News
P&C insurance’s role in the White House’s climate framework
In the first 8 months of 2023, the United States experienced 23 separate billion-dollar climate and weather disasters – a new, unfortunate record. In response to the increasing frequency of these weather events, as well as looking ahead at the long-term effects of climate change, the White House released a National Climate Resilience Framework at the end of September.
The framework identifies six core objectives that aim to strengthen the U.S. against the effects of climate change. These six objectives are:
To embed climate resilience into planning and management.
To increase resilience of the built environment to both acute climate shocks and chronic stressors.
To mobilize capital, investment and innovation to advance climate resilience at scale.
To equip communities with information and resources needed to assess their climate risks and develop the climate resilience solutions most appropriate for them.
To protect and sustainably manage lands and waters to enhance resilience while providing numerous other benefits.
And to help communities become not only more resilient, but also more safe, healthy, equitable and economically strong.
The framework also directly references the role that property and casualty insurance has to play in climate risk resiliency. To break down what that role really looks like, we were joined for this episode of the Insurance Speak podcast by Charlie Sidoti, the executive director of InnSure.
Tornadoes in the U.S: More than a regional concern
This year’s weather news has included various headlines about tornado sightings and subsequent losses caused by twisters that touched down around the United States.
Insurance professionals can expect to see more tornado-related claims come from different areas of the country along with significant structural damages from these events.
Events outside of “Tornado Alley”
Even places where tornadoes aren’t common often see a couple each year.
The notion of Tornado Alley as a designated area for tornadoes is misleading, according to the National Oceanic Atmospheric Administration National Severe Storms Laboratory. Tornadoes have been reported in all 50 states. The central plains region is often referred to as Tornado Alley because of the prevalence of these catastrophic events where the cold, dry air from the north meets warm, moist air from the Gulf Coast. Tornadoes are common in the area during the spring and summer months. However, the threat of tornadoes still exists in the Southeast, the southern and central plains, and the northern Plains and Midwest.
The study Spatial Trends in United States Tornado Frequency also evaluated whether tornadoes are occurring more often. Findings included a decrease in tornadoes in Tornado Alley and an increase in the Southeast area, coined Dixie Alley. This analysis and others like it noted upward trends in the frequency of tornadoes in the Southeast, Midwest and Northeast.
More than 1,300 tornadoes occurred in 2022, with the most being recorded in Mississippi, Texas and Alabama, according to the Insurance Information Institute. Regardless of how many tornadoes occur annually or where, residential losses from even just one can be substantial.
US P&C carried reserves at year-end 2022 redundant by $4.7bn of reported surplus: AM Best
According to global ratings agency AM Best, the US property & casualty (P&C) segment reported its 17th consecutive year of favorable reserve development based on 2022 calendar year results, however, the $3.6 billion in favorable reserve development reported for last year was nearly one-third of the level reported in 2021.
The agency explains that the P&C industry’s carried reserves at year-end 2022 are redundant by $4.7 billion, or 0.5% of its reported surplus.
This amount includes $7.5 billion of asbestos & environmental (A&E) deficiency, as well as $18.1 billion of statutory discount, which is treated as a deficiency from the full value reserves.
Moreover, from a historical standpoint, the most recent accident year usually contributes the largest portion of total favorable runoff. But, during calendar year 2022, the largest contribution came from the 2020 accident year, the year that was most impacted by the COVID-19 pandemic, while a much smaller contribution came from the 2021 accident year.
Best noted that after removing the effects of A&E and discounting, the agency estimates the industry’s core undiscounted reserves to be redundant by $30.3 billion at year-end 2022.
AmericanAg - Global Reinsurance Solutions
At the same time, overall industry reserves as of year-end 2022 are estimated to be $13.3 billion stronger than reserves reported as of year-end 2021.
Commentary/Opinion
We are not yet at the new normal: Artur Klinger, Everest
As demand for catastrophe reinsurance continues to outpace supply, further market hardening is expected, and against a backdrop of an uncertain inflationary environment, it will take time before the industry knows what the new normal is, according to Artur Klinger, Head of International Reinsurance, Everest.
With the reinsurance industry meeting in Baden-Baden this week ahead of the fast-approaching January 1st, 2024, renewals, we spoke with Everest’s Klinger about the focus of discussions during an interesting time for the market.
“I think there will be two main topics up for debate. The first is cat capacity. As we see it through discussions we’ve had during the year, the demand is increasing further. Clients are asking for additional capacity. And we feel that the demand is increasing further and also faster than supply, and that will lead to further hardening of the market,” said Klinger.
He explained that this will be different from market to market and from client to client.
Research
Auto Insurers Manage Customer Expectations as Repair Cycle Times Double in Two Years, J.D. Power Finds
Long repair shop backlogs and lingering parts shortages have caused the average auto insurance repair cycle time to reach 23.1 days in 2023, up 6.2 days from 2022 and more than double the average repair time in 2021.
