News
Small Business Insurance Customer Satisfaction Defies Steadily Rising Rates to Reach All-Time High in J.D. Power Study
Despite steadily rising interest rates and strained business conditions, U.S. small businesses are increasingly satisfied with the products and services they are receiving from their commercial insurance providers.
According to the J.D. Power 2023 U.S. Small Commercial Insurance Study, released today, overall customer satisfaction has reached an all-time high of 847 (on a 1,000-point scale) as customers note significant year-over-year improvement in three of five factors evaluated in the study.
“Contrary to what we’ve seen in personal lines insurance, small business customer satisfaction keeps rising even as premiums have continued to climb,” said Stephen Crewdson, senior director of global insurance intelligence at J.D. Power. “While the overall satisfaction numbers are high, there are some important variations based on the size of the small business. The trend is really being driven by businesses in the ranges of five to 10 employees and 11-50 employees, as opposed to the micro businesses with fewer than five employees. That variation should inform more targeted small business strategies on the part of insurers.”
Third consecutive year of weather-event insurance claims exceeding $100bn:
In a recently released insurance sector report, Bloomberg Intelligence has forecasted that 2023 is poised to mark the third consecutive year in which insured losses stemming from natural catastrophes will surpass $100 billion, primarily due to a surge in weather-related claims.
The report highlights the increasing prevalence of secondary perils such as floods, hail, and wildfires, which have gained momentum in tandem with rising global temperatures.
Notable findings from the report include Munich Re’s assessment of global insured costs for natural-catastrophe events in the first half of the year at $43 billion, while SwissRe places the figure at $50 billion.
This discrepancy in figures notwithstanding, experts from Bloomberg Intelligence assert with confidence that the threshold of $100 billion in claims for weather-related incidents will be crossed for the third consecutive year.
The devastating earthquake that struck Turkey and Syria, resulting in a tragic loss of approximately 58,000 lives, stands as one of the most impactful events of the year.
Are auto insurers pulling back from California? | Insurance Business America
California is in the midst of more insurance woes as reports indicate that auto insurers are restricting new policies.
Companies have had to raise auto insurance rates across the US to offset the impact of inflation and increased claims. In California, these challenges are made even more complicated due to insurers’ inability to quickly adjust rates.
The state requires regulators to approve rate increases and the review process has slowed since the California Department of Insurance implemented a rate freeze during the pandemic.
The delays have caused insurers to “terminate agency appointments and restrict the submission of business,” according to American Agents Alliance, which represents independent insurance agents and brokers.
AAA finds driving assistance technology could prevent 37M crashes
New AAA research recently found that advanced driver assistance systems could prevent approximately 37 million crashes.
Advanced driver assistance systems (ADAS) are the eyes and ears of your car. They use sensors and cameras to detect potential hazards, warn drivers, and can take corrective action automatically. These safety systems are common on new vehicles, and they have the potential to save lives by preventing crashes – but how many?
New research by the AAA Foundation for Traffic Safety estimates that available ADAS technologies could prevent approximately 37 million crashes, 14 million injuries, and nearly 250,000 deaths over the next 30 years. This would represent 16% of crashes and injuries and 22% of deaths that would otherwise occur on U.S. roads without these technologies.
“The findings from this latest study on the AAA Foundation’s work in emerging technologies suggest that ADAS have the potential to transform road safety,” said Dr. David Yang, president and executive director of the AAA Foundation. “However, the full safety benefits of ADAS will not be realized unless they are fully understood by the consumer, used properly, and widely adopted.”
GEICO employees report 'mass' layoffs
Insurance company GEICO has undergone another tranche of layoffs, employees have reported on social media.
Several members of staff at insurer GEICO have taken to LinkedIn to confirm they were part of “mass” layoffs last week.
Affected individuals appear to have come from a range of departments, including marketing, customer support, the special investigations unit, and IT.
P&C Market to Remain Unprofitable Until 2025
The overall property & casualty industry is forecast to finish 2023 with a net combined ratio at 102.2, nearly identical to the final 2022 result of 102.4, according to the latest underwriting projections by actuaries at the Insurance Information Institute (Triple-I) and Milliman, which also said that the P&C will not post a ratio below 100 and return to profitability until 2025.
