News
Limited capacity, undervalued properties roil coastal insurance markets
Even coastal properties with appealing risk profiles still face rate increase increases between 15%-50%.
Coastal areas across the U.S. have experienced recent changes in weather patterns. According to the National Oceanic and Atmospheric Administration, in 2022, 18 separate weather and climate disasters cost at least $1 billion in damages in the U.S. Most were hurricanes, storms and floods.
The United States Geological Survey predicts that over the next hundred years in California, about half a million people and $100 billion worth of coastal property will be at risk. Florida recently suffered between $50 billion and $65 billion in damages from Hurricane Ian — the second-largest insured loss on record. These weather incidents result in a lack of carrier capacity enhanced by rising rates and a trend of properties being valued incorrectly.
Increased insurance coverage rates
As severe weather affects the U.S. coasts, insurance carriers’ room for adequate catastrophe risk capacity is diminishing. With carriers rolling back their capacity, commercial property owners along the coast must contend with rate, valuation and deductible increases.
In its Global Insurance Market Update, Marsh reported that the 2022 fourth quarter experienced increased property rates for the 21st consecutive year. The increase caused carriers to look for ways to mitigate costs. This resulted in a challenging environment for catastrophe-exposed properties. Properties with appealing profiles still face increases between 15% and 50%.
Undervalued coastal properties
Properties not only don’t have adequate coverage, but they’re also discovering coverage gaps in their current appraisals. A study by Kroll found that 68% of buildings valued from 2020-2021 were underinsured by 25% or more. And nearly 90% of appraised buildings were undervalued. Some properties in coastal states don’t have any coverage. The Insurance Information Institute reports that only 18% of Florida’s residents have flood insurance for their homes.
The lack of protection and misevaluations leave property owners confronting unexpected losses with premiums that are ill-equipped to deal with them. Increased rates and a lack of capacity complicates finding insurance coverage and protection for property owners in coastal states across the U.S.
Risk professionals and senior leaders must anticipate and proactively manage risks to thrive amid uncertainty in a dynamic industry. As underwriters scrutinize a business’s risk capacity, buyers will be challenged to differentiate their risk during the renewal process. They may need to rethink the elements of their insurance contracts. This requires an approach rooted in data and analytics.
Stephen McCord, regional sales leader and senior vice president of real estate & hospitality at Marsh McLennan Agency
Farmers Halts New Florida Homeowners Business as Risk, Costs Climb; Company Monitoring California Developments
In California, Farmers Insurance Group is the 2nd largest writer of homeowners multiperil, with a 14.46% market share, according to BestLink.
Farmers has stopped writing new homeowners policies in Florida, a move intended to more effectively manage risk exposure during “historically high” catastrophe and continually climbing reconstruction costs, according to spokesman Luis Sahagun.
At least 15 companies have put a moratorium on new Florida homeowners business over the past 18 months, Insurance Information Institute (III) spokesman Mark Friedlander said. Some of those were among the seven carriers declared insolvent in Florida, he added.
“We’re not seeing any indications of stability in the marketplace” despite recent rounds of legislation intended to curb claims fraud and abusive legal costs, said Friedlander.
Sahagun called Farmers’ action in Florida a “pause” and would not define further what that means. Farmers Insurance Group was the 16th largest writer of homeowners multiperil insurance in Florida in 2022 with a 1.92% market share, based on direct premiums written, according to BestLink.
Friedlander listed a number of factors pointing to an unstable market. “More than 50% of the 47 Florida-domiciled insurers remain on the watch list of a regulator.”
III found that homeowners rates rose 100% over the past three years in the Sunshine State: 27% in 2021, 33% in 2022 and 40% last year. The average cost of a policy is now $6,000 in Florida, Friedlander said.
Direct-to-Consumer Insurance Appeals to Commercial Buyers and Carriers, but One Size Does Not Fit All -
The desire for DTC is growing. What could that mean for the commercial insurance landscape?
Traditionally, insurers have relied on selling coverage through their trusted networks of brokers. But now, the market is slowly but surely starting to change.
Carriers and aggregator comparison websites have been selling their personal auto, property and travel insurance policies direct to consumers online almost since the advent of the internet — a trend that accelerated during COVID-19, as consumers made more purchases online and Insurtechs such as Lemonade and Hippo grew in popularity.
