Impact Award Insights: Core Projects Are Diverse, but Prioritize Growth, Underwriting, and Cloud  July 27th 2023

Record investment returns push Chubb earnings up sharply

Chubb Ltd. reported second-quarter net income of $1.79 billion, up 50.7% from the year-earlier period, as record investment returns and strong commercial premium growth offset higher catastrophe losses.

The outlook for growth across its businesses in Asia-Pacific is “significant,” and in North America and other parts of the world Chubb sees opportunities to take on more property exposure amid the favorable rate environment, the insurer’s top executive said Wednesday while discussing the company’s second-quarter results with analysts.

“We had a simply outstanding quarter — in fact, another record quarter performance with double-digit premium revenue and earnings growth as a result of world-class P&C underwriting results,” Evan G. Greenberg, Chubb’s chairman and CEO, said on the call.

“As I look ahead, we again are confident in our ability to continue this pattern of growth in revenue and earnings and in turn drive double-digit EPS growth,” Mr. Greenberg said.

Westfield Insurance leader expects property hard market going into 2024

Pressure continues to build in the property and auto insurance markets, and ‘hard’ conditions are likely to extend into 2024, according to one commercial lines leader.

“This is a period where carriers are seeing their loss trends increase, the reinsurance market is tightening, which creates the need to increase their rates,” said Troy Crawford (pictured), commercial lines product management leader at Westfield Insurance, which provides business property and liability, personal lines and agribusiness insurance.

“What you’re also seeing is a lot of announcements by insurance companies pulling back on the types of business that they’re willing to write. We see a lot of [these actions] geographically, such as in California, where a lot of carriers are pulling back.

“We don’t have any plans to do those types of actions, but I do expect that we’re going to continue to feel the hard market impacts going into 2024, particularly for property and auto.”

Car Insurance Rates Spike 17% in the First Half of 2023; Another 4% Rise on the Way

The average annual cost of a car insurance policy surged $240 to $1,668 in the first six months of 2023, up from $1,428 in 2022. Prices will increase another 4% before the end of the year, according to Insurify’s latest auto insurance report. The report attributes these increases to insurers experiencing high losses as a result of soaring auto repair prices and the effects of climate change.

“Vehicle repair and maintenance costs have outpaced inflation and show no signs of slowing, leading insurers to increase auto insurance prices to keep up with the cost of higher claim payouts,” says Allie Feakins, Insurify’s senior vice president of insurance.

The report examines auto insurance price trends using Insurify’s own data of more than 79 million car insurance quotes, sourced directly from partnering insurance companies. It also reveals:

• Drivers are dropping coverage to keep car insurance costs affordable. The percentage of car insurance shoppers considering buying full-coverage car insurance fell more than 50% in 2023, compared to 2022.
• Michigan still has the highest auto insurance costs in the country, with an average policy costing $231 a month. Michigan drivers spend about 4.4% of their household income on car insurance – the highest proportion of any state.
• Car insurance prices have climbed the highest in New Mexico, Nevada, and New Jersey, with an average 34% increase in costs within the last six months
• Major insurers are pulling out of Florida and California, citing devastating hurricanes and wildfires that have led to heightened catastrophe risk and a high number of expensive claims.

A First Look at How U.S. Insurers Are Adopting Global Climate Reporting Guidelines

U.S. insurers are adopting numerous strategies to deal with risks from climate change, according to a review out today that gives the first look at how or if insurance companies are adopting the widely used Task Force for Financial Disclosure guidelines.

The review of Climate Risk Disclosure Survey responses, submitted to state regulators each year by insurers operating in 27 member states and jurisdictions, was conducted by climate leadership group Ceres and the California Department of Insurance.

This is the first year in which responses on the survey were aligned with the recommendations of the Task Force for Financial Disclosure (TCFD) guidelines.

TCFD has become a global standard since being introduced in 2017 by the Financial Stability Board, an international body that issues recommendations about the global financial system. The aim of TCFD is to improve reporting of climate-related financial information from companies.

Disclosure recommendations are structured around four pillars (governance, strategy, risk management, and metrics and targets). Within those recommendations are 11 recommended disclosures.

By including TCFD in the survey, it takes the U.S. insurance industry from a place in which no U.S. insurer had completed a TCFD report just four years ago to seemingly abundant TCFD reporting from 500 insurers.

“It gives an enormous amount of information,” said Steven M. Rothstein, managing director, Ceres Accelerator for Sustainable Capital Markets, and one of the report’s authors.

Not all participating insurers fully took to reporting – only 13% reported on all 11 TCFD points – but most provided a hearty trove of information, with 78% providing information on six or more of the 11 TCFD recommended disclosures, the Ceres report shows.

Do Property Insurer Priorities Match the Risk or the Customer Expectations?

Pressure is creating a climate for change in the restaurant industry. Coming out of a difficult few years, pundits would have expected restaurants to be in significant trouble. All of the same factors that are affecting insurers are similarly impacting restaurants. Talent is in high demand and not easy to find. Increased inflation is causing a re-ordering of customer priorities. At the same time, inflation is impacting supply costs for restaurants—both in food and food packaging. Ordering technology is shifting. Customers are even shifting the time of day they like to dine out.

But the pressure isn’t causing restaurants to go away; it’s just causing them to change. In fact, according to Yelp’s 2023 State of the Restaurant Industry report, business openings for restaurants rose nationally in April 2022-March 2023, over the previous year.[i] Shopping and beauty care are industries in decline, but consumer spending on dining is continuing to rise.

The real evidence of customer and business change in the industry, however, comes from viewing the types of restaurants that are opening and growing. (See Fig. 1). Pop-ups are by far the greatest growth sector, a sign that people are continually looking for new and original options in dining. Their needs are met by agile, entrepreneurial chefs and investors who have their fingers on the pulse of culture and cuisine.

Pressured by costs, talent, inflation, and changing customer preferences, the industry’s new leaders are those who moved quickly to create new concepts. Restaurants used to be known for their consistency, but the new restaurant culture is one where the only consistency is steady innovation.