News
Population growth dwarfs efforts against hurricane losses: Swiss Re
Building standards improvements in Florida since the 1970s have trimmed the magnitude of hurricane annual losses, however, these gains have been dwarfed by higher modelled loss expectations arising from population growth in the state, Swiss Re Nat Cat experts warn.
Swiss Re believes that by partnering with the private and public sector, re/insurers can drive mitigation of and adaptation to rising nat cat risk.
Experts used Swiss Re’s in-house model for North Atlantic tropical cyclones to reach these conclusions. The improvement in building standards in the state since the 1970s have trimmed the magnitude of annual losses expected to result from hurricanes by some 90-100%.
Despite Florida’s efforts to buttress itself against hurricane losses through its improved building codes, higher modelled loss expectations – that arise from the state’s population growth which has tripled to more than 22 million since the 1970s and the accompanying accumulation of valuable assets – have stunted these gains.
“Hurricane Ian brought this into sharp focus in particular around Fort Myers, where the storm made landfall. Based on Swiss Re’s models, annual expected losses in Fort Myers due to population growth have risen 340-350% from 1970s levels, surpassing the building standards-driven gains in Swiss Re models of 150%,” experts explain.
Commentary/Opinion
The Crisis in Flood Insurance
We may finally see consumers start to change their behaviors, either leaving risky areas or fortifying their homes and businesses.
The flood insurance crisis in the U.S., which has been described as a "slow-moving hurricane," has made landfall, hitting Louisiana especially hard.
Rising premiums, to reflect soaring claims from natural catastrophes, are now hitting consumers hard enough that Louisiana and nine other states have sued to block increases in national flood insurance rates. Those increases are limited to "only" 18% a year but could eventually total more than 700% for many homeowners and businesses and cause an exodus from southern Louisiana, according to testimony at a hearing last week.
Politicians can be expected to use regulation to protect consumers -- also known as voters -- as long as possible, but, beyond some short-term issues, insurers can't be forced to lose money. Government officials may also decide to subsidize homeowners' insurance policies, but that isn't a long-term strategy, either. Those taxpayers whose flood insurance premiums stay the same or even decline will resist subsidizing those who choose to live with greater risks.
Something has to give. We may finally see consumers start to change their behaviors, either leaving risky areas or fortifying their homes and businesses.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
A Secret Weapon Against Claims Inflation
An active, efficient accident management program can save hundreds of dollars per claim and potentially cut days off a claim’s cycle time.
KEY TAKEAWAY:
--An accident management expert can help expedite the collision claims management process to mitigate financial impacts, such as storage fees, secondary tows, rental costs and more.
Managing the costs associated with an accident claim has never been more important, considering today’s challenging economic climate. Amid inflation, supply-chain disruptions and a labor shortage, auto insurers also face pressure from surging storage costs and an increasingly complex process of matching vehicles needing repair with facilities that have both the capacity and the capability to fix them. These challenges result in higher costs for insurance carriers and lengthier wait times for policyholders.
Ben Zatlin serves as vice president and general manager of Agero's accident management business
[Ed. note: Expert Analysis] Automobile Third-Party Diminution in Value Claims
When an automobile is damaged in an accident and then repaired, the resale value may be less than a comparable automobile that has not been damaged. In other words, the damage results in a reduction or “diminution” in the resale value of the automobile.
An insured’s claim for this reduction in value may be made against a third party that negligently caused the damage to the insured’s automobile, or it may arise from a first-party claim against the insured’s own physical damage coverage. The term “diminished value” can be confusing. There are three types of diminished value.
Gary Wickert is an insurance trial lawyer and a partner with Matthiesen, Wickert & Lehrer, S.C., and is regarded as one of the world’s leading experts on insurance subrogation.
