News
US insurance sector to lose around 400,000 workers by 2026
The insurance industry in the United States is facing a significant challenge due to a shortage of skilled workers, with projections by the US Bureau of Labor Statistics suggesting that the industry could lose around 400,000 workers through attrition by 2026.
This issue is compounded by an aging workforce, with many employees nearing retirement. Consulting firm RSM highlights this demographic shift, which occurs against a backdrop of rapid technological change, regulatory shifts, and evolving customer preferences.
This talent gap underscores the importance of effective succession planning to ensure continuity in leadership roles and other critical positions. The value of experience in the insurance sector means that any gap in planning could harm customer trust and impact long-term revenue.
The industry faces multiple challenges, including knowledge and skills gaps, a broader talent shortage, and the need to adopt new technologies. If unaddressed, these could lead to competitive disadvantages, operational inefficiencies, increased regulatory risks, and difficulties in retaining customers, potentially harming the sustainability of businesses.
Marlene Dailey Financial Services Senior Analyst and Insurance Consulting Director at RSM
TransUnion: Auto insurance shopping up 12% YOY
Auto insurance shopping was up 12% year-over-year during Q3, TransUnion said in its latest quarterly report.
Released Tuesday, TransUnion’s Insurance Personal Lines Trends and Perspectives Report found auto insurance rates remained flat compared to this year’s Q2, and that the search for lower premiums remained the top reason for customer shopping. Separately, Triple-I has forecasted that premiums will rise 10.4% this year.
“In addition to raising rates, insurers are employing other measures to improve their profitability, like suspending distribution and toughening underwriting standards,” said Stothard Deal, vice president of strategic planning for TransUnion’s insurance business. “These efforts have likely motivated consumers to expand their shopping activity with new insurers.”
The report found that new vehicle sales also played into the year-over-increase, saying that a strong labor market coupled with return-to-work policies likely motivated people to invest in new vehicles, thus necessitating the need to shop for insurance.
The battle over right to repair is a fight over your car’s data
The question of whether your local mechanic can tap into your car’s data to diagnose and repair spans issues of property rights, trade secrets, cybersecurity, data privacy, and consumer rights.
Cars are no longer just a means of transportation. They have become rolling hubs of data communication. Modern vehicles regularly transmit information wirelessly to their manufacturers.
However, as cars grow “smarter,” the right to repair them is under siege.
As legal scholars, we find that the question of whether you and your local mechanic can tap into your car’s data to diagnose and repair spans issues of property rights, trade secrets, cybersecurity, data privacy, and consumer rights. Policymakers are forced to navigate this complex legal landscape and ideally are aiming for a balanced approach that upholds the right to repair, while also ensuring the safety and privacy of consumers.
UNDERSTANDING TELEMATICS AND RIGHT TO REPAIR
Until recently, repairing a car involved connecting to its standard onboard diagnostics port to retrieve diagnostic data. The ability for independent repair shops—not just those authorized by the manufacturer—to access this information was protected by a state law in Massachusetts, approved by voters on November 6, 2012, and by a nationwide memorandum of understanding between major car manufacturers and the repair industry signed on January 15, 2014.
However, with the rise of telematics systems, which combine computing with telecommunications, these dynamics are shifting. Unlike the standardized onboard diagnostics ports, telematics systems vary across car manufacturers. These systems are often protected by digital locks, and circumventing these locks could be considered a violation of copyright law. The telematics systems also encrypt the diagnostic data before transmitting it to the manufacturer.
This reduces the accessibility of telematics information, potentially locking out independent repair shops and jeopardizing consumer choice—a lack of choice that can lead to increased costs for consumers.
Commentary/Opinion
Road to profitability: Adapting to radical changes in U.S. insurance
Change is always risky, but complacency during times of dynamic change is a larger risk to any organization. The winds of uncertainty are swirling around us with some hardening markets across the insurance landscape. The opportunity for change is right in front of us. Digital technology is accelerating change for the better and utilizing that technology to your advantage means taking new risks but reaping the rewards.
Our team talks a lot about challenging the status quo and constant improvement – thinking differently and challenging the insurance industry to think differently. We recognize it can be hard to take that first step, but there is never a perfect moment to embrace change. At a certain point, you have to launch and learn. What you will find is that the learning itself is what brings about real innovation. The sooner you start, the better positioned you will be heading into 2024 and beyond.
Bill Madison is chief executive officer of the insurance segment of LexisNexis Risk Solutions
Crash Detection Will Transform Auto Claims – No, Really
Too many headlines contain wild hyperbole meant to grab readers’ attention while conveying the enthusiasm of the author. In particular, the word “transformation” has been severely overused and often misplaced, particularly when applied to the auto insurance claims process. This is NOT the case here!
It is our opinion, as experts in auto physical damage claims information technology, that the more sophisticated crash detection as defined here will indeed be transformative to auto claims in multiple ways.
But first it is critical to understand the relationships among various telematics programs and crash detection technologies.
Stephen Applebaum and Alan Demers, as published in Insurance Thought Leadership
Artificial Intelligence Not Main Cause of Recent Insurance Layoffs: AM Best
AM Best does not believe artificial intelligence is the main cause of recent insurance industry layoffs.
