News
Triple-I: 2023 Insurer Economic Performance Tied to Broader Trends
The underlying economic growth of U.S. auto, home, and business insurers is likely to increase faster than the rest of the U.S. economy in 2023, according to the Insurance Information Institute’s (Triple-I) just-released Insurance Economic Outlook.
“The timeline of any recovery in insurance underlying growth will be dictated by Federal Reserve monetary policy and any shift away from tightening rates,” said Dr. Michel Léonard, Chief Economist and Data Scientist, Triple-I. “As certainty over the timing of this change firms up, the cost of mortgages and other consumer loans will decrease, fueling underlying growth, especially for homeowners and personal auto.”
“Even though we expect economic fundamentals to improve throughout 2023, line-specific underwriting considerations will continue to depress performance,” noted Léonard. “For example, we expect personal auto underwriting trends, including adverse frequency and severity, to continue into 2023.” Insurers underwrite specific risks, in various business lines, to charge the policyholder an appropriate premium for assuming the risk.
Insurer economic growth had generally been tracking below the nation’s overall Gross Domestic Product (GDP) since the start of the pandemic in 2020. Triple-I, however, expects insurer underlying growth in 2023 to catch up on overall GDP, ending the year at around 3 to 3.5 percent, whereas the broader U.S. economy is forecast to grow at a rate of 3.2 percent this year, up from 2.6 percent in 2022.
Property/casualty (P/C) insurer replacement costs are projected to increase between 4.5 percent and 6.5 percent year-over-year in 2023. P/C insurers are generally defined as those offering auto, home, and business insurance coverage. “This is an improvement from 2022’s 8.1 percent and 2021’s 11.8 percent year-over-year increases,” Léonard said, noting that various P/C replacement costs increased upwards of 25 percent since 2020. “We are cautious about forecasting any reductions in inflation and replacement costs in 2023 because of ongoing heightened geopolitical risks and their impact on global supply chains and commodity prices,” he said.
Should replacement cost increases subside this year, it will benefit homeowners and personal auto insurers the most, followed by commercial property and commercial auto insurers. Used autos, new vehicles and construction materials experienced the steepest rise in prices in recent years amongst a basket of key goods replaced or repaired by P/C insurers.
Intelligent platform options take communication to a new level
The insurer’s handling of a claim can often turn into the moment of truth for the policyholder — prompting the policyholder to stay with the insurer or seek out competing offerings. The absence of a quality claims experience is the surest way to drive the policyholder to a competitor.
A low-friction engagement between the policyholder and the insurer that is underpinned by timely, transparent, and clear communications can facilitate future renewals. In providing this level of service, insurers can ensure insureds receive the personalization that will make them loyal customers for years to come.
Countering disjointed communications with personalized experiences
Time becomes a precious commodity following a loss occurrence. The policyholder, insurer’s first notice of loss reps, agents, adjusters, and repair firms/shops must communicate and exchange accurate, clear information and data. In this stressful environment, communication between the various stakeholders is a challenge by any measure.
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Tesla Competing With ‘GEICOs of the World’ to Lower Insurance Prices
While executives of Tesla said the car maker’s insurance business isn’t yet big enough to warrant separate financial disclosure of its results, Chief Executive Officer Elon Musk reiterated a benefit for Tesla owners: cheaper premiums.
Speaking on an earnings conference call Wednesday, Musk said that “just by Tesla operating insurance for our cars at a competitive rate, that makes the other car insurance companies offer better rates for Teslas.” In other words, Tesla being in the insurance business “has a bigger effect than you think” because it lowers the cost of insurance even for Tesla drivers who don’t buy insurance coverage from Tesla. That’s because “now the GEICOs of the world have to compete with Tesla and cannot charge outrageous insurance for Teslas,” Musk asserted. It has an amplified effect, [which is] very important,” he said.
Suzanne Sclafane
![Talking claims with AmFam, Plymouth Rock and Pie.](https://dxj7eshgz03ln.cloudfront.net/production/link/image/830180/twenty_by_nine_extra_large_2ae753dd-b0aa-4a64-81ef-63f34ecc4177.jpeg)
Talking claims with AmFam, Plymouth Rock and Pie.
Digital Insurance spoke with three claims leaders about their plans to meet a challenging 2023 head-on.
Supply chain snags, staffing shortages, inflation and catastrophes – oh my! P&C insurers are looking at a challenging 2023. Rounding out our claims outlook for the year, we went right to the source: Claims leaders at three insurers, who shared how they're meeting these discrete challenges head on.
