News
Some bright spots, but P&C insurers face challenges and uncertainties
Insurance broker WTW predicts that catastrophe-exposed property business will see price increases of between +10% to +25% in 2024 and warns that while commercial lines price increases have started to stabilise, it’s a challenging and uncertain environment for P&C insurers heading into next year.
The inflationary landscape continues to impact commercial insurance prices, with WTW noting that almost all lines of coverage continue to show price rises mostly in the single digits, while the property market remains relatively hard.
WTW warns that at the upcoming renewals, certain clients and industry sectors still face spiralling premiums.
To combat this, WTW says that it has proactively “assisted clients disrupt the status quo by testing and implementing creative solutions to address the challenges faced by clients.”
This includes alternative and innovative solutions such as parametric options, integrated solutions, and alternative capital/MGA/MGU solutions.
“Additional innovative options include risk financing-led structured programs, along with captives, group captives, and rent-a-captive solutions to provide complementary and/or alternative solutions to traditional insurance programs,” says WTW.
Research
Every American Is Losing Money Due to Extreme Weather. Here’s How.
From shoe-melting 116-degree weather in Las Vegas to sudden flash floods in New York City and Chicago, extreme weather caused record-breaking damage in 2023. Media headlines often focus on the billions of dollars lost due to property damage from flooding and wildfires in Florida and California, but climate change is impacting all our wallets in unexpected ways.
Bankrate’s extreme weather survey found that 57 percent of Americans say they have incurred costs due to an extreme weather event over the past 10 years. While 43 percent of adults in the U.S. reported that they have not incurred any expenses due to extreme weather in the past decade, many consumers may be overlooking the hidden costs of extreme weather. Extreme weather events around the globe impact our food prices, insurance rates, energy bills and more.
Key facts about extreme weather costs
Adults with children bear the brunt of sudden expenses from extreme weather. Compared to childfree adults, adults with children under 18 incurred drastically more extreme weather-related costs in almost every category. For example, 10% reported evacuation expenses, and 17% reported medical expenses, while adults without children reported costs at 7% and 11%, respectively. (Bankrate extreme weather survey)
Most Americans anticipate the financial repercussions of extreme weather to continue. According to our data, 57% of U.S. adults expect that climate, extreme weather events and the environment will have a negative impact on their finances by 2033. (Bankrate extreme weather survey)
Gen X is less optimistic about the future than other generations. At 31%, more Gen Xers expect that climate, extreme weather and the environment will very negatively impact their personal finances over the next 10 years than any other generation. This is compared to 22% each of Boomers and Millennials and 20% of Gen Zers. (Bankrate extreme weather survey)
AI in Insurance
Insurity’s AI Solutions Improve Policyholder Experience by Cutting Down Support Time by 75%
Insurers leveraging Insurity’s AI tools and services benefit from higher policyholder satisfaction, enhanced operational efficiency, and increased profitability
Insurity, the leading provider of cloud software for insurance carriers, brokers, and MGAs, today announced that it has expanded its strength in AI-driven solutions for P&C insurance, thanks to its cloud-native AI software. Insurity has been a clear market leader in analytics and its investment in AI technologies builds on this core strength for the company.
Insurity is already the public cloud leader, with more than 330 of its customers deployed in AWS and Azure. These investments in cloud technologies enable Insurity’s software to quickly plug into the emerging AI technologies, APIs, and microservices that are easily accessed through public cloud technologies. Along with its own investments in analytics and AI, Insurity’s robust cloud infrastructure is breaking new ground in transforming the future of insurance operations.
“Our commitment to investing in cutting-edge technology significantly outpaces that of our competitors,” said Chris Lafond, Chief Executive Officer at Insurity. “Insurity’s AI investments are poised to transform P&C insurance. With our current AI tools, insurers can now deliver faster, more personalized service without sacrificing profitability, setting a new standard in customer experience. We are excited to keep bringing a wide array of AI-based tools and applications to P&C insurers.”
Claims
Fostering Transparency Between Insurers, Auto Repair Shops
In an ever-evolving landscape of increasing insurance premiums and rising costs attributed to costlier auto parts, aging vehicles, supply chain concerns and labor shortages, the ripple effect extends far beyond the desks of insurance companies. The intricate relationship between insurers and auto repair shops stands at the forefront of this dynamic, and its impact is keenly felt by drivers across the U.S.
The rising costs of doing business with collision repair shops have, in turn, escalated the expenses associated with diagnosing and repairing vehicles. As this cycle of costs spirals upward, it poses significant challenges to insurance policies, repair shop operations and, ultimately, the customer experience.