The projection provides little solace after underwriting results deteriorated across the board for big personal lines carriers in the first half of 2023, prompting more carrier pullbacks.
Poor personal lines underwriting performance is the key driver in both years, with a personal auto forecast of 109.5 for 2023. Additionally, large catastrophe losses dashed hopes of a market recovery after a difficult 2022.
The net combined ratio is the sum of two ratios, one calculated by dividing incurred losses plus loss adjustment expense (LAE) by earned premiums in a year, and the other by dividing all other expenses by either written or earned premiums, according to the Insurance Risk Management Institute.
A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above 100% means that it is paying out more money in claims than it is receiving from premiums.
“Catastrophe losses in the first half of 2023 were the highest in over two decades, slightly higher than the record set in first half of 2021," said Dale Porfilio, chief insurance officer at Triple-I. “The good news is that the personal auto net combined ratio is beginning to show incremental improvement. Moreover, commercial lines continues its strong overall performance."
“We forecast net combined ratios to incrementally improve each year from 2023 to 2025, with the industry returning to a small underwriting profit in 2025," he added.
AI in Insurance
Exploring the Transformative Landscape: Generative AI's Impact on the Insurance Industry | LinkedIn
SPOILER ALERT - This article was generated, exactly as you see it, by Chat GPT-3.5 (the free one) in response to the prompt: Write a 700 word LinkedIn blog on "The Biggest Opportunities for Insurers from Generative AI" without using musical metaphors or analogies.
Alan Walker, Insurance Digital Transformation/InsurTech Advisor
InsurTech/M&A/Finance💰/Collaboration
CLARA Analytics and ClaimDeck Combat Growing Litigation Rates and Rising Social Inflation
Leading Casualty Claims AI and Litigation Management Platform Providers Align to Optimize Claims Outcomes
CLARA Analytics (“CLARA”), the leading provider of artificial intelligence (AI) technology for commercial insurance claims optimization, and ClaimDeck, the industry’s leading SaaS-based, process-driven litigation management platform, today announced they have formed a strategic partnership to help carriers manage their litigation rates and drive better legal outcomes. Both CLARA and ClaimDeck insurance claims solutions are innovative technology platforms that use claims data to optimize the litigated claims outcome and mitigate rising litigation costs.
“The seamless integration of our tools with ClaimDeck will facilitate improved decision-making, lower legal expenses, and measurable improvements in casualty claims litigation outcomes.”
CLARA’s AI-driven tools and resources for insurance companies, MGAs and self-insurers include analytic solutions to assess casualty claims, predict and prevent litigation, and identify best-in-class defense attorneys to optimize legal defense strategy. ClaimDeck provides a platform for insurers and defense attorneys to collaborate and a workflow engine to ensure best practices are followed. ClaimDeck captures over 500 categories of data that further contribute to the AI effort and achieve a double-digit percentage reduction in legal and indemnity spend and average case life through process optimization.
“As insurers look for new ways to elevate their casualty claims litigation management, CLARA’s innovative AI-driven solutions deliver value by helping reduce costs, speed decision-making, and improve case settlement,” said Dwayne Hermes, CEO, ClaimDeck. “Our collaboration with CLARA offers unmatched litigation management tools that can have measurable impact on claim outcomes and save users millions in excess legal expenses.”
IBM Sells Weather Business to Private Equity Firm Francisco Partners
The sale underscores a broader retrenchment in the tech industry this year as companies cut costs to offset a slowdown in demand from inflation-wary consumers and businesses.
International Business Machines (IBM) has agreed to sell its weather business to private equity firm Francisco Partners for an undisclosed sum, the technology services giant said on Tuesday.
The sale includes The Weather Company’s consumer-focused assets such as Weather.com and Storm Radar, as well as enterprise offerings for industries including media and aviation. IBM will retain its sustainability software business.
InsurTech: Digitising Insurance
InsurTech Digital speaks to Elsewhen’s Leon Gauhman who says insurtechs are ‘game-changers disrupting one of the most slow-moving sectors.
