Commentary/Opinion
![Unexpected Developments in Personal Auto](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906380/original_ratio_extra_large_581f0835-7fd9-4e36-9a15-0130887e559d.jpg)
Unexpected Developments in Personal Auto
It might take more than raising rates to make this line healthy again.
For the first time in at least 30 years, if ever, the personal auto insurance line’s combined ratio is 112.2, according to AM Best. That means for 2022, insurers saw an underwriting loss of $12 for every hundred dollars they collected in premium.
AM Best is projecting that the combined ratio will be around 106.5 for 2023, demonstrating that higher rates are helping to cover costs. However, the loss trends are not looking much better in 2023.
In response, insurers are raising rates quickly by double-digits and pursuing undesirable options to reach equilibrium and return to profitability.
Individual insurers are responding by making tough business decisions. Roosevelt C. Mosley observed that some companies are announcing they are getting out of personal lines due to significant losses. “Others are facing surplus issues and being forced to exit,” said Mosley, who is the current CAS president and principal with Pinnacle Actuarial Resources.
Meanwhile, insurers might not be able to compensate for shortfalls in collected premiums with investment income. “Unless somehow returns are in the high double digits, the investment will not help as it has before,” Mosley said.
Annmarie Geddes Baribeau, President of Insurance Communicators, LLC
![What is the biggest impact insurtech has had on insurance?](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906235/original_ratio_extra_large_746d4651-4e9e-4907-8410-8c172a6097ed.jpg)
What is the biggest impact insurtech has had on insurance?
From accelerator, to liberator, to equalizer, a variety of attendees at Insuretech Connect’s November conference believed that insurtech has had a role to play in re-shaping the insurance industry, though perhaps not necessarily in the disruptive guise that was originally anticipated by some.
For Tim Hardcastle, Instanda CEO and co-founder, insurtech has proven itself to be insurance’s “liberator” and now offers a “rainbow of hope and aspiration”.
“A lot of the insurance community are very innovative and they’d like to do more for their customers, and they’d like to be more creative, and a lot of people we’ve talked to are held back from being able to do that, because of the processes that they’re forced to use, or the technology that they’re using is not relevant, or it’s not suitable for today’s customer needs,” Hardcastle told Insurance Business.
“I think a lot of the technology vendors treat the insurance companies quite badly – I have been a consumer of software services from my previous role, so I’m not talking from a theoretical perspective, I know, practically, what it’s really like.”
Ultimately, in Hardcastle’s view, insurtech is “providing a much better way for customers”.
“The great thing about insurtech is that over the last few years, it’s grown in momentum, it’s grown in impact – you can look at that from an investment standpoint, in terms of where funding has gone, you can look at it in terms of number of companies that are working with insurtechs,” Hardcastle said. “I can look at it through my own lens of the clients that we’re now working with and the impact that we’re now making.”
Customer Retention is the Most Cost-Effective Path to Growth
Most insurers’ growth strategies revolve around two key pillars: new customer acquisition and new risk products. However, retention is just as crucial and should be the third pillar in your growth strategy.
It’s not hyperbole to say that growth is the key to survival in today’s insurance landscape. Mid-sized insurance carriers are in a unique middle ground, squeezed on all sides. You have huge, incumbent carriers with deep pockets on one side. On the other side, you have agile, digital-first startups. Then, there are emerging new business models like embedded insurance. So, how are carriers, especially mid-sized players, supposed to compete while also hitting their growth goals?
Most insurers’ growth strategies revolve around two key pillars: new customer acquisition and new risk products. However, retention is just as crucial and should be the third pillar in your growth strategy.
Customer retention is essential for insurance carriers to maintain profitability, reduce costs, and thrive in a competitive industry. It’s not just about retaining customers for the sake of it but also about providing superior customer service, value, and personalized solutions that build long-lasting relationships.
How does retention reduce costs? New customer acquisition is expensive. According to the Independent Insurance Agents of Dallas, the insurance industry has the highest customer acquisition costs of any industry. It costs an average of seven to nine times more for an insurance agency to acquire a new customer than to retain one.