That model is now gaining some traction in the commercial market, particularly in professional liability, general liability, property and cyber for small businesses. Yet uptake so far has been slow, and there are only a handful of providers out there
Alan Murray, associate director at AM Best, believes that the direct-to-consumer (DTC) model has the potential to significantly reshape the commercial sector, from the type of products sold to the way they are bundled, as well as how the products are distributed and the role that agents and brokers will play.
“The approach of some of the major commercial insurers has generally been incremental, not so much through a break with the traditional agency/broker model but through attempts to automate data collection and underwriting decision-making in a way that enables the agency base to enhance its efficiency by automating otherwise time-consuming processes,” said Murray.
SHOCKING (pun intended)! San Francisco area becomes first U.S. region to hit 50% EV adoption
Half of new auto registrations in the San Francisco designated market area (DMA) were for electric vehicles (EVs), making the city the first in the nation to reach this level of adoption, according to a new report.
S&P Global Mobility shared new research this week that showed the San Francisco region’s 50% electrification rate, which includes both EVs and hybrid models, was more than three times greater than the national average of 16.6% during the same March period.
Commentary/Opinion
Juneteenth: What It Is And How It Is Observed
It goes by many names. Whether you call it Emancipation Day, Freedom Day or the country's second Independence Day, Juneteenth is one of the most important anniversaries in our nation's history.
On June 19, 1865, Maj. Gen. Gordon Granger, who had fought for the Union, led a force of soldiers to Galveston, Texas, to deliver a very important message: The war was finally over, the Union had won, and it now had the manpower to enforce the end of slavery.
The announcement came two months after the effective conclusion of the Civil War, and even longer since President Abraham Lincoln had first signed the Emancipation Proclamation, but many enslaved Black people in Texas still weren't free, even after that day.
That was 156 years ago. Here are the basics of Juneteenth that everyone should know
InsurTech/M&A/Finance💰/Collaboration
Top 10 Auto Insurance Insurtechs by Funding
Auto insurance, among other insurance types, is becoming ever more streamlined, with bespoke policies and specific data lowering premiums for consumers – even amid current economic headwinds and the cost-of-living crisis. InsurTech Digital takes a look at the insurtechs bringing these innovations to the market.
- Akur8 - $37.9m
- Zendrive - $57m
- EasySend - $71.5m
- Instanda - $73.1m
- Novidea - $80m
- Ushur - $92m
- Tractable - $119.9m.
- Sure - $123.1m
- Bolttech - $443.2m
- Shift Technology - $540m
[See article for company descriptions]
Where do insurtechs go from here?
Co-founder and COO of Policy Expert, Adam Powell, looks at ways insurtechs can add value to their propositions
Business resilience and value-adding innovation have never been more important to insurers in today’s unsteady economic and geopolitical landscape.
For the past decade, effective use of insurtech has become a core requirement for optimising business operations and delivering growth in the face of changing client needs and an ever-evolving market.
It’s impossible to talk about the future of insurance without considering where tech plugs in. But what principles can we apply for peak performance?
Adam Powell, Co-founder and COO, Policy Expert
Insurance Industry reacts to Lemonade’s Two-Second Claim Settlement with Mixed Responses
The insurance industry has reacted with mixed views on the news that AI-powered insurtech, Lemonade, facilitated a claim settlement in just two seconds, setting a new speed precedent for the insurance industry.
We’ve rounded up a selection of comments from our own social media platforms and submitted commentary, to gauge the market reception regarding Lemonade’s news.
Climate Analytics Insurtech Reask Raises £4.6 Million in Latest Seed Funding Drive
Reask, a climate analytics and technology-driven risk modelling firm, has successfully raised a total of £6.55m in investment funding, with its recent seed round attracting £4.6m.
The additional funding will enable Reask to expand its coverage of hazards and expand its international team, enhancing its ability to serve customers effectively, the company announced.
The seed round was co-led by Mastry Ventures and Collaborative Fund, with participation from Machdoch Ventures and existing pre-seed investor Tencent, as well as pre-seed investors SV Angel and Hawktail.
In January 2022, Reask closed a seed funding round led by Tencent, a prominent global technology giant headquartered in China. The funding was designated for product development, operational expansion, and worldwide business development, with a particular focus on the London Market.
Bees360 - The Future of Property Inspections
Bees360, provider of drone enabled property inspection services powered by artificial intelligence (AI), and OneClick Data, a trusted data partner dedicated to streamlining the building code-sourcing process for all parties in the roofing industry, are leveraging each other’s technologies to revolutionize property inspections and improve the insurer and homeowner experience.