Where would insurance be without insurtechs? Nowhere near the scale of digitisation seen in other industries as claimed by Elsewhen’s Founder & Chief Product and Chief Strategy Officer, Leon Gauhman
For Gauham, “insurtechs are the insurance industry's pioneers, the game-changers proving it is possible to disrupt even the most slow-moving and conservative sectors.
“Left to their own devices, legacy insurance giants would have struggled to get to grips with tech transformation.
“But wave after wave of innovative and entrepreneurial insurtechs is pushing the industry to develop customer-centric, digital-first business models and deliver friction-free, personalised consumer experiences.”
Events
CONNEX 2023 Conference | September 12-13 | Bloomington, IL
The theme this year is Connected Car... Connected Industry.
The CONNEX annual conference is dedicated to enabling ecommerce by connecting all segments of the collision ecosystem.
CONNEX is the cross-roads of the industry bringing together leaders who share a common interest in driving efficient communication between trading partners. CONNEX is a forum to learn about future technologies and trends that will impact the industry in near to midterm.
The goal of CONNEX is to educate industry leaders and provide a forum for open discussion of issues that are important to the future of the industry.
EXCLUSIVE TOUR OF RIVIAN
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Commentary/Opinion
What to Expect in Industry 4.0
We love to think about disruption as simply a modern-day term. Yet four historic industrial revolutions offer ample evidence that disruption occurs far more frequently than we might ever imagine.
Each of the three past industrial revolutions has ushered in seismic change: The original Industrial Revolution was powered by steam, the second was driven by electricity, assembly lines and mass production and a third industrial revolution introduced computers and the internet. Industry 4.0 —where we find ourselves today — is moving exponentially faster than its predecessors. Defined by digital transformation, connectivity and the rise of real-time data, Industry 4.0 has already evolved from on-premises to the cloud and from intricate programming languages to no-code. Now, it is embracing AI and quantum computing.
As Industry 4.0 shifts the world around us, it also creates tremendous opportunity to shape insurtech solutions and the insurance industry in incredible ways for those ready to embrace it.
Insurance, of course, pre-dates all four industrial revolutions. Historic points that involved or created insurance opportunities include the advent of benevolent societies to aid ancient Greeks with burial costs, the Spanish maritime explorations that led to the discovery of America, the Great Fire of London, the discovery and proliferation of electricity, the introduction of the automobile, the rise of computer hackers and countless other pinnacle moments. At each point, societies have progressed, in part, either because insurance has been interwoven in these efforts or because insurance products developed because of those pivotal developments.
The insurance industry has provided peace of mind the world over with each evolutionary step of humanity and technology. With steam engines and railroads, the telegraph and steel mills, electricity, nuclear energy and the advent of the internet — humanity made gigantic strides, and, in each instance, insurance adapted accordingly.
Why Industry 4.0 is radically different
While insurance historically advanced with societal progress, the actual insurance product — the agreement that obligates an insurer to cover a policyholder’s risks — remained steadfast as a written, physical document.
Arguably, the establishment of the Hartford Steam Boiler Inspection and Insurance Company (circa 1860s) was an astounding leap forward in industrial safety, as these insurers encouraged smart practices related to steam energy. Henry Ford’s assembly line led to a radical shift in how society moved. Computer technology took us to the moon. Again, at each step, that perennial paper insurance policy was a bedrock.
Tim Hardcastle is the CEO and co-founder of Instanda
Canada
How wildfires are affecting some of Canada’s largest P&C insurers
Four of Canada’s publicly traded P&C companies report positive underwriting profits despite facing an unusually active wildfire season.
Despite facing a heavy loss year and an unusually active wildfire season, four of Canada’s publicly traded P&C companies — Intact Financial Corporation, Fairfax Financial Holdings, Definity Financial Corporation and Trisura Group Ltd. — reported positive underwriting profits thus far, according to commentary from DBRS Morningstar.
Overall, the insurance companies reported positive net earnings for the first half — and second quarter — of 2023, thanks to consistent premium rate increases, less-volatile financial markets and higher interest rates, DBRS said. However, of the four companies, Intact’s results were negatively affected by higher-than-expected NatCat claims.