InsurTech/M&A/Finance/Collaboration
InsurTech100 for 2023
The world’s most innovative InsurTech companies that every leader in the insurance industry needs to know about in 2023
ABOUT THE LIST The InsurTech100 is an annual list of 100 of the world’s most innovative InsurTech companies selected by a panel of industry experts and analysts. These are the companies every leader in the insurance industry needs to know about as they consider and develop their digital transformation strategies.
The previous InsurTech100 lists received widespread attention. Companies that won places on the lists generated huge awareness among insurance firms and the wider insurance community. Many were approached directly by financial institutions while others got a more welcome reception from prospective clients and partners.
The list has been updated for 2023 to recognise the next generation of solution providers shaping the future of the insurance industry. The list aims to help senior management and insurance professionals evaluate which digital insurance models have market potential and are most likely to succeed and have a lasting impact on the industry.
InnSure launches cross-disciplinary network of experts, innovators and climate-impacted communities
InnSure, the mission-driven nonprofit dedicated to harnessing the power of the insurance industry to combat climate change, announced today the launch of InnSure Corps, a cross-disciplinary network of experts, innovators and climate-impacted communities.
Designed to support leadership development by connecting professionals across traditional boundaries, InnSure Corps is dedicated to innovating and deploying insurance core competencies as a primary tool to amplify and accelerate climate-friendly practices and facilitate more resilient communities.
"Climate change is the defining professional development challenge for the next generation of insurance leaders, and understanding the power of insurance is a crucial professional development area for climate action leaders across all sectors," said Doug Shulkin, InnSure Corps Program Director. "Through this new initiative, our collective efforts will make the world safer, more secure, and more sustainable."
InnSure Corps is launching founding Chapters in Boston, NYC, Chicago and Austin, TX. Participants will have access to member-only events, event discounts, networking, project opportunities, educational workshops, leadership initiatives, and a regular newsletter, among other benefits.
Corporate Sponsors of InnSure Corps will also reap benefits from involvement with the program, particularly when it comes to attracting, developing, and maintaining talent and fostering the next generation of responsible leadership. As a mission-driven organization, InnSure is well-positioned to help companies develop and maintain a focus on sustainability and inclusivity.
InnSure is actively seeking members, mentors, founding chapter presidents for new locations, and leaders to drive the program agenda by leading programming councils. Professionals interested in learning more about InnSure Corps and how to get involved should navigate to Join InnSure Corps or email doug@innsure.org.
Transamerica to Collaborate with Bestow to Enhance Financial Protection Offerings
Transamerica is pleased to announce its strategic partnership with Bestow, a leading technology company in the life insurance industry.
Together, Transamerica and Bestow will offer customers an intuitive digital platform with enhanced self-service options for Transamerica's life insurance products. Transamerica and Bestow have aligned behind the mission to empower people to create a better tomorrow through saving, investing, and protecting their loved ones.
"We are excited that Bestow will be building out a platform that redefines the Transamerica experience with our agents and clients," said Andrew DeMarco, Head of Life Solutions at Transamerica. "Powered by Bestow technology, Transamerica will be able to enhance not only the way we engage with new clients – digitally and in minutes – but also how we provide service throughout the policy lifecycle."
The Bestow platform simplifies the insurance application process for customers and agents and, in most cases, speeds up the process from application to decision in less than ten minutes. The partnership will allow Transamerica to provide new products, including new final expense offerings, with enhanced customer experience while keeping a focus on quality and sound financial products that help bring people peace of mind.
"Partnering with Transamerica to reimagine the application, underwriting, and policy issuance of new products on our platform has been rewarding for both teams," said Melbourne O'Banion, CEO & Co-Founder, Bestow. "This is only the beginning of a fantastic partnership that will provide their agents and customers with increased access to financial products through a best-in-class, convenient, digital buying experience."
AI in Insurance
Nearly half of CEOs believe their jobs should be replaced by AI
CEOs are so bullish on artificial intelligence that nearly half believe that most or all of their job should be replaced by artificial intelligence, according to a survey from edX for Business.