![ISG to Publish Report on Insurance Platform Solutions](https://dxj7eshgz03ln.cloudfront.net/production/link/image/829982/twenty_by_nine_extra_large_e4b29663-6718-49fb-bedf-e1e2b810e3e5.jpeg)
ISG to Publish Report on Insurance Platform Solutions
Upcoming ISG Provider Lens™ report will evaluate providers of modern platforms helping insurers boost efficiency and compete in a changing industry.
Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, has launched a research study examining providers of insurance platform solutions that enable insurance companies to develop and deliver relevant, personalized products in an intensely competitive industry.
The study results will be published in a comprehensive ISG Provider Lens™ report, called Insurance Platform Solutions, scheduled to be released in June. The report will cover companies offering modern platforms to both life and retirement and property and casualty insurance providers.
Enterprise buyers will be able to use information from the report to evaluate their current vendor relationships, potential new engagements and available offerings, while ISG advisors use the information to recommend providers to the firm’s buy-side clients.
![Insurance companies urged to step up AI governance amid increasing regulation](https://dxj7eshgz03ln.cloudfront.net/production/link/image/829967/twenty_by_nine_extra_large_ff032247-07b7-4972-aa96-31b00d010343.png)
Insurance companies urged to step up AI governance amid increasing regulation
Artificial intelligence (AI) has helped streamline and transform the insurance process, from underwriting to claims. But as these tools become increasingly embedded in carriers’ lines of business, so too does the need for governance to ensure the technologies are used in safe and compliant ways.
Insurance companies should also be increasingly engaged in the governance of AI systems in the face of growing regulatory pressure. Every organization should have an AI governance platform to avoid the risk of violating privacy and data protection laws, being accused of discrimination or bias, or engaging in unfair practices.
“As soon as a similar regulation or legislation is passed, organizations are placed in a precarious position because [lack of governance] can lead to fines, loss of market share, and bad press. Every business who uses AI needs to have this on their radar,” said Marcus Daley (pictured), technical co-founder of NeuralMetrics
InsurTech/M&A/Finance💰/Collaboration
![Insurity CEO on the Company’s Rising Rank Among P&C Core System Providers](https://dxj7eshgz03ln.cloudfront.net/production/link/image/830532/twenty_by_nine_extra_large_/uploads/tmp/1675011218-5827-2322/Chris-Lafond.png)
Insurity CEO on the Company’s Rising Rank Among P&C Core System Providers
The insurance core systems market is dominated by a small number of large companies, and when it comes to companies that serve the property/casualty market exclusively, the number is smaller. Recent news that Duck Creek Technologies (Boston) was to revert to being a private company through its acquisition by Vista Partners coincided with a scheduled catch-up conversation between IIR and Insurity CEO Chris Lafond. Tentatively arranged for some months, the conversation coincided with Insurity’s announcement, made at its most recent analyst briefing, that it had surpassed $300 million in annual revenue, placing it as the number-two player at some distance behind Guidewire Software (San Mateo, Calif.), but ahead of Duck Creek. Insurity’s growth is especially interesting because it has historically been a commercial lines system provider, as compared with the mix of personal and commercial systems business of the other top-three players, to say nothing of the major providers of both P&C and life-and-annuities systems. Lafond attributes the company’s success to its outstanding industry expertise, aggressive cloud strategy, its assessment of where growth opportunities are to be found in the industry, along with a few key acquisitions.
Today, Insurity, based in Hartford, Conn., reports that it has more than 500 customers, including 15 of the top 25 P&C carriers and seven of the top 10 MGAs in the U.S. The company’s suite of products include policy, billing, claims and analytics software that power all phases of the policy lifecycle. Chris Lafond joined the company in 2017 as a board member. He was named CFO later that year, and in 2019 he became CEO.
“We feel really good about how the business has continued to grow,” Lafond comments. “We’ve expanded our offerings to the customer base, and out of the over 500 customers we serve, 400 are in the cloud in some way, shape or form.”
Cognizant and CoreLogic Renew Relationship with $1B, 10-Year Services Agreement
The new deal deepens the scope of current collaboration, with focus on delivering superior solutions and customer experience through digital transformation and operational excellence.
Cognizant (Teaneck, N.J.), a provider of information technology, consulting, and business process services, today announced a new, 10-year services agreement valued at approximately $1 billion with CoreLogic (Irvine, Calif.), a global property information, analytics and data-enabled solutions provider, according to a joint statement from the companies.