The automotive industry’s reliance on cutting-edge diagnostic software solutions presents a unique opportunity to enhance transparency, streamline operations and foster better communication between insurers and repair shops. When integrated with insurance software, these diagnostic solutions provide insurers with real-time visibility into the vehicle repair process.
This level of integration serves as the cornerstone for achieving more efficient claims handling, while also redefining the traditional paradigms of assessing vehicle damage and bolstering overall customer satisfaction.
Brian Herron is the president and CEO of Opus IVS
InsurTech/M&A/Finance💰/Collaboration
Alacrity Acquires South Carolina’s Cross Country Adjusting
Insurance Claims management service Alacrity Solutions Group, has acquired Cross Country Adjusting of Pageland, South Carolina.
CCA, founded in 2005, provides residential and commercial property claims adjusting through a national network of adjusters.
The transaction with CCA is Alacrity’s fifteenth acquisition since 2015.
Based in Fishers, Indiana, Alacrity provides property, auto, and casualty claims adjustment services; staffing; temporary housing; a managed repair network; and subrogation and recovery services to national and regional insurance companies, managing general agents, third party administrators, self-insured corporations, and the government sector.
BlackRock acquired a majority stake in Alacrity in 2023.
Financial terms of the transaction were not disclosed.
How Smart Communications and Guidewire are transforming P&C insurance
The collaboration between Smart Communications and Guidewire is rooted in a shared commitment to the property and casualty (P&C) insurance industry. Their partnership focuses on cloud innovation and customer success, aiming to revolutionize the insurance sector with cutting-edge technology
Smart Communications excels in providing modern enterprise Customer Communications Management (CCM) software through SmartCOMM and digital forms through SmartIQ™. Guidewire, on the other hand, offers an exceptional insurance operations suite with Guidewire Cloud, known for its best-in-class services. Together, they facilitate insurers in optimizing policyholder experiences and agent engagements.
This alliance has resulted in a comprehensive solution that combines the strengths of both companies. They focus on cloud-first strategies, integrating across enterprises to manage complexities and compliance. Professional services teams from both sides work diligently to ensure seamless implementation for their customers.
The partnership has led to a robust tech ecosystem, offering mutual customers access to the Guidewire and Smart Communications Marketplaces. Here, they can find pre-built accelerators and integrations with other leading customer experience technologies and applications. This collaboration reduces internal silos and enhances customer understanding.
People
Justin Jude to Succeed Dominick Zarcone as LKQ President and CEO Next Year
Company announces executive leadership succession plan.
LKQ Corporation (NASDAQ: LKQ) today announced that Dominick Zarcone, current President and Chief Executive Officer, has informed the Company’s Board of Directors of his intention to retire from his role effective June 30, 2024. The Board has unanimously selected Justin Jude, the Company’s current Senior Vice President and President of its Wholesale – North America segment, to succeed Zarcone as LKQ’s next President and CEO.
In the interim, the Board has appointed Jude to serve as LKQ’s Executive Vice President and Chief Operating Officer from January 1 until he officially succeeds Zarcone as President and CEO on July 1, 2024. It is anticipated that Zarcone and Jude will be included on the slate of nominees for election as members of the LKQ Board of Directors at the Company’s Annual Meeting of Stockholders in May 2024.
Jude has been an LKQ team member since 2004. During his tenure at LKQ, he has held various leadership roles across the Company’s North American Sales, Supply Chain, and Information Systems departments. From June 2014 to July 2015, he served as President of LKQ’s Specialty segment. Since July 2015, he has served as President of LKQ’s Wholesale – North America segment. In this role, he has produced remarkable financial results and developed an incredible leadership team. In addition, currently serves on the board of directors of MEKO in Sweden.
Canada
Crash Detection: Real Transformation For Auto Claims – No, Really
The word “transformation” has been severely overused in relation to the auto insurance claims process. That is not the case here. It is our opinion that the sophisticated Crash Detection defined here will indeed be transformative to auto claims in multiple senses of that word.
Sfara, a global telematics technology provider who launched the first mobile phone based crash detection in 2014, has introduced the World’s First All-Speed Crash Detection, Including ZeroMotion. These capabilities solve both of the above technical issues. Low speed accident detection for claims is more valuable than many may think. Sfara research reveals that 70% of crashes occur under 25 mph as do 48% of crashes involving injuries. And 11% of fatalities occur when a vehicle is not moving at all. Further, this solution captures the additional 70% of auto crashes that other solutions miss by solely detecting high speed accidents.
Call To Action
With the arrival of true Crash Detection, auto insurers should learn, test, pilot and implement this technology as one of their highest priorities. Their stakeholders and partners will be most appreciative and their customers will reward them with greater loyalty.
Crash Detection will transform auto claims and become table stakes and it will be no accident – and that is definitely not hyperbole.
