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![U.S. Insurers Hit Hardest by Inflation, Triple-I Global Analysis Finds](https://dxj7eshgz03ln.cloudfront.net/production/link/image/869137/original_ratio_extra_large_1eb90df5-f0fa-4312-af58-fa0ff6bd4bc5.jpg)
U.S. Insurers Hit Hardest by Inflation, Triple-I Global Analysis Finds
U.S. insurers have paid more than their counterparts worldwide to repair and rebuild damaged properties and vehicles due to inflation since 2018, according to an executive briefing conducted on behalf of the International Insurance Society (IIS).
“Cumulative increases in property replacement costs were higher than overall inflation in the U.S., Canada and Japan."
Inflation and Insurance Replacement Costs was developed by the Insurance Information Institute (Triple-I) and analyzes the relationship between overall inflation and insurance replacement costs for property and casualty (P&C) insurers in six of the world’s largest insurance markets between 2018 and 2022: Canada, the European Union (E.U.), Japan, Korea, the United Kingdom (U.K.), and the United States (U.S.). P&C insurers offer auto, home, and business coverage. Both the IIS and Triple-I are affiliates of The Institutes.
Within this five-year timeframe, the U.S. experienced the highest cumulative inflation rate (20.7 percent), followed by the E.U. (20.3 percent), the U.K. (17.7 percent), Canada (17 percent), Korea (11.9 percent), and Japan (3.3 percent), the analysis found. The U.S. also saw the highest cumulative inflation rate increase for insurance replacement costs (30.4 percent) between 2018 and 2022, Triple-I determined.
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.
Claims transformation: The inconvenient truth
Claims is the beating heart of insurance service providers. It is the moment when insurers convert a policy into the financial help needed following a calamity, and it’s the point at which the sector proves its worth and makes good on the customer’s trust.
With such high stakes, you’d think insurers would do everything in their power to ensure a smooth, frictionless and stress-free claims experience. Yet, according to PwC’s Insurance Brand Sentiment Index 2022, something is going terribly wrong.
The index, which tracks the key drivers of compliments and complaints via social media, found that insurers experience more negative conversations on Twitter than positive, resulting in a net sentiment of -19.2%.
When you zoom in on claims, the numbers become even starker. PwC’s data shows that net sentiment for this critical event is -86.8%, highlighting it as a significant pain point.
According to the report, “…the approval or rejection of claims is the largest topic across the industry with customers unhappy with the outcome of a claim. However, customers are also voicing dissatisfaction with more basic operations such as claims status or delayed responses to questions.”
Moreover, claims dissatisfaction is a key reason consumers switch insurance providers. Accenture reports that nearly one-third (30%) of dissatisfied claimants had switched carriers in the past two years, and another 47% were considering it.
That data is damning.
Accenture says, “Overall, the consumers who reported not being fully satisfied could represent up to $34 billion in premiums annually, or up to $170 billion over the next five years.”
What is interesting is that insurance industry data suggests the opposite. According to the Association of British Insurers, 79% of home insurance, 87% of travel, and 99% of motor claims are fulfilled. Similarly, the American Council of Life Insurers (ACLI) reports that in 2021, companies paid approximately $100 billion to beneficiaries and another $97.7 billion to annuity holders in the U.S.
That begs the question: Why do consumers feel aggrieved when so many claims end in positive outcomes?
The answer is found at the intersection of two key areas: The failure to provide basic operations and timely responses, and the false perception that insurers don’t pay out.
With claims taking months or more to process and customers not being kept informed of where they are in the process, they can only assume they’ve either been forgotten, or their claim has been rejected.
![The Predict & Prevent™ Podcast Episode 2: How Sensors and Visual Technology Can Help Insurers Effect Badly Needed Change](https://dxj7eshgz03ln.cloudfront.net/production/link/image/868691/twenty_by_nine_extra_large_c3a289ad-8158-436b-86b2-2d46830e7dd2.png)
The Predict & Prevent™ Podcast Episode 2: How Sensors and Visual Technology Can Help Insurers Effect Badly Needed Change
Sensors and data-driven intelligence platforms are foundational technologies that can identify hidden dangers and help prevent losses, according to the guests of “Hidden Dangers Uncovered,” The Institutes second installment of its podcast Predict & Prevent™.
Host Pete Miller, CPCU, CEO and president, The Institutes, sits down with Bob Marshall, CEO and co-founder of Whisker Labs, and Dave Tobias, COO and Co-Founder of Betterview, to discuss their companies’ approaches to implementing and utilizing sensors and data to drive effective change for their customers.