Rather than pouring your budget into acquisition, it’s much more cost-effective to strike a balance and invest in retaining the customers you already have. This creates new upselling opportunities for your sales and customer service teams to introduce new risk products and services that fit their needs.
Steve Johnson is the Co-Founder and Head of Product for insured.io
Research
![Down, Down, Down….AM Best P/C Downgrades Outpacing Upgrades](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906381/original_ratio_extra_large_02097bfa-d4be-4cea-8f0e-8cf732b32d96.jpg)
Down, Down, Down….AM Best P/C Downgrades Outpacing Upgrades
The number of rated property/casualty personal lines insurers that had their credit ratings downgraded by AM Best more than doubled to 21 in the first-half of 2023, compared to 10 in first-half 2022.
Additional downgrades of 10 commercial insurers and one reinsurer brought the P/C insurance industry total to 32 for this year’s first half, compared to 18 in total for last year’s first half, the rating agency said in a report released in mid-October.
Together, the P/C downgrades accounted for 9.1 percent of all AM Best’s ratings actions taken during the first half of this year. In contrast, for first-half 2022, downgrades accounted for 5.2 percent of the firm’s rating actions.
In addition, Best reported that the number of P/C ratings placed under review more than doubled in the first half of 2023 and made up 6.3 percent of total rating actions.
InsurTech/M&A/Finance💰/Collaboration
![INSTANDA exec discusses insurtech's impact on climate resilience.](https://dxj7eshgz03ln.cloudfront.net/production/link/image/905898/original_ratio_extra_large_8024bd21-2396-4551-b337-f3fcbc69cf9f.jpeg)
INSTANDA exec discusses insurtech's impact on climate resilience.
The insurtech blitz of the past decade was a boon for carriers, managing general agents (MGAs), brokers and more across the insurance spectrum. Insurtech innovation offered ample reasons for good times; insurtechs provided streamlined processes, better distribution, cost savings, enhanced customer experience and more.
A byproduct of insurtech's growing influence has been the opportunity for organizations to improve their own sustainability efforts and protect against or mitigate evolving climate and disaster-related risks — encouraging more resilient communities. With investors in insurtech more closely securitizing both market trends and emerging insurtechs, will this progress toward environmental action wane as well?
In this article, we will explore a few of the impressive advancements insurtechs have presented or influenced in recent years and consider what a muzzle on insurtech innovation could mean for sustainability efforts.
Growth, change and opportunity
The global insurtech market enjoyed tremendous growth in recent years with equity funding reported at $9 billion in 2018 and rising to $14.5 billion in 2021, according to Boston Consulting Group. However, investments across the entire fintech spectrum pulled back between 2021 and 2022 as investment in the sector fell from $139.1 billion to $79.9 billion — with insurtech funding experiencing the largest decline. Equity funding for insurtech fell 50% from $14.5 billion in 2021 to $7.2 billion in 2022. And according to BCG, "The market shows no sign of a rebound."
However, tech-enabled carriers and MGAs making considerable strides to address climate change-related risks and encourage sustainability rely on the very tools and thinking insurtechs offer for scale and innovation. The decline in funding, coupled with the ongoing hard market, could reduce the number of these tech-enabled initiatives that offer contributions to greater sustainability. One need only look to California and Florida to see how insurers are shifting their focus to cost-savings to protect themselves from climate-related exposures like wildfires and hurricanes. Even Hippo paused its new business in 2023 to regroup and reduce its losses as access to capital, coupled with rising claims and a hard market forced many in the space to become more circumspect.
Sara Shipley, Chief Human Resources Officer And Chief Transformation Officer., INSTANDA
![Assureful Raises $1.5 Million Pre-Seed Round to Reinvent Insurance for eCommerce Sellers](https://dxj7eshgz03ln.cloudfront.net/production/link/image/902399/original_ratio_extra_large_7c14bb41-ae2f-4012-9c46-70079475eae5.jpg)
Assureful Raises $1.5 Million Pre-Seed Round to Reinvent Insurance for eCommerce Sellers
Assureful, the first insurance provider built exclusively for Amazon and eCommerce sellers, today announced it has closed a $1.5 million pre-seed funding round led by Markd. The round also included participation from Greenlight Re Innovations.
