PE Company Bain Capital Weighs Deal for Advent’s CCC Insurance Software  September 29th 2023

PE Company Bain Capital Weighs Deal for Advent’s CCC Insurance Software

Bain Capital is weighing a deal for CCC Intelligent Solutions Holdings Inc., the car-insurance software provider controlled by Advent International, according to people familiar with the matter.

Bain is among suitors that have expressed interest in acquiring the Chicago-based company, said the people, who asked to not be identified because the details are private. Other bidders are circling CCC, no final decision has been made and Bain could could opt against pursuing a deal, the people said. CCC has been working with an adviser to explore a sale, they said.

CCC rose 2.1% to close at $12.41 in New York trading Thursday, giving the company a market value of about $7.8 billion.

Representatives for Bain and Advent declined to comment. A spokesperson for CCC didn’t immediately respond to requests for comment.

[Editors Note]:

This could get interesting! According to their website CCC Intelligent Solutions is a leading SaaS platform for the multi-trillion-dollar P&C insurance economy powering operations for insurers, repairers, automakers, part suppliers, lenders, and more. CCC cloud technology connects more than 35,000 businesses digitizing mission-critical workflows, commerce, and customer experiences. A trusted leader in AI, IoT, customer experience, network and workflow management, CCC delivers innovations that keep people’s lives moving forward when it matters most.

The Auto Insurance and Physical Damage Claims landscape is in turmoil as several macro factors have converged to negatively impact virtually all participants, even as they scramble to adopt and leverage the digital technologies that they know they need.

U.S. Auto Insurer Claim Payouts Soar Due to Increasing Inflation

U.S. personal and commercial auto insurer liability claim payouts combined were $96 billion to $105 billion higher between 2013 and 2022 because of social and economic inflation, according to a new Insurance Information Institute (Triple-I) study.

“For personal auto liability insurance, increasing inflation drove loss and DCC (defense containment costs) higher by $61 billion,” the study, Impact of Increasing Inflation on Personal and Commercial Auto Liability Insurance stated. “For the same period (2013-2022), increasing inflation drove commercial auto liability loss and DCC higher by $35 to $44 billion.”

Liability insurance covers what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person, or persons. Every U.S. state except New Hampshire requires its drivers to purchase a personal auto insurance policy, with mandatory minimum amounts of liability coverage, as a condition of operating a motor vehicle. Commercial auto insurance liability policies are commonly bought by small businesses and corporations to cover trucks and other vehicles used for commercial purposes, such as limousines and taxis.

The study was researched and written by Jim Lynch, FCAS, MAAA, Triple-I’s former chief actuary; Dave Moore, FCAS, MAAA, president, Moore Actuarial Consulting LLC; and Dale Porfilio, FCAS, MAAA, Triple-I’s chief insurance officer. The research methodology compares the latest loss development patterns to a baseline assumption without social inflation and with stable inflation rates.

Commercial auto insurance sector continues to be unprofitable

The combined ratio for the U.S. commercial auto insurance sector is forecast to exceed 106% in 2023 as the segment continues to be unprofitable for the year, according to a report Thursday from Fitch Ratings Inc.

Rising claims severity from inflation and growing litigation exposure will continue to vex the commercial auto insurance market despite continued price increases and underwriting changes, Fitch said.

The U.S. commercial auto insurance business has produced a combined ratio above 100% in 11 of the last 12 years, the lone exception being 2021’s 99% as pandemic-related lockdowns resulted in a 25% decline in reported commercial auto liability claims together with associated declines in judicial activity and reserve development.

The negative effects of higher loss severity on commercial auto performance are expected to continue, driven by higher general inflation levels, supply chain and skilled mechanic labor shortages and liability costs. The average statutory closed claim payment in commercial auto liability increased by 18% in calendar-year 2022, the Fitch report said.

“More frequent attorney involvement in transportation claims and greater potential for outsized verdicts in several jurisdictions continue to exacerbate commercial auto loss costs, with insurers’ commercial auto litigation risk increasing amid the expanding presence of the litigation finance industry,” the report said.

Be on the lookout for these auto insurance fraud strategies

Insurance fraud can cost U.S. consumers as much as $308.6 billion each year, according to a 2022 study by the Coalition Against Insurance Fraud. Of that total, about $45 billion comes from property and casualty insurance fraud.

When it comes to auto insurers, a 2017 Verisk study reported these companies lose at least $29 billion a year to premium leakage caused by incorrect underwriting information leading to inaccurate rates. This leakage (some intentionally fraudulent) involves includes several different types of false information, including:

• Unrecognized drivers ($10.3 billion in leakage per year)

• Underestimated mileage ($5.4 billion in leakage per year)

• Violations/accidents ($3.4 billion in leakage per year)

• False garaging ($2.9 billion in leakage per year)

Some of this can be chocked up to innocent mistakes on the part of the customer, not everyone purchases an insurance policy or files a claim with good intentions. Insurers must be aware of the methods of intentional auto insurance fraud that scammers tend to favor in order to protect their interests. In the slideshow above, we’ll break down five of the most common types of auto insurance fraud carriers should keep an eye out for, according to Allstate.