“Cognizant has been an invaluable partner for many years in helping build our platforms–giving clients the data-driven technology solutions they need to navigate business processes,” comments Abe Kuruvilla, CIO, CoreLogic. We are pleased to extend our relationship with Cognizant as we continue to leverage our many years of technology expertise and integrated digital solutions.”
Coverdash Announces Launch after Oversubscribed Seed Round
The startup’s digital platform enables customers to source, purchase, and manage business insurance policies.
Coverdash, a New York-based digital business insurance startup has announced its official launch and the closing of an oversubscribed seed funding round.
Coverdash is a provider of software that aims to simplify the process of buying and managing business insurance policies. The company offers a range of commercial insurance products, including liability, property, workers’ compensation, and cyber. Coverdash’s digital insurance platform offers the ability to quote, bind, pay for, and actively manage insurance policies. A Coverdash statement said that the company has partnered with many of the world’s most recognized insurers, to provide growing businesses necessary policies at affordable rates.
Floodbase raises $12M for parametric flood insurance data
"Parametric insurance" — two words lethal to just about any cocktail party conversation. But expect to hear more about this concept as climate change impacts worsen.
Why it matters: One major impact — rising waters and heavier precipitation in some regions — is already being felt and has spawned a niche insurance area that entrepreneurs and investors are building.
Driving the news: Floodbase, the Brooklyn company formerly known as Cloud to Street, this morning announced it raised a $12 million Series A for its flood monitoring service.
There are plenty of wind gauges across the country, but far fewer flood monitoring systems. Floodbase contends that its combination of satellite data and ground-based sensors can enable insurance companies to begin introducing parametric flood policies.
Catch up fast: Parametric policies kick in when an event crosses a certain threshold — when, say, wind gusts reach a certain intensity — and pay out according to the magnitude of the weather event rather than the damages.
![Insurtech Betterview raises new funding round](https://dxj7eshgz03ln.cloudfront.net/production/link/image/830839/twenty_by_nine_extra_large_ee227252-2d4f-4266-863c-9cfe182acf9a.png)
Insurtech Betterview raises new funding round
Betterview, an insurtech company that allows insurers to identify and manage real property risk, has announced it has completed a new round of funding of undisclosed amount.
BetterviewBackers included existing investors EMC Insurance, Guidewire Software, Nationwide, MaidenRE, and ManchesterStory.
The company intends to use the funds to continue its growth, support the company’s path to profitability in 2023, and provide customers with new and enhanced products and features.
Recent enhancements include launching specialised risk insights for event-specific perils and a CAT-Response System, empowering insurers’ rapid and proactive response to severe weather events.
David Lyman, co-founder and CEO at Betterview, said: “We are excited to have strong financial backing with favourable terms to continue growing rapidly and reaching profitability in 2023.
Events
Payments Webinar, Wed. Feb. 1 @ 10 am PT/Noon CT/1 pm ET
Don’t miss CCC Intelligent Solutions VP of Payments Kelli Svymbersky, MBA and Forrester's Principal Analyst Ellen Carney in The Check-less Future of Insurance Claims webinar, moderated by Stephen Applebaum on Feb 1, 2023. Register now!
A critical moment of truth for insurance claims is the orchestration and automation of payments within the claims ecosystem. These important steps and tasks provide resolution for policyholders and service providers that repair, restore, and rehab a loss. As the nature of payments transforms to meet growing customer demand for richer digital experiences - from click-and-collect to mobile payments - the legacy check-based or Electronic Funds Transfer (EFT)-based options for insurance claims disbursement models alone are no longer sufficient.
Join CCC Intelligent Solutions and Guest Speaker Ellen Carney of Forrester Research for their take on why and how claims payments are changing, and what it means for insurers, claimants, and the entire claims ecosystem.
People
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Swiss Re group CUO moving to SCOR to serve as chief executive
Thierry Léger is moving from Swiss Re, where he served as group chief underwriting officer from September 2020, to join global reinsurer SCOR as chief executive beginning May.
According to Swiss Re’s announcement, Léger is stepping down as group executive committee member effective immediately. In the meantime, group CEO Christian Mumenthaler is taking over the CUO function.
“Over the past 25 years with Swiss Re, Thierry made great contributions to many parts of our business, from reinsurance to former Life Capital business unit, to group underwriting,” commented the chief executive on his colleague’s time at Swiss Re.