EVs in America: Stuck At 7%  September 7th 2023

EVs in America: Stuck At 7%

China is rocketing past 30%. Europe has achieved a solid 15%. America, at 7% penetration, is looking like an also-ran in EVs.

What is the holdup?

(see article for all 10 reasons)

Michael Dunne is an entrepreneur, author and keynote speaker. In 2018, Dunne founded ZoZoGo to deliver world-class advisory services on global electric and autonomous vehicle markets.

US insurtech CEO pay takes hit in 2022 | S&P Global Market Intelligence

A majority of the CEOs of listed US insurance technology companies operating as either brokers or underwriters saw their total adjusted compensation fall significantly in 2022.

The compensation packages for nine of the 14 CEOs in an S&P Global Market Intelligence analysis shrank year over year, with three declining by more than 90%.

Compensation for Bright Health Group Inc.'s George Mikan plunged 94.5% to $10 million from $180.8 million in 2021, while total compensation for Mario Schlosser of Oscar Health Inc. fell to just $700,000 from $60.8 million a year earlier. Both Bright Health and Oscar Health went public in 2021.

Clover Health Investments Corp. CEO Vivek Garipalli received no compensation in 2022 after taking in $389.6 million in 2021, the year the company went public. Garipalli elected to forgo any cash compensation in 2022, with no equity grants or other compensation provided during the year.

Garipalli, Clover Health's founder, stepped down as CEO on Jan. 1, 2023, in favor of Andrew Toy but retains the title of executive director.

Total compensation for Lemonade Inc. co-CEOs Dan Schreiber and Shai Wininger dropped 62.6% and 62.5%, respectively, because of decreases in their options. Options for both Schreiber and Wininger fell to $7.5 million from $21 million in 2021.

Francis Soistman of eHealth Inc. had a 41.6% decrease in compensation to $6.2 million from $10.6 million a year earlier. Maxwell Simkoff, CEO of real estate title insurer Doma Holdings Inc. had his compensation lowered by 40.6% to $4.8 million from $8.2 million in 2021.

Top 10 highest paid P&C insurance CEOs in 2022

Between their base salary, stock options and bonuses, it can be challenging to determine exactly how much a corporate executive earns in a given year.

Enter S&P Global Market Intelligence, where researchers analyzed annual reports and SEC filings from 2022 to determine which CEOs in the property and casualty insurance sector ‘brought home the most bacon’ that year.

The slideshow above illustrates 2022’s highest paid P&C insurance company CEOs in 2022, according to S&P Global Market Intelligence. Analysts noted that many individuals on this list actually earned less than they did in 2021. However they all still earned multi-millions of dollars over the course of the year — salaries that are far and above what other executives at each company earned.

The employment website Zippia explains that CEO salaries are generally tied to company performance, and that CEOs “provide an extremely high level of talent and skill to produce a strongly performing company.”

Only about 20% of a CEOs annual compensation comes from a base salary, Zippia adds. The majority of CEO pay is in fact determined by performance metrics and stock options.

How do the salaries of the P&C insurance executives named above stack up to other CEOs around corporate America? CNBC reports that 2022’s single highest paid CEO was Stephen Schwarzman of Blackstone, who drew a 2022 compensation package worth roughly $253 million.

12% of US homeowners foregoing home insurance, study finds

The unprecedented weather-related disasters roiling the country are also raising havoc with insurers, throwing underwriting formulas and forecasts out the window, boosting the cost of repairs to unprofitable levels. This has caused both insurance companies and their customers to abandon coverage altogether, with a recent survey finding 12% of homeowners in the U.S. don’t buy insurance for their dwellings.

Climate change is frequently cited as cause of the first-ever tropical storms in southern California, unheard of tornado alleys in New England, areas of Florida that haven’t been hit by hurricanes in more than 100 years, average areas burned by wildfires increasing by more than 400% in Hawaii. New weather-related disasters skew numbersInflation, migration trends that put more people in vulnerable areas, and slow response from lawmakers and regulators, have added to what’s called by some a severe crisis in insurance, in which premiums are becoming too expensive for consumers, yet aren’t high enough to cover losses. And the backbone of insurance calculations, accurately predicting risks and forecasting likelihood of disasters, has been knocked off kilter by the sudden uniqueness of weather-related disasters.