Mobs of Masked Teens Ransacked Philadelphia Stores. Police Say 15 to 20 Have Been Arrested

Groups of teenagers swarmed into stores in several areas of Philadelphia in an apparently coordinated effort, stuffing plastic bags with merchandise and fleeing, authorities said. Police arrested 15 to 20 people.

The flash mob-style ransacking Tuesday night at stores including Foot Locker, Lululemon and Apple came after a peaceful protest over a judge’s decision to dismiss murder and other charges against a Philadelphia police officer who shot and killed a driver, Eddie Irizarry, through a rolled-up window.

Video on social media showed masked people in hoodies running out of Lululemon with merchandise and police officers grabbing several and tackling them to the sidewalk. Photos of a sporting goods store at a mall showed mannequins and sneakers scattered on the sidewalk.

Those doing the ransacking were not affiliated with the protest, Interim Police Commissioner John Stanford said at a news conference, calling the group “a bunch of criminal opportunists.”

Target to Close 9 Stores, Including 3 in the San Francisco Bay Area, Citing Safety Concerns

Target said Tuesday that it will close nine stores in four states, including one in New York City`s East Harlem neighborhood, and three in the San Francisco Bay Area, saying that theft and organized retail crime have threatened the safety of its workers and customers.

The closings, which will be effective Oct. 21, also include three stores in Portland, Oregon, and two in Seattle. Target said that it still will have a combined 150 stores open in the markets where the closures are taking place. It said it will offer affected workers the opportunity to transfer to other stores.

The Minneapolis retailer said the decision to close the stores was difficult.

“We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all,” Target said in a statement.

Modeled Insured Annual Natural Catastrophe Loss Reaches New High

The global modeled average insured annual natural catastrophe loss has reached a new high of $133 billion, according to a new report from Verisk.

In its 2023 Global Modeled Catastrophe Losses Report, Verisk suggested that an annual insured natural catastrophe loss topping $200 billion is plausible.

"The growth in exposure values, driven primarily by continued construction in high-hazard areas, and rising replacement costs—largely due to inflation—are the most significant factors responsible for increasing catastrophe losses," Bill Churney, president of Verisk extreme event solutions, said in a statement. "The other significant factor is the impact of climate change, which is often cited as the primary reason for the increase in losses. But, while this plays a role, year-over-year growth of exposure and rising replacement values have a far greater short-term impact."

Verisk noted that the sizable insured natural catastrophe losses are no longer due to just hurricanes and earthquakes

Citizens Insurance gets OK for historic double-digit rate hike

Citizens Insurance policyholders can expect to see higher premiums when they receive their next renewal letter after the Citizens Board of Governors approved a double-digit rate hike on Wednesday.

The historic average 11.5% increase for homeowners with the most common type of policies comes after regulators ordered the company to revise its previous request to increase rates by an average of 13.3%.

The revised hike averages out to 12.3% when averaging personal lines. Commercial lines will see an average 10.2% increase. The personal lines rate increases will take effect Dec. 16, while the commercial increases will take effect Nov. 20.

California insurance regulation reforms applauded as move in right direction

While California’s property insurance reform proposals are yet to be ironed out, the industry is striking an overall optimistic note on the suite of changes being offered up by the state’s insurance regulator, industry sources tell PropertyCasualty360.com.

“My initial reaction was very positive that the department of insurance is taking steps to fix the property insurance issues in California and revising some of the regulations to allow insurance companies to get rate increases that they need in order to stay in the state and continue writing,” says Mark Robinson, co-founder of law firm Michelman & Robinson and leader of the firm’s regulatory practice group.

He notes the proposed changes show a lot of movement from where the California Insurance Commissioner Ricardo Lara was six months to a year ago.

Robinson does caution that it will take some time for these proposals to start healing the market, noting California Department of Insurance (CDI) is planning to have all of the updated regulations in place by the end of 2024.

“Once the carriers see the changes that are going to be happening, they will start coming back into the state,” Robinson says. “It’s obviously a huge market, but they need to have the rates in order for them to not lose money. So they need to be able to rate the fire areas appropriately.”

Bill Martin, president and CEO of Plymouth Rock Home Assurance, says the actions taken by California Governor Gavin Newsom and Commissioner Lara should be commended.

“They could have just ignored it and let the market shake out,” Martin says, continuing: “There have been times in the past when regulators and legislators have said ‘good riddance to insurance companies.’ These two have said: ‘This isn’t a problem that they’ve created, it is a problem that is bigger than that.’”