‘Strong leadership’ needed to overcome insurer challenges  November 9th 2023

Insured catastrophe losses have now surpassed $100bn in 2023

Global insurance and reinsurance market losses from natural catastrophe events have already surpassed $100 billion in 2023, making this the sixth year since 2017 that this level of nat cat insured losses has been reached, according to Gallagher Re’s Chief Science Officer Steve Bowen.

Secondary peril events have had a significant impact in insurance markets again this year, with Bowen’s data estimating that 81% of the now over $100 billion of insured catastrophe losses came from these perils.

Posting on Linkedin, Bowen said, “We continue to believe that $100 billion insured loss years is becoming the benchmark moving forward.”

“Perhaps the most interesting part of 2023, thus far, is that we’ve gotten to $100+ billion almost solely driven by high frequency / lower dollar ‘secondary’ events versus low frequency / higher dollar ‘primary’ events,” Bowen added. “In fact, this is one of the few years where we’ve hit $100+ billion without a major ‘primary’ event driving loss costs.”

Severe convective storms (SCS) losses in the United States continue to be the biggest contributor to the global bill, with $56 billion through the start of November, Bowen explained.

He said that it’s actually not that surprising that secondary perils have driven the bulk of losses, as since the year 2000 only three years, 2004, 2005, and 2017, have seen primary perils drive the majority of insured catastrophe losses.

Home Insurers To Be Scrutinized in Climate-Risk Study

The Treasury Department’s Federal Insurance Office (FIO) is taking the next step in its plan to collect data from insurers to assess climate-related financial risks facing homeowners and others nationwide.

The agency has asked the Office of Management and Budget (OMB) to approve its first-ever data collection project, which was proposed last year and aims to help the government assess the potential for major disruptions of private insurance coverage in regions that are particularly vulnerable to climate change. The FIO said the information would also help it assess both the availability and affordability of insurance for homeowners and other insured entities.

The data to be collected includes previously unavailable insurance down to the zip code level from the largest home insurance providers that collectively underwrite 70% of homeowners insurance premiums nationwide, the FIO said. The data to be collected is critical to understanding how climate-related financial risks impact individuals and families across state markets, particularly given recent insurer pullbacks and surging premiums in several states, it added.

Stable Jan. 1 reinsurance renewals expected

Jan. 1 reinsurance renewals will likely proceed in a more orderly fashion than was the case heading into this year, according to industry sources.

Additional capital and a resetting of expectations are likely to facilitate a less challenging process than at Jan. 1, 2023, sources said during a panel discussion Monday at the annual conference of The American Property Casualty Insurance Association.

Alex van Dijk, Morristown, New Jersey-based president, U.S. branches, at Guy Carpenter LLC, said the industry was “highly surprised” by the “significant” shift in pricing at last January’s renewals, saying it was greater “than our clients were prepared for.”

“I do see a more stable outlook for this renewal,” said Kerri Hamm, executive vice president, head of business development, for Munich Re U.S., adding that there was a “reset” of pricing and structure at last year’s renewals.

Molly Tully, Boston-based executive managing director, Aon Reinsurance Solutions, part of Aon PLC, said that “over the past 12 months, we have gone from a very dislocated, challenging market at Jan. 1 to what by April, May, June was a relatively stable marketplace.”

Ms. Tully added that the stability has been bolstered by a rebound of some $60 billion in the reinsurance industry surplus capital since bottoming in last year’s third quarter.

Mr. van Dijk said that positive third-quarter earning news from reinsurers has helped attract capital to the sector, which should continue into 2024 and 2025.

Zurich Insurance 9M P&C Gross Written Premiums Rise; Expects To Meet 2023-2025 Targets

Zurich Insurance Group (ZURVY) reported Thursday that its nine-month Property & Casualty or P&C gross written premiums increased 8 percent to $34.59 billion from last year's $32.09 billion. The growth was 9 percent on a like-for-like or LFL basis.