In the episode’s first segment, Miller and Marshall uncover the story behind Ting, an innovative plug-in sensor deployed in hundreds of thousands of U.S. homes to detect electrical issues that could cause fires. As co-inventor of this device, Marshall shares the sensor’s story from invention to adoption, detailing its AI-driven capabilities, and how it’s been shown to prevent 75-80% of electrical fires.
“Predict and prevent is possible here,” Marshall said.
“Electrical fire hazards typically develop over weeks [or] months. It can even be years … and we detect it very early. We detect the arcing the problem connection, and then, you know, we’re able to develop a pattern. Our data science allows us to know that it’s an outlet versus the panel versus a heating pad versus a laptop power supply.
In the second segment of the episode, Miller and Tobias discuss Betterview’s data-driven approach to predicting and preventing risk. Betterview, a property intelligence platform used by underwriters for scoring various property risks, acts as a prime example of how technology companies and insurance can work together for the betterment of all parties involved.
“I think our product is helping insurance carriers underwrite risk better. And that can mean a lot of different things to a lot of different people,” Tobias said.
“You know, pricing and effectively servicing their customers, customer experience element of it and predicting and preventing loss, which is a core belief of our company that we can actually effect change with that predict and prevent versus just repair and replace.”
To listen to this and other episodes, visit predictandprevent.org, or look for Predict & Prevent on most podcasting platforms. New episodes come out every two weeks.
![Why data can move insurance from protection to prevention](https://dxj7eshgz03ln.cloudfront.net/production/link/image/869000/original_ratio_extra_large_6f955207-a88d-4d13-8eb6-1650eed632ab.jpeg)
Why data can move insurance from protection to prevention
Insurers are poised to play a valuable new role as partners in accident prevention.
As the frequency, scale, and costs of disasters increase, connected technologies such as in-home smart devices and third-party data sources allow insurers to deliver real-time, personalized alerts and insights that help policyholders proactively protect their homes, vehicles, and other insured assets.
Many insurers already have fledgling IoT projects and growing stores of data from multiple sources that they can use to start delivering more meaningful connected insurance services. But adoption of existing connected products such as telematics-based car insurance remains low.
Successfully using these connected insurance building blocks for prevention requires strengthening customer trust that insurers will use those insights sensibly, leveraging data effectively, and imagining new ways to protect customers from the worst impacts of disasters.
Lars Boeing, Vice President Insurance, Capgemini Invent
The Legacy of Wejo
The mantra of last week's Autotech Detroit event was: "Build, Buy, or Partner." In the case of erstwhile data broker Wejo the message was "partner" but the partnership failed in spectacular fashion. That was not before the organization left its mark.
General Motors clearly turned to Wejo to act as its data broker with a $35M investment and an infusion of its own vehicle data - valued at $70M. With this support and a subsequent SPAC Wejo soon had $330M to begin developing solutions and selling data.
The aftermath of Wejo's apparent downfall is an educational moment for the industry. What is clear is that Wejo had many customers for its data - which was dominated by GM's car data culled from 11M connected cars.
An impressive list of location services companies had turned to Wejo for location data for both its quality and quantity. The data was so good, in fact, that GM itself found that it was buying back its own data through third parties that had put the Wejo data to work.
These third parties had been pursuing GM data for years and the Wejo-GM deal had opened the floodgates to the kind of location data needed for navigation-centric applications from insurance to navigation to automated driving. The Wejo deal exposed the reality within GM, and indeed other car makers, of confused and conflicting priorities and strategies regarding vehicle data.
Roger C. Lanctot, Director, Automotive Connected Mobility, Global Automotive Practice, TechInsights
Commentary/Opinion
The End of ESG
In the face of heavy criticism, U.S. executives are backing away from their emphasis on ESG (environmental, social and governance issues).
Farewell, ESG. We hardly knew ye.
ESG (an emphasis on environmental, social and governance issues) has struggled to take shape, and both Fortune and the Wall Street Journal pretty much declared it dead in the U.S. in the past week. (It continues strong in Europe.)
The fading of ESG will have broad implications for insurers. They'll start with coverage for the directors and officers who have had to wrestle with ESG considerations and will extend more subtly into many other lines by affecting how clients run their businesses and how they invest.