Insurers and homeowners rely on the opinions and expertise of individual inspectors when evaluating property damage. Traditional inspection processes and identifying proper building codes and taxation rates is time consuming, potentially impacting the claim adjudication timeline and customer experience. Bees360 and OneClick Data each solve individual pieces of this problem.
"Bees360 provides a new solution to an old problem for insurance carriers - helping policyholders become whole after a loss as quickly and painlessly as possible," said Courtney Cooke, vice president of sales at Bees360. "Through the use of AI, we provide increased accuracy and consistency in a manner not achievable through the traditional inspection process. The added benefit for our carrier clients is the cost savings this automation allows, helping reduce loss adjustment expenses."
Canada
Atlantic InsurTech startup QuickFacts secures $1.13m for Canadian expansion
Halifax-based startup QuickFacts, dedicated to improving the insurance industry with technological disruption, has confirmed the successful completion of a funding round securing $1.13m.
This InsurTech firm has built a strong reputation for aggregating insurance carrier underwriting information into a unified, searchable database for brokerages.
Exceeding their initial target of $500k, QuickFacts managed to raise a significant $1.13m. The round was spearheaded by Sandpiper Ventures, a venture capital firm with a focus on women-led, innovative technology businesses. Other participants in the round included Killick Capital, an investment firm based in St. John’s led by Mark Dobbin, Paul Hill, ex-CEO of Carta Worldwide, Neil Mitchell, former managing director at Marsh Canada, and a group from both Women’s Equity Lab Toronto and Vancouver.
QuickFacts’ innovative approach centres on compiling insurance carrier underwriting information for brokerages into a single searchable database. It enables brokerages to compare carrier information effectively. By using QuickFacts, a standard brokerage with 25 users can save an average of $140,000 a year in productivity, equivalent to two full-time brokers. Currently, the company’s software is being utilised by over 30 brokerages and 800 active brokers.
AI in Insurance
Cover Whale Ushers in New Era of Insurtech with Industry's First Chief AI Officer
Leading commercial trucking insurance provider will become AI-first company, with new position designed to spearhead the rapid adoption of AI company-wide
Cover Whale Insurance Solutions, Inc., a leading commercial trucking insurance provider and fast-growing insurtech, today announces the appointment of its Chief Artificial Intelligence Officer (CAIO), Darien Acosta, who will lead a new AI Transformation organization within Cover Whale.
Acosta's team has a mission to fully leverage the new opportunities for automation, decision-making, and innovation that AI models and advanced algorithms enable. Previously serving as Cover Whale's Head of Data Analytics, Acosta joins the executive team with the purpose of rapidly generating adoption of AI and machine learning functions across Cover Whale to generate customized solutions for its thousands of partner insurance agents and policyholders, and to accelerate all business functions.
Events
Connected Claims USA 2023 | Austin, TX | September 26-27, 2023
Reuters Events Invites the Insurance Claims Community to the World's Largest Claims Event
Connected Claims USA 2023 is expected to attract 700+ attendees from all major US carriers, and feature 75+ senior executive speakers across 2-days of networking and interactive discussion.
Partial speaker list:
- Jim DiVirgilio, Chief Regional Claim Officer Americas & Head of U.S. Claims, AXA XL
- Paul Measley, Chief Claims Officer, Plymouth Rock Assurance Corporation
- Laila Brabander, Head of North American Personal Lines Claims, Client & Producer Engagement Team, Chubb
- Lance Ondrej, SEVP & Chief Operating Officer, Germania InsuranceMike Fiato, EVP & Chief Claims Officer, Liberty Mutual
- Mike Fiato, EVP & Chief Claims Officer, Liberty Mutual
- Dan Moore, SVP Claims Shared Services, CAN
- Sean Burgess, Chief Claims Officer, Lemonade
- Carey Bond, Head of Claims, Americas, Lloyd's
- Angela Delude, Head of Claims Strategy, MassMutual
- Adam Hoover, VP, Business Architecture and Innovation, The Hanover
- Niketa Patel, VP Claim Customer Strategy, Travelers
- Andrea Bessling, Insurance Claims Executive, Allstate
- Jon Thornton, VP Claims Strategy & Transformation, Westfield
- Charlie Wendland, VP & Head of Claims, Branch Insurance
- Cheri McCourt, VP Claims, Northwestern Mutual
Join us in Austin, Tx to learn, connect, meet and enjoy Austin, TX - the city with something for everyone.