According to the J.D. Power 2023 U.S. Auto Claims Satisfaction Study, released today, that long delay has not adversely affected customer satisfaction. Surprisingly, customer satisfaction with the auto insurance claims process improves this year, thanks to concerted efforts by insurers to carefully manage customer expectations.
“It’s really a testament to strong client management processes and improved digital communications,” said Mark Garrett, director of global insurance intelligence at J.D. Power.
“Insurers have been able to earn significantly higher auto claim satisfaction scores at a time when costs and rates are rising—even though it’s never taken longer to get a vehicle repaired. Notable, too, is that insurers that have improved the most in overall satisfaction have done so in two key customer areas: showing concern for their situation at the beginning of the process and keeping them informed. Being empathetic toward the customer situation goes a long way in building trust with them.”
Claims/Payments
[Ed. Note: Truly Groundbreaking!] World's First All-Speed Crash Detection, Including ZeroMotion, by Sfara
Sfara announces today the world's first all-speed crash detection, from zero motion to high speeds, capturing the additional 70% of automobile crashes that other solutions miss.
Sfara's smartphone-based crash detection covers users through the full range of driving conditions, including under 25mph and when a vehicle is not moving. Other solutions either miss or don't report these incidents because they are unable to reliably perform.
This means Sfara's technology is the only solution on the market that detects the additional 70% of incidents others miss, and works quickly and accurately enough to support programs for both First-Notice-of-Loss (FNOL) and emergency response.
"There's simply no way to justify missing 70% of detectable collisions that represent nearly half of all injuries and fatalities," said Rocco Tricarico, CMO of Sfara
Despite conventional thinking, collisions that occur below 25mph are vitally important, given the injuries and the property damages that occur. Government and industry statistics present a startling picture of what occurs on roadways that the others miss.
What occurs under 25mph (injury and damage facts)
- 70% of crashes-
- 48% of crashes with injury
- 22% of crashes with fatalities
- 20% of crashes occur in parking lots
Non-moving vehicle (injury and damage facts)
- 27% of crashes with injury occur when a vehicle is not moving
- 11% of crashes with fatalities occur when a vehicle is not moving
- 700,000 crashes occur at stop signs annually, with over 1300 of these resulting in a death
When you combine Sfara's new ZeroMotion capability with its Integrated Suppression Framework, Sfara now possesses the only crash detection technology to cover the full range of crashes at any speed, including the additional 70% of crashes the others miss. Sfara offers their smartphone-based solution through an SDK easily integrated into other apps.
"Numerous analysts agree that the insurance industry has the potential for a 5-point margin gain with a program combining fraud detection, FNOL and claims acceleration, enabled by an offer of free emergency response to the consumer," says Nino Tarantino, GM of Insurance for Sfara
InsurTech/M&A/Finance/Collaboration
Marsh McLennan Agency CEO on M&A – "Our pipeline has never been better"
While insurance merger & acquisition (M&A) activity has been high for many years, at least one CEO isn’t worried about the market being picked over.
In fact, Marsh McLennan Agency (MMA) chairman and CEO David Eslick told Insurance Business that the firm’s M&A pipeline “has never been better.”
“There’s still some very nice-sized, high-quality firms that we continue to be in contact with,” said Eslick. “Last year, we did more deals than we’ve ever done in our history.”
With some 10,000 employees in 170 offices across North America, MMA provides business insurance, employee health & benefits, retirement, and private client insurance to organizations and individuals.
Marsh McLennan Agency not slowing down their M&A
Most notably, in August, MMA acquired top-100 agency Graham Company, one of the last large independent agencies in the United States.
Following that deal, Eslick shared his views on the challenges in the M&A marketplace, noting that credit markets were “fairly tight.”
“I think there’s some real changes,” he said. “A lot of our competitors for acquisitions, private equity-backed brokers, have seen their interest expense go up dramatically, which impacts their cash flow.”
LegalMation Announces $15M In New Funding to Drive its Commitment to Becoming the Leading AI-Powered Litigation Support Platform Across the LegalTech and InsurTech Ecosystems
LegalMation, Inc., the market leader in Generative AI-driven solutions for high-volume litigation, today announced it has raised a $15 million Series A financing round led by the venture capital team at Aquiline Capital Partners LP, Aquiline Technology Growth ("Aquiline"), with continued participation from existing investors Motley Fool Ventures, REV Venture Partners, Key Venture Partners, Quick Set LLC, and Brentwood Investments.
LegalMation has experienced rapid growth in demand for its Generative AI litigation response platform that provides the insurance and legal industries with clear productivity and cost savings. LegalMation's proprietary solutions enable legal professionals to respond to lawsuits, discovery requests, and related workflows using the client's own historical response data. In 2023, LegalMation's customers have already leveraged the platform to answer over 1.1 million discovery requests in over 30 state and federal jurisdictions.
Demand for LegalMation's solutions has been boosted by labor shortages and inflationary pressures. For in-house counsel in particular, automating high-volume litigation and related tasks has become the number one solution to these challenges. Accordingly, insurance carriers and large enterprises have become LegalMation's predominant client base as they seek to increase efficiency and find ways to scale at the organizational level as they find ways to apply Generative AI solutions to their operations.