In commentary released today, the credit rating agency wrote that “it is too soon to cite AI as the leading cause of the job losses, at least at this nascent stage.” Instead, AM Best said the layoffs likely fall into “the cyclical, rather than the structural, category.”
The rating agency explained that structural unemployment refers to jobs that are made redundant because of systemic changes and the adoption of technology, or a misalignment between business needs and employee skills. Cyclical unemployment refers to employment fluctuations driven by the business cycle, “which seems to be the case in the insurance industry,” AM Best said.
This insight comes after Liberty Mutual, American Family and GEICO announced staff reductions in recent months. AM Best wrote that personal lines are most affected by the latest layoffs, as loss ratios and underwriting margins are pressured by loss cost inflation, reinsurance capacity and pricing and rising climate risk.
Self-Driving Carmakers to See Increased Liability for Crashes, Report
The rise of autonomous vehicles (AVs) is set to change how the auto insurance industry operates, according to a new MarketWatch report.
According to the report, despite the rapid advancements in AV design and technology, self-driving cars aren’t yet ready to be rolled out for mainstream use, with the report authors saying Americans are still “at least a decade” away from fully autonomous vehicles. Regardless of the anticipated slow pace of change, issues are already arising with how AVs are monitored and managed on the roads. One problem is that innovation is outpacing the rate of industry regulation leaving, governing agencies struggling to update legislation around AV use and requirements.
With several incidents involving self-driving cars already seen from companies including Tesla and Cruise, the need to have regulations in place around liability is increasingly pressing. One of the biggest changes predicted in the report is a shift in liability from the driver to the automaker or software company behind the AV technology.
“If a driverless car hits another vehicle or a pedestrian, determining who’s at fault gets complicated,” the report said. “The traditional model of car insurance will likely need to be adjusted to hold manufacturers or software developers liable for collisions caused by autonomous vehicles.
“The industry will also need to develop coverage for newer risks, like those related to cybersecurity flaws and faulty GPS systems.” Tilla Gode, head of risk and insurance at Waymo, said insurance for autonomous vehicles isn’t any different for human-driven cars.
“Just like any commercial entity, we have insurance coverage in place that covers the Waymo driver over the course of the driving task,” said Gode. “Essentially, there’s a shift from human being drivers to the autonomous system being the driver — Waymo is the driver.”
InsurTech/M&A/Finance💰/Collaboration
Roost announces Relationship with USAA, Offering Home Security with Multi-Peril Protection & Premium Discount to Members
Roost, the industry leader in property telematics, is excited to announce a new relationship with one of the most respected U.S. insurers, USAA. This collaboration heralds a new era of comprehensive home security solutions for USAA members, which is comprised of the military community and their families, combining Roost's cutting edge home security and water leak/freeze solution with the company’s unwavering commitment to member service and safety.
USAA is offering the complete Roost Security360 Solution with 24/7 professional monitoring to its more than 13 million members across the nation. The solution addresses top causes of loss facing homeowners today: theft, water and fire. This innovative, nine-piece system offers a holistic approach to home security, ensuring that members receive protection for their homes even when they are away.
Roost Security360 and USAA will provide access to a professionally monitored home security system with a homeowners insurance premium discount. This new offering ensures peace of mind and safeguard of member’s homes and loved ones. The system includes a proactive water leak detection solution, which may provide cost savings while mitigating the inconveniences and disruptions associated with filing an insurance claim.
“USAA is proud to work with Roost to offer our members an advanced and affordable home security system like Roost Security360 Solution,” said Ryan Rist, AVP of Innovation at USAA. “By encouraging the use of smart home devices, we’re not just insuring homes, we’re helping to prevent losses. Our mission has always been to serve those who serve, and together with Roost, we’re making the connected home a safer and smarter place.”
One Inc and J.P. Morgan Payments Team Up to Elevate Property and Casualty Insurance Claims Payments
One Inc and J.P. Morgan Payments announced today they are working together – enabling insurance carriers to leverage J.P. Morgan’s comprehensive liquidity and payments capabilities as part of One Inc’s digital claim payouts platform.
With this partnership, insurance providers can now tap into expanded liquidity and payments capabilities, simplifying the claims experience for customers.
One Inc, a leading digital payments network dedicated to serving the insurance sector, and J.P. Morgan Payments announced today they are working together – enabling insurance carriers to leverage J.P. Morgan’s comprehensive liquidity and payments capabilities as part of One Inc’s digital claim payouts platform, further digitizing and deepening the claims experience.
This partnership merges both organizations' deep-rooted insurance industry expertise, positioning insurers to offer comprehensive, end-to-end solutions for a broad spectrum of Property and Casualty (P&C) insurance claims payment needs.
While checks have traditionally dominated insurance claim payouts, claimants today expect more instant, digital payment options. One Inc’s ClaimsPay® solution, named Best in Class P&C Nonbank Disbursements Platforms by Datos Insights, aims to expand claims payment capabilities for insurers while helping insurers accelerate revenue realization, reduce operational costs through digitization, and improve customer satisfaction.
