the reinforcement learning model used by ChatGPT that will fuel customer personalization advantages they call the “next best experience” (NBX).
Let's take a look at how marketers in the insurance industry can take advantage of AI. The three most significant generative AI advantages for the insurance industry all focus on creating deeper and more winnable consumer experiences.
Linh C. Ho has held executive leadership roles for a number of global tech companies and currently serves as Chief Growth Officer at Zelros
Canada
Canadian P&C insurers will be able to manage wildfire-insured losses: DBRS Morningstar -
Wildfire-insured losses will remain manageable for Canadian property and casualty (P&C) insurers but will add to extreme-weather concerns as they have been exposed to larger and more frequent weather-related losses, according to DBRS Morningstar.
“Although Canadian P&C insurers’ results are likely to come under pressure during Q2 and Q3 2023, as they bear the weight of an above-average wildfire season, we expect that insured losses will remain manageable for most companies,” said Marcos Alvarez, Global Head of Insurance.
According to the report, in the absence of any other major catastrophes during this time and based on current claims estimates, Canadian P&C insurers should be able to absorb these losses with negligible impact on their capitalization, remaining a profit and loss event for the industry.
DBRS Morningstar estimates that the aggregate insured losses of the ongoing wildfires in Alberta, Québec, and Atlantic Canada will be materially smaller than the record $4.3bn following the Fort McMurray wildfires in 2016.
“However,” Alvarez added, “we anticipate that the increase in extreme weather and natural catastrophe losses, together with a hard reinsurance market globally and relatively high inflation levels, will continue to pressure home insurance prices up in the near term.”
Canadian P&C insurers have been exposed to larger and more frequent weather-related losses, which are driven not only by climate change but also by the rise of property values over time as well as changes in demographics and accumulation of insurable value in risk-prone zones.
DBRS Morningstar has found that total insured weather-related losses in Canada for the last four decades (adjusted by inflation) has increased significantly since 2009. This increase in wildfire losses will compound insurers’ concerns about natural catastrophes.
Despite suffering insured catastrophe losses of $3.1bn in 2022, which was the third most costly year on record, the Canadian P&C insurance industry reported a strong combined ratio well below 90% during the year.
Although there was a slight deterioration in underwriting results when compared to the prior year, Canadian insurers benefitted from an advantageous pricing environment, contributing to solid topline growth.
Additionally, their overall results were also positively affected by favourable prior year claims reserve developments following conservative loss estimates during the peak of the Covid-19 pandemic.