Emerging from Stealth Mode, Insurtech CoverForce Unveils Product Suite, Bolstered by Expert Team and $5M Seed Funding
Today, CoverForce, the first independent insurance platform bringing streamlined comparisons and one-click buying to commercial insurance, officially emerged from stealth mode, unveiling its comprehensive suite of products made specifically for agency networks, wholesalers, and software companies. The company's infrastructure and easy-to-integrate API aim to provide digital access and one-stop comparison in an offline market with speed and accuracy.
CoverForce's leadership team brings big tech experience and deep insurance knowledge together to build technology that seamlessly integrates into established processes of carriers, agents and wholesalers. Chief executive officer and co-founder Cyrus Karai is joined by two additional co-founders: former executive vice president of global small & middle market business centers at Travelers, Behram Dinshaw, who serves as the company's chairperson of the board, and former software development manager at Amazon, Kaivan Wadia, who serves as the company's chief technology officer. Together, the three co-founders have assembled an expert team of engineers and industry advisors, including senior experts from Google, Amazon, The Hartford, Travelers, Allstate Corporation, McKinsey & Company and more.
"Historically, the commercial insurance industry has been fragmented and lacking a standardized API experience, forcing companies in need of quotes to navigate a complex, time-consuming process that consists of back-and-forth emails and phone calls," said Cyrus Karai, co-founder and CEO of CoverForce. "We are changing that by helping top insurance companies become digitally accessible to businesses, unlocking access to new alternative distribution channels and strengthening independent agents."
AI in Insurance
Why has generative AI penetrated insurance so fast?
According to Arun Balakrishnan (pictured left), chairman & CEO of Xceedance, the reason why the insurance industry has felt the need to adapt generative AI so quickly is because models like ChatGPT went to the consumer first.
“The accelerated adoption of large language models by businesses is due to their employees, customers and families having already started to use these tools in their everyday life,” he said.
“This had led executives to question how come their businesses are not thinking about this.”
During this year’s Target Markets conference in Arizona, Balakrishnan was joined by Travis MacMillian (pictured right), Xceedance’s president, Americas, to speak about why blockchain has not experienced a more concerted push through the industry, like AI.
The pair also discussed why they think the programs space is thriving post-pandemic.
Forrester’s Predictions 2024: Sixty Percent Of Generative AI Skeptics Will Embrace The Technology — Knowingly Or Not
According to Forrester’s (Nasdaq: FORR) 2024 predictions, released today, 60% of generative AI skeptics will use and value the emerging technology in 2024, whether they realize it or not.
Consumers who are genAI skeptics will embrace the technology for tasks that enhance creativity and productivity, including seeking support from conversational assistants and translating and summarizing content.
Additionally, business, technology, and marketing leaders’ investment in genAI in the year ahead will augment employees’ creative problem-solving time by up to 50% — driving customer-centric innovation and creating greater business value.
Forrester’s predictions analyze the dynamics and trends across different topics and industries, including technology and innovation; B2B marketing, sales, and product; artificial intelligence and automation; customer experience (CX); and the future of work. These insights help leaders see around the corner and gain a competitive edge to thrive in the year ahead.
EMEA
Solera launches industry-first solution for insurers to meet growing sustainability needs and offset emissions
Global survey reveals 75% of drivers prepared to switch providers for a greener policy, while insurers struggle to meet demands and new regulation
Solera launches industry-first solution for insurers to meet growing sustainability needs and offset emissions.
Solera, the global leader in vehicle lifecycle management and claims, has published research involving 10,000 drivers from the UK, France, Australia, Germany, and Spain, showing that 75% would switch to insurers offering greener policies.
However, an additional worldwide survey of decision makers in the auto insurance industry reveals that providers are facing a storm of challenges, not only in meeting the sustainable demand but also managing new ESG regulations.
To tackle these challenges, Solera is introducing Sustainable Estimatics, an industry-first carbon tracking tool enabling insurers to track and offset the carbon emissions linked to the end-to-end customer’s claims process.
Bill Brower VP Industry Relations at Solera: “With one of the world’s largest AI-powered claims databases, we’re excited to introduce Sustainable Estimatics. This innovative tool is designed to address the urgent sustainability demands facing insurers, not merely as a compliance checkbox but as a way to help them provide customers with more competitive, green premiums.”
“One of its standout features is its ability to effectively address scope three emissions, which are notoriously hard to measure. By assisting insurers in measuring and mitigating these emissions, ‘Sustainable Estimatics’ is helping create a greener future.
“Sustainable Estimatics is the pinnacle of Solera’s data driven innovation and leadership in claims. But there are other solutions and services in our portfolio connected to sustainability which allow businesses to make greener decisions. For example, Solera promotes the use of eco-friendly parts, encourages repairs over replacements, and reduces unnecessary displacements through our visual AI tools and various fleet and repairs solutions."