Natural disasters, many driven by climate change, caused global economic losses of $313 B in 2022, insurance broker Aon PLC estimates, of which less than half was insured  January 26th 2023

Natural disasters caused $313 billion economic loss in 2022: Aon

Natural disasters, many driven by climate change, caused global economic losses of $313 billion in 2022, insurance broker Aon PLC estimated Wednesday, of which less than half was insured.

Losses from natural catastrophes covered by the insurance sector amounted to $132 billion, 57% above the 21st-century average, it added, leaving a global “protection gap” of 58%.

Yet, while the number of catastrophic events such as floods and hurricanes rose — at least 421 individual events compared with an average of 396 since 2000 — Aon said the protection gap was one of the lowest on record.

More than 16K homes were within the path of early January tornadoes

An estimated 16,800 homes were within the path of a severe weather system that produced tornadoes, hail and straight-line winds across Mississippi, Alabama and Georgia, CoreLogic, Inc. reports.

The residential properties in the systems path have a combined reconstruction value (RCV) of $4.5 billion, CoreLogic projected. Alabama’s Dallas County was the hardest hit, with an estimated 5,755 properties with an RCV of $1.6 billion located along the path. Spalding, Henry and Troup counties in Georgia and Tallapoosa County, Alabama, were among the most heavily impacted.

According to the data analytics company, a single supercell thunderstorm, which traveled some 550 miles, was responsible for the most severe tornadoes. The first tornadoes were first spotted in Selma, Alabama, where the cyclone reached EF-2 status with an estimated peak wind speed of 130 mph.

Climate Disasters Forcing Insurers to Rethink Low Premiums, Few Claims Model

When it comes to climate impacts, the frontline of the finance industry is insurance. Last year’s payout from damages caused by extreme-weather events totaled $120 billion—about the same as the economic output of Kenya. And that’s a 50% increase over the previous decade’s average.

It’s becoming a big problem. Insurance provides companies and individuals with the peace of mind that, for a small premium paid regularly, they will be covered for when catastrophes such as floods or wildfires hit. However, if the payouts increase because more customers are making claims, then the insurance industry either takes in lower profits or it has to increase the regular premiums customers pay.

Conning: Embedded Insurance Market Could Exceed $70B in Premium by 2030

Embedded insurance – a concept in which insurance is wrapped into the purchase of a product at the point of sale – could exceed $70 billion in premium by 2030, according a new report by Conning. This is on par with the entire excess and surplus lines market today, the report added.

The report, The Promise and Perils of Embedded Insurance, stated that while Conning believes some of the predictions about future premium in the embedded insurance space are exaggerated, it does see the market having a significant future impact on both personal and small commercial lines of insurance business.

Conning’s report explored two scenarios for the future growth of the embedded insurance market. In the first, which it said is most likely, insurers and their non-insurance partners would continue to focus on making the insurance purchasing process more convenient while the price of insurance would remain unchanged. Conning said it sees this scenario as having the potential to support a predicted $70 billion market by 2030.

TransUnion Insurance Trends and 2023 Outlook Report Points to More Online Life Insurance Shopping

Digitalization leads TransUnion’s Trends and Outlook Report for Personal, Commercial and Life Insurance in 2023

More than four in 10 consumers go online or use an app when shopping for life insurance, according to a new TransUnion (NYSE: TRU) report. This is a significant shift as the vast majority of consumers traditionally purchase their life insurance policies through an agent.

However, this is also very much on-trend as the insurance industry undergoes an evolution toward digitalization across all segments and policy touchpoints, as detailed in TransUnion’s Insurance Trends and 2023 Outlook Report.

"Rate increases are only going to carry companies so far toward profitability, and customers are increasingly at their limits. Creating opportunities to provide customers efficient quoting and underwriting, in addition to valuable coverage packages, is one of the best alternative strategies to a better bottom line."

Mark McElroy, executive vice president and head of TransUnion’s insurance business

Marsh McLennan posts Q4 and full-year 2022 results

Marsh McLennan has reported financial results for the fourth quarter and year ended December 31, 2022.

The global brokerage giant said it had consolidated revenue of $5 billion for Q4 2022, which is 2% lower than the same period in 2021 but 7% higher on an underlying basis. Net income was $466 million, or $0.93 per diluted share, compared with $1.57 in Q4 of 2021. Adjusted earnings per share was $1.47, versus $1.36 for the year prior.

