News
![Senate committee investigates Florida's insurer of last resort](https://dxj7eshgz03ln.cloudfront.net/production/link/image/910871/original_ratio_extra_large_c5c15e25-2efb-4487-8475-66d278f7ce2f.jpg)
Senate committee investigates Florida's insurer of last resort
The US Senate Budget Committee has initiated an investigation into the financial viability of Citizens Property Insurance Corporation, known as Florida’s insurer of last resort.
In a letter addressed to Governor Ron DeSantis and other top Florida officials, Committee Chair Sheldon Whitehouse requested documents outlining Citizens’ plans to “address increased underwriting losses from climate-related extreme weather events.”
Whitehouse shared the committee’s growing concerns about Florida’s climate exposure and Citizens’ expanding market share, which “more than doubled since 2020” to around 18%. He also drew attention to state law that allows Citizens to impose special assessments on all policyholders, potentially resulting in substantial spikes in insurance costs.
The letter went on to state that Florida might turn to the federal government for a bailout in the event of Citizens’ insolvency, adding that such a request could put the budget and American taxpayers “at substantial risk.”
Whitehouse pointed to recent reports by Swiss Re and Munich Re suggesting that Citizens could see losses ranging from $36 billion to $162 billion, depending on the severity of future catastrophes.
“Florida is on the front line of the climate crisis, and it could take just one major hurricane to render Citizens insolvent - a fact the current governor has, himself, admitted,” Whitehouse told CNN, referring to a statement made by DeSantis earlier this year.
“As most people know, Citizens has not been solvent,” DeSantis had said to the press last March. “If you did have a major, major hurricane hit with a lot of Citizens property holders, it would not have enough to pay out.”
Banks more hesitant to lend in areas with inaccurate flood maps
Climate change poses many problems for society as a whole, and for commercial real estate (CRE). Properties can face flooding or wildfires or heavy damage from winds. A building can be cut off from everything else. All the time while increasingly cut off new business lines in states that have been particularly hard hit by disasters.
At a time when insurance can’t be counted on as the rescue of last resort, lenders must consider the risk they could take on. The Federal Reserve Bank of New York emphasized this point in a recent blog post.
The observation started with a previous post about potential inaccuracies in flood maps. It wasn’t a nationally representative examination, but one still worth consideration because the issues aren’t only restricted to one part of the country.
The accuracy of federal flood maps is important for their part in setting insurance requirements for mortgage borrowers. But, as the NY Fed pointed out, there’s a mismatch. The maps are static, periodically updated by the Federal Emergency Management Agency. The conditions in any given area covered by a map aren’t static.
“On the one hand, the climate continues to change, and the risks posed by a rising sea level, hurricanes, or even summer rains are constantly evolving,” they wrote. “On the other hand, many communities proactively manage flood risks through the construction of dams, floodways, or elevated dwellings to reduce the chance of catastrophic damage.”
Erik Sherman, Freelance Writer and Photographer
Commentary/Opinion
Survival of the Fastest–Strategy 2: Auto Quoting that Saves Customers and Insurers Time and Money
In this, the second article of a four-part series, see how speed and innovation can widen your sales funnel and often beat the ROI of a traditional “expense-optimized” auto quoting process.
A typical auto insurance quote takes 7 to 15 minutes to complete—a long time in a world where online retailers empower one-click purchases. How hard do your customers have to work for a quote?
If your applicants repeatedly enter or confirm information while their patience dwindles, they may be stuck in a quote flow that prioritizes cost savings for the insurer. This approach, widespread in the industry, stages expenditures on third-party data according to a prospect’s progress toward binding a policy. But this outdated process may lessen the chances of the very outcome you’re seeking: A completed sale.
It’s possible to lose sight of the customer experience (CX) in the pursuit of cutting expenses. But CX, scale, and efficiency are the metrics of forward-thinking insurance leaders.
It turns out that speed and innovation can often beat the return on investment of a traditional expense-optimized process—in plain, hard numbers. That’s even before accounting for the hidden costs of handling applications that never make it to quote or bind or the poor word of mouth that may follow a subpar quoting experience.
David Ayers leads technology initiatives and insurance use-case development for Verisk’s LightSpeed platform
![Millions of US homes at risk of losing their insurance because of one major issue: ‘There is a reckoning on the horizon’](https://dxj7eshgz03ln.cloudfront.net/production/link/image/909384/original_ratio_extra_large_c587fedf-ef07-4f8b-b0e0-e6c76dad7734.jpeg)
Millions of US homes at risk of losing their insurance because of one major issue: ‘There is a reckoning on the horizon’
With the frequency and intensity of extreme weather events increasing across the United States, millions of homeowners in the most vulnerable parts of the nation are in danger of losing their insurance.
