Wildfire-prone California to consider new rules for property insurance pricing  September 22nd 2023

The insurance bubble could make the value of your house plummet

If you own a house in California, it keeps getting harder to insure it. After years of devastating wildfires, Allstate stopped offering new policies in the state last November. State Farm announced the same thing in May, citing “rapidly growing catastrophe exposure.” Farmers Insurance is limiting new policies. Some smaller insurers have followed.

Thousands of other homeowners have been told that their policies won’t be renewed—and for some, the only option left is a much more expensive last-resort insurance program set up by the state. On average, the program, called FAIR, costs more than twice as much as traditional insurance. (That’s partly because California regulations don’t currently let insurers raise rates based on future climate risk, so traditional insurance is artificially cheap.)

The same problem is playing out in other states, like Louisiana, where the risk of extreme wind is increasing, and in Florida, where more than 1.8 million properties are at risk of severe flooding—and insurers are also pulling out.

A new report looks at how much these rising insurance costs could make home values drop. “We have this accumulating climate debt over the past few decades that is just starting to come due,” says Jeremy Porter, a researcher at First Street Foundation, the nonprofit that published the report.

P&C insurance market shows resilience, risk awareness, and tech commitment: KBW

The KBW Insurance Conference 2023 shed light on the current state of the Property and Casualty (P&C) insurance market, revealing a landscape marked by pricing resilience, careful risk assessment, and a commitment to technological advancements.

Despite exceptions in sectors like Directors and Officers (D&O) insurance and workers’ compensation, most personal and commercial insurance lines are witnessing steady or accelerating rate increases. This upward trend in pricing positions insurers to exit from competitively-priced D&O accounts.

Importantly, these rate increases continue to outpace respective loss trends, suggesting a positive outlook for core underwriting margins in the second half of 2023 and into 2024. The compounding effect of personal auto rate adjustments is expected to drive near-term improvements, with earned rate adequacy anticipated by 2024 or early 2025.

Insurers are closely monitoring steadily-high claim cost inflation, driven by factors such as economic inflation, social inflation related to litigation, and climate change-related trends. To account for unusual loss trend volatility, particularly in auto and property lines, insurers are incorporating conservative judgment into their assessments.

There is also a recognition that favourable workers’ compensation trends may not persist, which is keeping profitability in focus.

Digital Self-Service Platforms: Benefits and Risks for Insurance Companies

Digital self-service platforms are finally taking root in the insurance industry. Although large carriers and MGAs have led that charge, smaller MGAs, independent brokers and agencies are now following suit. The reason? Customer convenience. A recent survey by Zendesk reveals that 75 percent of consumers view self-service as a more convenient way to solve customer service issues. Solutions like chatbots, user forums, and customer portals are rapidly changing how customers engage with insurance companies.

The right self-service automation solution can be a win-win for MGAs and their customers. However, the wrong or incomplete solution can irritate your customers and risk losing them to a competing agency. There are a number of benefits and considerations to keep in mind when deciding if and when to implement a self-service platform.

Digital Self-Service Platforms: The Pros

Before your organization goes through the process of digitizing certain aspects of insurance to accommodate self-service for customers, let’s take a look at why you’d want to do it in the first place.

Eric Ayala is the senior vice president, Americas for Novidea

5 Lessons learned from insurance claim investigations

Navigating the complex landscape of insurance claims requires a mix of empathy, problem-solving and expertise.

As claims adjusters, we’ve spent decades developing our skills and collaborating with underwriters, administrators and policyholders to investigate both common and unusual claims. We’ve compiled important insights that shape our approach to claims investigations.

This article is the first in a series about the fundamental lessons that shed light on what it takes to do the job successfully. We hope to provide an insider’s perspective on how skilled adjusters really operate. The slideshow above illustrates five key lessons about insurance claim investigations.

In truth, we don’t just work for insurance companies. A crucial part of our job is fulfilling the promise to pay claims, which often requires us to advocate on behalf of claimants to help them receive the compensation they deserve.

A fair and just conclusion

Insurance claims adjusting is a dynamic field that demands a deep understanding of policies, meticulous investigation and effective communication.

Through our experiences, we’ve come to understand and define these fundamental lessons. We’ve learned to appreciate the delicate balance between thoroughness and efficiency, as well as the importance of building trust with claimants.

Louis Pippin is chief claims officer at Venbrook Group