For the full year of 2022, revenue was at $20.7 billion, an increase of 5% year-on-year or 9% on an underlying basis. Net income was $3 billion, and earnings per share decreased 1% to $6.04. Adjusted earnings per share grew 11% to $6.85 from $6.17 in 2021.

“2022 was an outstanding year for Marsh McLennan,” said John Doyle, who took the helm of Marsh McLennan as president and CEO at the start of 2023. “We generated underlying revenue growth of 9%, grew adjusted EPS by 11%, and expanded adjusted margins for the 15th consecutive year. We achieved these strong results while continuing to invest in our talent and capabilities, both organically and through acquisitions.”

Travelers sees 39% decrease in net income for Q4

Primary insurance group The Travelers Companies Inc. has reported a 39% year-on-year decrease in net income to $819 million for the fourth quarter of 2022, compared to $1.33 billion from the same period last year.

Notably, net income for the full year also fell by 22% to $2.84 billion, compared to 2021’s $3.66 billion.

Core income for Q4 was $810 million, compared to $1.28 billion, in the prior year quarter. Travelers noted that the decrease was primarily due to higher catastrophe losses, a lower underlying underwriting gain, and lower net investment income.

At the same time, Travelers reported $2.99 billion in core income for the full year, a 15% decrease from 2021’s $3.52 billion.

GEICO, State Farm among honorees for digital experience

Corporate Insight (CI) announced the top winners of its 2022 Monitor Awards, a program that assesses and recognizes high quality digital tools and practices offered by firms in property and casualty insurance, life insurance and annuities. The gold medalists include Ladder, State Farm, GEICO and Lincoln Financial Group. The program annually distributes gold, silver and bronze awards to firms that CI determines offer the best tools and features. CI publicly shares the gold medal winners in each category for recognition.

"Throughout 2022, firms across the insurance space devoted more resources to their mobile apps and account owner sites," said Justin Suter, research manager at Corporate Insight, in a press release statement. "Our surveys show that account owners with mobile apps are more likely to be satisfied, with firms across our coverage group focusing on significant pre-login payment capabilities, stronger mobile app functionality and improved account owner transaction options."

Insurers in each category undergo a selection process by leveraging data from CI's P&C Insurance Monitor Experience Benchmark service to assess firms' digital tools and features of their websites or mobile apps. Through these evaluations, CI determines the strengths and weaknesses of the forks' digital capabilities and then offers the insurers recommendations for areas of improvement. Firms can use this information to set goals in their digital innovations and compare capabilities and features or deliver an improved digital user experience. The process then allows CI to generate rankings between the firm's platforms and assign awards to those with best digital capabilities

Auto Shopping and Switching at 2-Year HighAuto Shopping and Switching at 2-Year High

Auto insurance shopping activity is at a two-year high, according to a quarterly report from J.D. Power in collaboration with TransUnion, showing that consumers are taking note of rate increases from their insurers.

The quote rate for auto insurance in the fourth quarter of 2022 was 12.1% and the switch rate was 4.1%—the highest levels in the more than two years since J.D Power has been doing the quarterly loyalty indicator and shopping trends (LIST) report.

At the same time, carriers' spending on ads has decreased after more than two decades of rapid growth in ad spending, the study notes. The fall in ad spending is attributed to severe cost pressures, leading to some carriers even closing acquisition channels to slow the growth of new, unprofitable business.

As consumers are increasingly interested in switching insurers in an environment in which carriers are less interested in their business, “how this plays out in 2023 will be something we will watch throughout the year," the study noted.

Telematics adoption, often viewed as a solution for rising auto premiums, has stabilized after an initial surge in early 2022. While 60% of consumers who were offered a telematics program opted in to participate, and most reported satisfaction with the program, over 40% of consumers saw their rates increase. The lack of pay-off may hinder continued adoption.

“The value proposition of telematics is that consumers give up some sense of privacy or autonomy to provide insurers a demonstrably safe driving record in real-time," said Michelle Jackson, senior director of personal lines market strategy at TransUnion. “If they're not seeing that translate into lower rates, or if their rates actually increase, some may not continue with the program."