What’s happening
Per a report from First Street Foundation, there are 39 million homes insured via private companies. However, the threat of natural disasters has started a chain of events in the insurance industry that could jeopardize the financial security of those homeowners.
The study from the nonprofit climate research firm noted that because each state regulates its private insurance market and can cap the rates of policies, premiums don’t necessarily reflect the risk involved for homes in regions susceptible to wildfires, hurricanes, and floods.
As a result, major insurance companies like Allstate and Nationwide are no longer finding it profitable to remain in those high-danger areas and have left current and potential customers scrambling for alternatives.
For example, Florida has already seen four insurance companies leave within the last year, while State Farm is no longer accepting new applicants in California.
Kaiyo Funaki, Writer/Editor at The Cool Down
Research
Auto Insurer Prospects Improving Amid Price Hikes and Moderating Loss Severity
Fitch Ratings finds improvements vary widely across companies as many still report underwriting losses
The U.S. personal auto insurer segment is seeing larger pricing actions take effect, with moderating claims severity setting the stage for segment improvement in 2024, based on personal auto segment public filings for the first nine months of 2023, Fitch Ratings says.
However, the pace of underwriting improvement varies widely across companies, with many still reporting material underwriting losses, which will continue into 2024. Personal auto insurers have endured profit difficulties for the last two years as carriers faced heightened challenges in responding to adverse loss trends tied to higher costs from inflation, supply chain shortages and tighter labor markets.
For the group of nine insurers that disclose personal auto results in generally accepted accounting principles (GAAP) supplemental filings, aggregate personal auto written premiums were up 10.4% year-to-date through 3Q23 from the prior year, and the segment combined ratio (CR) moved down to 98.5% from 103.6% for the same period.
![Increase in Average Car Insurance Premiums by State: 2022-2023](https://dxj7eshgz03ln.cloudfront.net/production/textual/image/911377/original_ratio_extra_large_fb099835-4310-4b6f-97c5-6490227ed9b8.jpg)
Increase in Average Car Insurance Premiums by State: 2022-2023
Car insurance premiums have surged 17% nationally and in Florida have rocketed up 88% this year 📈
Some of the drivers... — Higher cost of cars — Increase in fraudulent insurance claims — Higher labor/parts replacement costs
[From today's Car Dealership Guy (CDG( Newsletter — Get it free HERE
Thanks to Steve Greenfield and Automotive Ventures Weekly Intel report for flagging
InsurTech/M&A/Finance💰/Collaboration
Navigating the Future: The Latest Trends in Insurtech
In the dynamic world of Insurtech, AI and machine learning are no longer just buzzwords; they’re game-changers.
We’re seeing AI revolutionize everything from risk assessment to customer service. For instance, complex algorithms can now predict risks with incredible accuracy, transforming how policies are priced. Chatbots, powered by AI, are redefining customer interactions, offering personalized advice 24/7. This isn’t just efficiency; it’s a paradigm shift in user experience.
The Rise of Telematics and IoT
Telematics and the Internet of Things (IoT) are taking the driver’s seat, especially in auto insurance. By harnessing real-time data from vehicles and smart devices, insurers can offer usage-based policies that are fairer and more tailored to individual driving habits. This isn’t just about tracking mileage or driving behavior; it’s about creating a connected ecosystem that rewards safe driving and helps prevent accidents before they happen.
Blockchain for Transparency and Trust
Blockchain in Insurtech is like a trust machine. It’s making waves by bringing transparency and security to transactions. Think smart contracts that automatically execute when conditions are met, eliminating delays and reducing fraud. This technology is not just for cryptocurrency enthusiasts; it’s a building block for a new era of trustworthy, efficient insurance processes.
Daniel Rombach, Tech enthusiast, music lover, and art and design enthusiast. Always seeking new ways to explore my interests and engage with the world - published on Medium
![Insurtechs develop partnership approach](https://dxj7eshgz03ln.cloudfront.net/production/link/image/911199/original_ratio_extra_large_d08a3df9-d7ef-42c8-80cd-78f5b991fce3.jpg)
Insurtechs develop partnership approach
Collaboration has replaced revolution as the mantra in the insurtech sector as established property/casualty insurers increasingly adopt digital processes and interactions in their operations.
Metrics to measure the greater use and deployment of technology have been developed, and established technology companies are adding capabilities and staff to meet growing demand. Managing technology adoption by companies and their employees, allowing employees to form new working habits around the emerging technologies, continues to be a component of the technological evolution of the insurance industry, experts say.
They were speaking during meetings at the annual Insuretech Connect conference in Las Vegas, where thousands of insurance and technology experts met Oct. 30-Nov. 2.
“This conference this year is a lot more about partnering with incumbents, technology startups partnering with incumbents,” rather than being here to “disrupt,” said Bryan Davis, Atlanta-based executive vice president and head of VIU by Hub, broker Hub International Ltd.'s digital platform for personal lines.