"We are excited to embark on this journey with J.P. Morgan, a financial institution renowned for its commitment to innovation and client service," said Ian Drysdale, CEO at One Inc. "This strategic partnership underscores our shared vision of providing cutting-edge solutions that address the evolving needs of the P&C insurance industry. Together, we will set new standards for modern and often instant insurance claims payments, benefitting insurers and policyholders alike."
Amwins completes $1bn recapitalization transaction - Reinsurance News
Amwins, an independent wholesale distributor of specialty insurance products, has completed a significant $1 billion recapitalization transaction with its existing shareholder group.
According to the firm, Dragoneer Investment Group, Genstar Capital, SkyKnight Capital, L.P., and employee shareholders (together, the investors), purchased $1 billion in equity from more than 375 Amwins employee shareholders and Public Sector Pension Investment Board (PSP). PSP also rolled 80% of their equity position forward.
Amwins noted that after the completion of the recapitalization transaction, the employee shareholder group will remain the largest single ownership group with approximately 40% ownership of Amwins.
Research
Groundbreaking Global EV Repair Cost Research Unveils 29% Higher Overall EV vs. ICE Repair Costs in Side-by-side Model Comparison
Groundbreaking Global EV Repair Cost Research Unveils 29% Higher Overall EV vs. ICE Repair Costs in Side-by-side Model Comparison
Data Provides Opportunities for Greater Industry Learnings and Innovation as Electrification of Auto Industry Continues to Evolve
Solera Holdings, LLC, the global leader in vehicle lifecycle management, today announced groundbreaking global research looking at repair cost trends of electric vehicles (EVs) in comparison to internal combustion engine (ICE) repair costs.
“Collision and property damage claim severity for electric vehicles is higher than their conventional counterparts, but only the property damage increase is significant. Electric vehicles were also associated with lower claim frequencies under all applicable coverages.”
The comparative study considered aggregate international analytics across 20 countries; Solera’s vast global claims database aggregates and normalizes raw claims data to provide insights into important performance metrics such as claim cost behaviors and replaced part composition. Approximately 92,000 raw data points (repair estimates) were examined, between January 2021 through August 2023, comparing findings of a Hyundai Kona EV with its ICE model counterpart.
“Recognized by the industry for its exceptional innovations, Hyundai offers consumers both ICE and EV options with some of its models. The Hyundai Kona, which received the 2023 Subcompact SUV, Editor's Choice Awards, Car and Driver, U.S., is one such option making it an ideal example for Solera’s study,” explained Bill Brower, Solera’s Vice President Global Industry Relations and North America Claims Sales.
Highlights of Solera’s EV vs. ICE Comparative Repair Cost Study Include:
- Overall, EV repair costs are 29% higher than ICE repair costs, globally, on average.
- EV parts costs are 48% higher, on average, per estimate. Parts included high-voltage battery, battery-control unit, cabling, battery box, and system battery charger.
- Representing 24% of total parts cost spend (normalized), EV battery “system” repair costs are the highest part cost item(s) ($8.89M) compared with headlights ($2.88M).
- Driver airbag “systems” were replaced 8% more frequently on EVs.
- Rear bumper absorbers were replaced 1,390% more frequently on EVs.
- Rear bumper reinforcements were replaced 14% more frequently on EVs.
EMEA
Paul Stacy: Market conditions 'perfect' for better application of telematics data
’Without these vital ingredients, usage-based insurance propositions are unlikely to deliver reduced claims frequency and improved underwriting performances,’ says chief executive
Stories in the media, both here at Insurance Times and in the wider national press, have made much of rising motor premiums for UK policyholders.
Earlier this week (13 November 2023), for example, insurance fleet management software provider Trakm8 published the findings of its national driver survey, noting that 28% of motorists thought rising costs were making motor insurance unaffordable.
The week before that (9 November 2023), pricing specialist MGA Pearson Ham published figures showing that motor premiums had risen by 48% in the 12 months up to October 2023, with the average quote reaching £577.
The ABI even called on the government to reduce the rate of insurance premium tax levied on the sector so that savings could be passed on to drivers, with Mervyn Skeet, the association’s director of general insurance policy, saying that this could provide put-upon drivers “with an immediate reduction in costs”.
Motor insurance is a compulsory cover for UK drivers, meaning that these customers are required to purchase cover and cannot escape price rises by simply cancelling their policy – which would be irresponsible even were it an option.
Telematics has often been floated as a partial solution to this issue, allowing insurers to extract efficiency gains from a greater understanding of their policyholders and pass savings onto those customers who present the best risks.
Indeed, Paul Stacy, chief executive at telematics solution provider IMS, believes that these pricing headwinds “are perfect market conditions to justify the operational spend necessary to turn telematics data into lower loss ratios for insurers and lower premiums for customers”.
Speaking exclusively to Insurance Times, he explains: ”Whilst many insurers and brokers have made an investment in harnessing telematics technology, many have underinvested in both the tools by which to effect behavioural change in their customers and in building appropriate operational processes for risk management."