A Fortune columnist described the backlash against ESG on Thursday, writing:
"In the U.S., ESG detractors have basically won.... A full half of Fortune 500 CEOs now believe ESG issues are 'unduly impacting business decisions.' And that sentiment is trickling down to the chief sustainability officers in charge of ESG. Participants in a Fortune Impact Initiative call on Tuesday, which took place under Chatham House rules, admitted as much. 'We don’t talk about ‘ESG’ anymore,' and 'the term [ESG] does get in our way' were common refrains."
Paul Carroll, editor-in-chief, Insurance Thought Leadership
InsurTech/M&A/Finance💰/Collaboration
![InsurTechs hunt for their **‘Ozempic moment**': Key takeaways from **Insurtech Insights**](https://dxj7eshgz03ln.cloudfront.net/production/link/image/868899/twenty_by_nine_extra_large_528e4081-cab6-425c-9ca8-f56e7efe6d44.jpeg)
InsurTechs hunt for their **‘Ozempic moment**': Key takeaways from **Insurtech Insights**
In 2021, weight loss drugs Ozempic and Wegovy were approved for diabetes, and soon doctors started prescribing them. Things progressed and several internet pharmacies are now willing to dole out these medicines without much oversight. For most people, given the choice of exercising and eating broccoli vs. a jab, the latter was preferable.
Was WeightWatchers going to be left behind? No. In March, it acquired a telehealth subscription that allows it to connect patients with doctors to prescribe Ozempic. Broccoli be damned – it pays to latch on to the latest trend vs. sticking to the messaging of the past.
Last week, the Insurtech Insights two-day conference took place in New York City, with participants hailing from various segments of the insurance food chain.
If we were to draw an analogy, embedded insurance sounded like the Ozempic for InsurTechs. Add ChatGPT and AI, and you have the trifecta. It's like WeightWatchers all over again. We have new products and buzzwords – forget about what we told you last year as our differentiating strategy.
German insurtech Thinksurance secures $24M to spearhead commercial insurance digitalisation in Europe
Based out of Frankfurt, Thinksurance, an insurtech company, has snapped $24 million in new funding. This round was led by international insurtech specialists Viewpoint Ventures and M-Tech Capital as well as Segenia Capital. In addition, existing investors Eight Roads Ventures (which backed Safe Security), and Columbia Lake Partners also participated in the round.
AI in Insurance
Navigating the AI Frontier: A How-To Guide for P/C Insurers
Executive Summary
In a report published in early March, analysts at Celent advised P/C insurance leaders about the significant risk of doing nothing with large language models. The “competitive gap established by early adopters could be sustainable due to an LLM’s inherent ability to learn and improve,” they wrote in an announcement about the report.
But what exactly should they do today? Here, Celent Analyst Andrew Schwartz provides answers, laying out some basics for CEOs, COOs and functional leaders, advising on where to start, what they need to be thinking about today, what they should be planning and, importantly, how should they be coordinating their efforts with regulatory bodies.
AI: The Future of Group Insurance
74% of insurance executives plan to increase investments in AI. Insurers that seize this opportunity early will have a critical advantage.
KEY TAKEAWAYS:
- While traditional new business and renewal processes can be time-consuming and result in missed opportunities, AI can quickly generate alternate plan designs.
- During high-load periods, the volume of quotes requiring underwriter review can slow processes. AI can assist by pulling together data, even from previously inaccessible sources like handwritten notes.
- AI-powered chatbots can provide immediate assistance and answers to customer queries, providing a better customer experience. These tools can be trained to learn an insurance company’s products, policies and general “language,” helping customers fully understand their benefits plan.
Mike de Waal, president and founder, Global IQX
People
American Family Ventures (AFV) has appointed Dr. Henna Karna as an Entrepreneur in Residence.
American Family Ventures (AFV) has appointed Dr. Henna Karna as an Entrepreneur in Residence.
AFV Managing Director Dan Reed said that Karna’s “exceptional track record and leadership in technology innovation put her in position to bring next-level perspective to both our work as investors and our mission as change agents and innovation leaders. I look forward to how her expertise and insights contribute to our work with entrepreneurs who are transforming the future of insurance.”
With a career spanning over 25 years, Karna has held numerous senior-level positions and has been a regular on the keynote speaker circuit. She is known for her leadership of Google Cloud’s global insurance road map and has held executive positions with AXA, Verisk Digital Services and AIG. An advisor for the CDL-Wisconsin Risk Stream from Creative Destruction Lab, she brings a masters and a doctorate from the University of Massachusetts as well as an MBA from MIT.