Assureful is the first insurance provider to integrate with major eCommerce marketplaces like Amazon, Walmart and Ebay as well as platforms such as Shopify, BigCommerce and WooCommerce to provide customized embedded usage-based and monthly billed insurance premiums based on sellers' actual sales volume and product categories.
It uses Generative AI and Machine Learning to rate, price and underwrite mandatory insurance coverage for eCommerce businesses of all sizes. With categorization across 33,000 different product types, Assureful can deliver more accurate coverage and competitive pricing to its customers. The company is licensed nationwide in the US and as a Coverholder at Lloyd's of London, it has delegated underwriting authority.
"We're thrilled to close this initial funding round and have the support of investors who believe in our vision to reinvent insurance for eCommerce sellers," said Rohit Nair, Founder & CEO of Assureful.
"Marketplaces such as Amazon and Walmart make carrying appropriate insurance mandatory. This capital will help us continue enhancing our proprietary technology and product offerings as we scale up to serve this fast-growing customer base. We're proud to be the first in the industry taking this modern approach."
Layr Helps Insurance Brokers Be More Efficient & Profitable
Layr, a leading insurance tech company, closed a $10 million round of financing led by Cota Capital. The K Fund, HSCM Ventures, Sandbox Industries, and Flyover Capital also participated in the round.
The company will use the funds to expand go-to-market operations and bolster Layr’s platform functionality for brokers. Independent insurance brokerages use Layr’s cloud-based tools and services to increase broker profitability and customer satisfaction in small business insurance operations.
“One of every four dollars in the GDP goes through the insurance industry, yet it’s glacially slow to change. Many of the tools to distribute and service insurance products are outdated, using the same technology as when I entered the industry 20 years ago. Layr’s changing that for underwriters, brokers, and policyholders,” said Phillip Naples, founder and CEO of Layr.
“When brokers use Layr for their small business insurance management, their policyholders receive insurance services that are as easy and painless as their online banking. With Layr, broker partners handle more clients with ease and at higher margins, all while gaining valuable business intelligence. It’s time to bring small business insurance into the 21st century.”
![Detecting and preventing water leak damage using artificial intelligence](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906402/original_ratio_extra_large_0c8d7603-bbfe-48a7-a17a-a2e89cf50571.png)
Detecting and preventing water leak damage using artificial intelligence
One company is slashing the number and magnitude of water-related claims
This article was produced in partnership with WINT – Water Intelligence.
Desmond Devoy, of Insurance Business America, sat down with Yaron Dycian, co-founder and chief product officer, for WINT – Water Intelligence, to discuss how the startup company is teaming up with several insurance companies to use AI to track water problems in buildings – and contain water damage claims.
Groundbreaking technology that uses AI to monitor water leaks and usage in commercial and residential buildings and on construction sites is significantly impacting dynamics in the builders’ risk and P&C markets.
WINT Water Intelligence, founded in 2018, uses AI to analyze water consumption in buildings and stops leaks at the source. Its technology is used on construction sites worldwide, in such iconic buildings like the Empire State Building in New York City, as well as in modern facilities such as Microsoft’s and HP’s R&D facilities. It can alert the staff that there is a water leak and automatically shut off the water to mitigate damage. This is done through advanced, real-time monitoring and artificial intelligence, which can let property managers know that there is, for example, a leak on the seventh floor, and how to mitigate the damage.
Innovation
MassMutual launches innovative wellness offerings that help Policyowners better understand and protect their health
Massachusetts Mutual Life Insurance Company (MassMutual) today announced that it is enabling eligible policyowners to gain knowledge about their health through a variety of tools, offerings and research so they can make informed, proactive health decisions that may help them lead longer, healthier lives.
The company’s efforts are centralized under the MassMutual Health and Wellness Program, which focuses on initiatives that provide policyowners with insights into their potential health risks, empowering them to seek out appropriate interventions and motivate healthy behaviors and lifestyles.
"For generations, MassMutual has delivered long-term value to our policyowners by providing holistic financial solutions that address their needs at each stage of life,” said Sears Merritt, Head of Enterprise Technology and Experience, MassMutual. “Now, we are proud to expand on our offerings by unveiling innovative solutions that provide them with knowledge to make choices that support their well-being, helping them to lead fulfilled lives and be there for the most meaningful moments with their loved ones.”