Technology has already penetrated the insurance sector, he said. When VIU by Hub launched in 2022, the broker estimated the number of consumers available for digital interaction was “probably in the 35% to 45% range” but now “we’re seeing that up in the 65% range,” he said. property/casualty insurers increasingly adopt digital processes and interactions in their operations.
AI in Insurance
MAPFRE CEO: AI Regulation Needed | AI: At the Center of CLaiMS
FROM INSURANCE INNOVATION REPORTER NEWSLETTER
FEATURED STORY
The anniversary of ChatGPT was anticipated by a day or two in MAPFRE CEO Antonio Huertas Mejías’ keynote address to the Geneva Association’s 50th annual Summit, held this year in Zurich on Nov. 28 and 29.
Antonio Huertas’ keynote address stressed the need for the insurance industry to pursue prudent and ethical innovation related to AI, cyber risk and climate related risks
READ MORE
COMMENTARY
“Exactly one year ago today, ChatGPT was officially introduced, sending the business world, pundits and laypersons alike into a frenzy.” Thus begins our Commentary piece today, authored by industry experts Stephen Applebaum and Alan Demers. AI: At the Center of CLaiMS
The open challenge to insurers and AI solution providers is coming together to develop meaningful business cases including loss avoidance, mitigation and payout accuracy beyond efficiency gain.
AI for Claims
Conventional wisdom is that AI lacks human emotion and empathy which are essential, especially among insurance customer and other people interactions. Claims might be the most human emotion demanding so the AI use-cases talked about today tend to call for AI tools aiding claim adjusters rather than doing the whole job. However, it is important to state that all of this chatter is still early-on and short-term minded. At the end of the day, ROI still dominates decision making and given the highly competitive P&C Insurance market fraught with current financial pressures, the balance between deployment of tools and automation of jobs will be put to a new and more rigorous tests.
Anthony O'Donnell, Executive Editor, Insurance Innovation Reporter
![[Ed. Note: Recommended] AI in Insurtech | December Edition of InsurTech Digital](https://dxj7eshgz03ln.cloudfront.net/production/link/image/910897/original_ratio_extra_large_4a2a2363-672e-47a7-882f-fd39c417f560.jpg)
[Ed. Note: Recommended] AI in Insurtech | December Edition of InsurTech Digital
Welcome to the December edition of InsurTech Digital.
This month we take a look at earth observation and imaging in insurance underwriting, the use of AI in insurtech, the top 10 insurtech incubators, and much more.
As well as exclusive interviews with Wolt and Apiture.
People
![Markel announces Bob Cox, President and COO, will leave the company at the end of 2023; company provides update on leadership structure](https://dxj7eshgz03ln.cloudfront.net/production/link/image/911036/original_ratio_extra_large_5b1227a5-fb00-4d31-8b58-7a0153f5856c.jpg)
Markel announces Bob Cox, President and COO, will leave the company at the end of 2023; company provides update on leadership structure
Markel, the insurance operations within Markel Group Inc. (NYSE: MKL), announced today that Bob Cox, President and Chief Operating Officer, Global Insurance Operations, will be leaving his role December 31, after five years leading successful, profitable growth strategies for the company's global insurance operations.
"Bob joined us five years ago bringing his more than 35 years of insurance leadership experience to lead efforts on accelerating our strategies to deliver the best value and services for our customers across the globe," said Jeremy Noble, President. "He has built a strong foundation to position us for long-term, profitable growth, including evolving our products, broadening our distribution channels, and enhancing our global operations. We are grateful for his leadership and contributions to Markel."
Cox joined Markel in 2018 to oversee Markel's global insurance operations—its Markel Specialty and Markel International divisions. Prior to joining Markel, he held executive leadership insurance positions, including extensive experience in all areas of specialty and commercial property and casualty insurance.
"I am incredibly proud to be part of the Markel team and the collective progress we have made in offering our customers and partners superior service and solutions," said Cox. "I have tremendous admiration for the Markel team, and I know they will continue to grow and innovate in the pursuit of long-term success."
With Cox's departure, its Markel Specialty and International insurance divisions will report directly to Noble. Simon Wilson, President Markel International, Alex Martin, President, Markel Specialty, and Bryan Sanders, Chairman, Markel Specialty, will report to Noble effective December 31.
2024 PREDICTIONS
Industry Trends to Exploit for 2024
Agency owners must watch and learn about major trends when they start. Following are key trends that insurance agencies should be tracking for 2024.
- Insurtech
- Market Conditions
- 2024 M&A Activity and Pricing
- Peer Acquisitions
- Tax Law Changes Likely
- Group Benefits and Health Insurance
Catherine Oak, founder of the consulting firm, Oak & Associates