Stephen Applebaum & Alan Demers - published by Insurance-Canada.ca - Where Insurance & Technology Meet
Aviva to acquire Optiom for CA$170 million | Insurance Business Canada
Transaction projected to bolster specialty lines and distribution in the country
Aviva has officially announced its acquisition of Optiom O2 Holdings Inc (Optiom) from Novacap and other minority shareholders.
The deal, valued at approximately £100 million (around CA$170 million), sees Aviva taking over a prominent managing general agent (MGA) in Canada, known for its vehicle replacement insurance offerings and flexible payment options for customers.
According to a news release, the deal marks a significant expansion of Aviva’s capital-light business ventures, which already constitute over half of the company’s portfolio. Specifically, the deal enhances Aviva Canada’s presence in a profitable niche of the Canadian insurance market.
Aviva, having previously been an underwriting capacity provider for Optiom, views the deal as an opportunity to deepen its involvement in a lucrative line of business and to secure a stable and growing source of distribution income. The acquisition also aligns with Aviva’s capital management framework, which remains consistent with the company’s strategy, the firm stated. Aviva continues to focus on delivering regular and sustainable returns of surplus capital.
PwC cuts 2% of workforce in Canada amid slowing economy
Layoffs come as country enters a technical recession
PricewaterhouseCoopers, the global accounting firm, has cut its workforce in Canada by 2% as sustained high interest rates push the nation’s economy toward a recession.
A spokeswoman for PwC confirmed the reduction, reported earlier by the Globe and Mail newspaper, without giving further details of the layoffs. With the company’s website saying it employs about 7,700 people in Canada, the cut would amount to about 150 people.
The Canadian economy looks to have entered a technical recession this year as the Bank of Canada holds interest rates at multi-decade highs to combat inflation.
EMEA
Admiral out, Allianz in to snap up online insurer?
Conditions not met for original deal to complete
Insurance group Allianz has reportedly offered to acquire the part of online insurer Luko that Welsh financial services provider Admiral Group is no longer purchasing.
Admiral, the only FTSE 100 company from Wales, previously announced that it was snapping up the insurtech to accelerate the growth of Admiral’s footprint in France. As noted at the time, Admiral was not acquiring Luko’s operations in Germany and Spain. Last month, neo-insurer Getsafe agreed to buy the entire German customer base of Luko Insurance.
Now it’s been confirmed that Admiral is not interested anymore.
“Admiral had intended to purchase Luko’s French household business (Luko Cover),” the UK enterprise told TechCrunch. “Unfortunately, they were unable to meet the conditions set out in the transaction documents and the parties were unable to reach an agreement to enable this deal to complete.”
It was reported that one of the reasons for Admiral’s U-turn was the €2.3 million discrepancy between the premiums collected on behalf of third-party insurers and those collected by Luko Cover. This was discovered during due diligence, alongside a sum apparently owed by the insurtech in the form of tax contingencies.
Making the most of the autonomous revolution
The road ahead has been cleared for autonomous driving in the UK, with the government committed to a ‘transport revolution’ in the coming years.
In this contributed feature, ARC360 partner Repairify considers the implications for automotive repair sector, and what opportunities self-driving may present.
“The automated vehicles bill announced in the King’s Speech purports to deliver a ‘transport revolution’ by enabling the safe implementation of self-driving vehicles and by securing the UK’s position as a ‘global leader’ in this high-tech arena, creating one of the world’s ‘most comprehensive legal frameworks’ for self-driving vehicles, underpinned by safety.
As the growth of self-driving cars gathers pace, so too will the importance of calibration, presenting a significant business opportunity for workshops to generate a new revenue stream by working on vehicles equipped with ADAS features which require calibrating and or programming to the vehicle.
2024 PREDICTIONS
Goldman Sachs channels Taylor Swift in 2024 markets outlook: 'All you had to do was stay [invested]'
A Goldman Sachs Group strategist has some advice for investors thinking about tweaking their portfolios in 2024: Maybe try listening to Taylor Swift instead.
In his 2024 investment outlook released Wednesday, Goldman’s Chief U.S. Equity Strategist David Kostin channeled America’s favorite pop star, advising Goldman clients that “all you had to do was stay — invested” to reap more market gains next year.
For those who may be unfamiliar with Swift’s oeuvre, that’s a reference to “All You Had To Do Was Stay,” a popular track from Swift’s “1989” album.
As the title of Kostin’s report implies, the analyst and his team expect the S&P 500 index SPX to continue to climb in 2024, setting a year-end target of 4,700 for the index. That would be a gain of about 5% from Tuesday’s close (6% if dividends are included). By comparison, the S&P 500 is up 17.1% year-to-date in 2023, largely thanks to strong performance from a handful of the most valuable companies included in the index