Further, executives estimate that nearly half of the skills that exist in their workforce today won’t be relevant in 2025 and that 47% of their workforce is unprepared for the future of work, according to the survey.
“With more companies moving full speed ahead toward an AI-driven workplace, leaders are faced with an important decision: Embrace AI or be left behind,” said Andy Morgan, head of edX for Business.
The global online learning platform recently surveyed 800 knowledge workers and 800 C-suite executives from across the nation for its “Navigating the Workplace in the Age of AI” report.
People
AmFam's Gwen Olson Women Insurance Leadership
Since last fall, Gwen Olson, enterprise claims strategy associate vice president, American Family Insurance, has led the completion of the firm's phase out of legacy systems and made more progress on updating its claims technology strategy and operations. Olson leads the insurer's claims services (AFICS) unit serving five insurers that comprise the American Family Group.
"We've been able to streamline the process a lot more for the adjusters," she said. "Our technology facilitates portions of the claim. Our adjusters are there to make those human connections at the times that the customers need us and our support."
To make the sweeping systems advances, consolidation and upgrades American Family has done, required a guiding hand and a vision. Olson provided leadership through that process.
"Leadership means being part of the team, recognizing the work that they do and recognizing that you need unique skill sets," she said. "You need to hire folks who are different from you, have different perspectives and are willing to have discussions and bring their ideas and their thoughts forward, so that collectively, you're making decisions and moving things forward — allowing your team to be empowered and embracing some of the risk. And then just recognizing the need to reward that when things are paying off."
Canada
Intact starts sale of RSA personal insurance subsidiary
Intact Financial Corp (Intact), a Canadian multinational property and casualty insurance company and the parent company of RSA, has started the sale of RSA’s personal insurance business in the UK, according to reports.
A Bloomberg report revealed that Intact has been working with JPMorgan Chase & Co to gauge buyer interest in the personal insurance business, which is valued at approximately £500 million and covers everything from home to pet protection. The business also sells insurance policies directly to clients and includes partnerships with other financial institutions.
Strategic review
Toronto-based Intact and Danish insurance group Tryg A/S acquired RSA in 2021, providing Intact with control of the business’s Canadian and UK and international operations. Meanwhile, Tryg took the business’s Swedish and Norwegian arms. In March, Intact announced that RSA’s personal lines business will exit the competitive market for motor insurance.
Through RSA, Intact has been expanding into commercial insurance in the UK. This month, it announced the acquisition of the brokered commercial platform from Direct Line Insurance Group Plc in a deal that could rise to £550 million. Intact said it will continue to pursue a strategic review of its personal lines business in the UK.
“The strategic review of these options is underway and is expected to be completed in Q4 this year,” a spokesperson for Intact told Bloomberg.
EMEA
European cyber insurance startup Stoïk raises $10.7 million and expands to Germany
French startup Stoïk offers a cyber insurance product to small and medium companies — a bit like Coalition in the U.S. And things have been working well in France. So the company just announced that it plans to expand to Germany as its second country with Franziska Geier heading the team there.
The company also raised another $10.7 million (€10 million) to help with this market expansion. Munich Re Ventures, the corporate venture fund of the insurance giant, is leading the round with Opera Tech Ventures also participating. Existing investors Andreessen Horowitz and Alven are putting more money in the company as well.
Stoïk focuses specifically on SMEs as small companies are quite vulnerable when it comes to cyber attacks, such as ransomware. It provides a hotline that customers can contact whenever they are facing a cyber incident.
The company can compensate for loss of revenue (gross operating margin) during an incident. It can also provide third-party liability in case of a data breach claim.
Vitality discontinues VitalityCar
London-based insurer Vitality is discontinuing its car insurance program, which it launched in June 2021.
In a message displayed on its site, the carrier, known for its life and wellness offerings, shares that over recent months the car insurance market has experienced unprecedented claims inflation. This has led to significant price increases, impacting Vitality’s ability to deliver appropriate value for good drivers. As a result, it is no longer offering new car insurance policies.