AI in Insurance
Bill Gates: We'll all have AI-powered personal assistants within 5 years
The way we interact with technology will “completely change” before the decade is out, according to the billionaire Microsoft cofounder.
Artificial intelligence might be dividing experts when it comes to its potential to destroy mankind or force people out of their jobs—but according to Bill Gates, it’s going to land us all with our very own executive assistant in less than a decade
In a post to his official blog on Thursday, the billionaire Microsoft cofounder said that even in 2023, “software is still pretty dumb”—but he predicted that this would “change completely” within the next five years.
Canada
![Square One partners with Zurich Canada to offer personal auto insurance](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906239/original_ratio_extra_large_eda8147a-dd3f-4563-b165-c348c35bd502.jpg)
Square One partners with Zurich Canada to offer personal auto insurance
Offering made available in Ontario, with more provinces to follow
Square One Insurance Services has partnered with Zurich Canada to provide personal auto insurance in Ontario, with more provinces to follow in 2024.
The based brokerage said this partnership combines its “digital-first” purchasing environment with Zurich Canada’s claims service expertise, allowing customers to easily personalize their limits, coverages, and deductibles online, as well as receive their policies in a few minutes.
In an emailed news release, CEO and president Daniel Mirkovic spoke about Square One's aim with its auto insurance offering.
“Since 2011, our team of professionals at Square One have made the home insurance process effortless for hundreds of thousands of Canadians,” Mirkovic said.
EMEA
![Britain says makers, not car owners liable for self-driving crashes](https://dxj7eshgz03ln.cloudfront.net/production/link/image/906600/original_ratio_extra_large_f9838503-2c3a-4fd1-b7d8-e13850731227.jpg)
Britain says makers, not car owners liable for self-driving crashes
Britain will make the makers rather than the owners of self-driving cars legally liable for any crashes under a framework for developing autonomous vehicles (AV), the government said on Tuesday, in a move welcomed by insurers and AV startups.
King Charles said the government would bring forward an Automated Vehicles Bill as he set out the government's legislative agenda for the forthcoming parliamentary session, after one promised last year did not materialise.
"My ministers will introduce new legal frameworks to support the safe commercial development of emerging industries, such as self-driving vehicles," Charles said in a speech to lawmakers.
Tara Foley, head of UK and Ireland operations for global insurer AXA (AXAF.PA), said this would add "multiple benefits for the UK economy, road safety and green jobs".
"For insurers, it also provides crucial clarity for establishing liability for self driving," she added.
Root Teams Up with Admiral's Connect for Embedded Insurance Solutions
Root, the comprehensive digital insurance platform, has unveiled its inaugural strategic partnership in the UK with Connect, a subsidiary of leading insurer Admiral Group. The plan for the collaboration is to create an embedded insurance platform.
Connect, recognised for its API-first embedded insurance platform, simplifies the integration of insurance solutions into businesses’ offerings. Embedded insurance involves coverage developed by a carrier but distributed through non-insurance channels. It often complements other products or services and comes with a limited insured amount.
With the launch of its insurance offering through Connect, Root plans to provide customers with seamless finance and insurance protection for their products through a single, straightforward payment embedded at the point of sale.
The insurance sector is experiencing a swift uptick in the embrace of embedded insurance, with insurance decision-makers expecting a significant boost in revenue from such offerings, as reported by Chubb. AM Best, a credit rating agency, has previously stated the increased use of embedded insurance in developed markets serves as a means to enrich product offerings and seamlessly integrate risk protection into purchases.
Speaking about the partnership, Louw Hopley, Co-Founder at Root, said: “We’re delighted to partner with Admiral Pioneer to provide the API connectivity architecture behind their innovative Connect platform. The early signs are very positive and we’ve received good feedback so far.
“Connect really shows the power of APIs in enabling innovative partner distribution and means companies can not only offer their products and services, but also insurance cover for them, meaning a turn-key service to customers. It makes the journey simpler for customers, helping them to build resilience and security into their product purchases, and makes the processes more streamlined for businesses.”