What becomes of towns and cities and residential areas when insurance is no longer affordable? Or when companies deem areas are simply too risky to insure? For some, the current situation is more a matter of economics than Mother Nature, as well as an industry clinging to old ways of doing business.

Number of factors pressuring the property insurance market: ALIRT - Reinsurance News

A “triple-threat” which consists of more frequent and severe weather-related losses, a protracted inflationary environment, as well as surging reinsurance costs has the property insurance market under “substantial pressure”, according to ALIRT Insurance Research.

ALIRT states that while insurance carriers are consistently working to counteract these trends through more focused underwriting and risk selection, higher rates, tightened terms and conditions, and market exits, there are likely more insurer casualties yet to come.

To counteract this concern, ALIRT noted that there are number of factors that distributors can focus on to help anticipate potential downgrades, as well as severe financial deterioration.

This includes:

• Geographical and by-line concentrations of risk,

• Implicit parental strength (how large a holding group structure stands behind an insurer)

• The trend of quarter-to-quarter underwriting metrics, such as reported and accident year loss ratios

• Reserve development and especially increasing additions to prior year reserve positions over time

• Operating earnings – especially if operating losses begin to widen

• Risk-Based Capital Ratios, especially those that are nearing regulatory action levels

Allianz outlines net-zero transition plan

German insurer Allianz (ALVG.DE) on Thursday outlined intermediate targets to reduce emissions as part of a plan that aims for net zero in 2050 in its proprietary investment and P&C underwriting portfolios and by 2030 within its own operations.

The intermediate targets apply to the company's Property & Casualty (P&C) insurance portfolios, which now aim for targeted carbon emission reduction of 30% for the retail motor segment, and greenhouse gas (GHG) emission intensity reduction of 45% in the commercial insurance segment, by 2030.

"We believe our intermediate targets will help us realize our growth potential and contribute to a healthier, more secure future for everyone," said Allianz CEO Oliver Baete.

Parametric Insurance: A Complement to Traditional Property Coverage

Underwriter concerns over natural catastrophe losses continue to drive a hard global property market. Many risk buyers remain challenged to find adequate coverage to address a growing protection gap, especially for their cat-prone exposures, and other risks that include non-damage business interruption, loss of attraction, loss of ingress/egress, and sub-limited or excluded coverage.

And for good reason. According to Aon, the market continues to worsen, with expectations for market challenges to extend through at least Q3 2023:

• Global insured losses in the first six months of 2023 were anticipated to reach $53 billion — the fourth highest on record. Natural catastrophes in the U.S. contributed $40 billion to that figure.

• Property rates increased in North America from an average of 13.9 percent in Q1 2023 to 25.5 percent in Q2 2023.

• Capacity for cat-prone regions, including Florida (windstorm) and California (earthquake) continues to decrease.

As a result, risk buyers have been extra creative with their risk management programs through the use of increased retention and alternative risk solutions. This is where parametric insurance comes into play — an alternative solution that has grown in utilization to insure against a variety of perils in any market conditions.

It’s safe to say that the commercial insurance space has reached a critical juncture, in several manners. The Great Resignation, born from the pandemic, left no industry unscathed. As many opted for a career change or an early retirement, several seats at the table opened and remained empty.

Now, as the pandemic’s public health emergency looks at us from our rearview mirrors, the insurance industry is being hit with a silver tsunami. According to the United States Census Bureau, by the year 2030, all individuals considered to be in the “baby boomer” generation will be either age 65 or older. Another wave of retirements is heading the industry’s way, which will mean even more seats to fill.

“Undoubtedly, we are facing a workforce shift in the industry,” said Michael Combs, president, CorVel.

Additionally, technology is fostering its own tsunami. While there is never a shortage of technological advances, the recent surge of artificial intelligence capabilities has altered the playing field for how businesses can operate.

As the industry continues to incorporate the growing functionalities of technology into their everyday operations, these tools can also be used to ensure that the next and newest generation of industry talent is prepared to continue on, especially after their mentors retire.

How Relevant of a Risk Is the Talent Gap?

As mentioned previously, there have not been many sectors or industries that haven’t felt the sting of the talent shortage. This phenomenon is proving to be incredibly precarious, especially for insurance.