P&C insurance revenue grew 9 percent on a reported and LFL basis from last year to $31.42 billion, driven by strong growth in commercial and retail insurance, supported by rate increases of 6 percent

In the first nine months, Life Present value of new business premiums or PVNBP went up 21 percent on a reported basis and 23 percent on LFL basis to $12.17 billion.

The company recorded PVNBP growth in EMEA, Asia Pacific and Latin America.

Farmers Exchanges gross written premiums grew 2 percent from last year to $20.64 billion.

George Quinn, Group Chief Financial Officer, said, "We maintained momentum in the third quarter, delivering continued top-line growth following a very strong first half of the year and a great start to the new financial cycle. This makes us confident that we'll be able to finish the year strongly and achieve our financial targets for 2023-2025."

Mitchell Reports a Lower Total Loss Rate for Electric Vehicles

Mitchell, an Enlyte company and leading technology and information provider for the Property & Casualty (P&C) claims and Collision Repair industries, today released its latest trends report: Plugged-In: EV Collision Insights.

This quarter's report examines total loss frequency for electric and ICE automobiles. In the U.S. and Canada from Q1 to Q3 2023, the EV total loss rate was 7.25% for models 2020 and newer. Luxury ICE automobiles manufactured over the same time period and with a comparable actual cash value (ACV) had a rate of 7.47% versus 8.49% for all ICE vehicles.

"Many believe that auto insurers are writing EVs off as a total loss more often than their ICE counterparts of a similar model year and ACV, even with only minor damage," said Ryan Mandell, director of claims performance at Mitchell. "Our data simply does not support that conclusion. In fact, even though an EV's lithium-ion battery significantly increases the likelihood of a total loss outcome, we do not see these automobiles declared total losses more often than ICE alternatives."

Along with total loss frequency, the Q3 2023 Mitchell report documents the difference in EV and ICE automobile:

• Labor: Labor for EVs represented nearly half the cost of the total collision repair (49.66%) as compared to ICE alternatives (41%), equating to more than six additional labor hours per job.

• Claims Severity: Repair costs for all EVs continue to trend higher than those for gasoline-powered vehicles, with a differential of $950 in the U.S. and $1,301 in Canada. These numbers are expected to grow in the coming months as supplements are written.

• Parts Usage and Repair: OEM parts are the standard for EV repair with 88.85% of repairable EVs using parts provided by the vehicle manufacturer versus 67.48% for ICE alternatives.

The Plugged-In: EV Collision Insights report also highlights a modest increase from Q2 in claims volume for repairable EVs of 1.86% in the U.S. and 3.14% in Canada. The top North American regions for EV collisions—British Columbia, California and Quebec—saw increases in claims frequency as well.

Lemonade Surpasses 2 Million Active Customers

Lemonade (NYSE: LMND) (the "Company"), the digital insurance company powered by AI and social impact, today announced the welcoming of its two millionth customer. The pace to achieve the second million customers was 35% faster than the first million, which was achieved in late 2020, while premium per customer increased approximately 70% over the same period. More notably, net operating loss, as compared to gross earned premium, roughly halved over the same period. Taken together, these improvements are a testament to Lemonade’s structural technological advantage and overall scalability.

“Reaching two million customers around the world is an exciting milestone, and one we achieved much faster than our first million and with significant expansions, of both product and geography, along the way”

A few highlights achieved as Lemonade scaled from 1 to 2 million customers:

• Lemonade Car launched with telematics-enabled auto insurance in the United States and continues rolling out across the country

• Lemonade expanded across the pond, offering contents insurance in the UK in addition to other markets in Europe

• Metromile joined the family as the company’s first acquisition

The Company continued its work with AI, implementing large language models trained to interact with customers, creating a seamless and delightful experience along the way and so much more…

“Reaching two million customers around the world is an exciting milestone, and one we achieved much faster than our first million and with significant expansions, of both product and geography, along the way,” said Shai Wininger, cofounder and co-CEO of Lemonade. “We’ve doubled our customers while increasing our premium by 3.5x. This is indicative of the strong progression of the business in recent years, and outlines a clear path to profitability.”