Research
State Farm maintains lead in homeowners insurance market
It is besting its major competitors for pole market share position.
State Farm has maintained its dominance in the US homeowners insurance space, holding firm on its position as the leading market share holder in the third quarter despite grappling with its highest loss ratio in almost six years.
According to analysis by S&P Global Market Intelligence, State Farm saw a 9.6% year-over-year surge in direct written premiums to $7.52 billion during the period. This allowed it to secure an 18% market share, besting the country’s other top insurers.
Trailing behind State Farm is Allstate, which secured a 9% market share. USAA and Liberty Mutual claimed the third and fourth positions, each commanding approximately 7% of the market with premiums of $3.02 billion and $2.94 billion, respectively.
Other insurers in the top 10 include Farmers Insurance (6% market share), Travelers (5%), American Family Insurance (5%), Nationwide (3%), Chubb (2%), and Citizens Property Insurance Corporation (2%).
As Premiums Increase, Nearly 70% of Americans Are Reviewing Their Insurance Policies
Extreme natural disasters. Daunting supply chain challenges. Surging inflation. Runaway litigation. Soaring reinsurance costs.
These compounding challenges are profoundly affecting Americans' insurance premiums in unprecedented ways. According to a new survey released today by Trusted Choice—the national consumer brand representing the members of the Independent Insurance Agents & Brokers of America (the Big “I”)—a full one-third of Americans (32.8%) say they are unaware that external economic factors are affecting insurance rates.
Over two-thirds (69.3%) have put their insurance policies under review, with nearly half (45.8%) citing rising premiums as the catalyst.
“Consumers are grappling with increased insurance costs, yet many of them don't realize the extent that economic pressures and market dynamics are affecting their rates,” said Charles Symington, Big "I" president & CEO. “Because independent insurance agents work with multiple insurance companies, they are uniquely positioned to work with consumers to help them take a good hard look at their policies, offer various coverage solutions and approach the challenging market with a holistic perspective to help ensure their clients aren't left vulnerable.”
Among the study's key findings:
Higher Deductibles: 46.6% of Americans have considered or already taken a higher deductible to save money on insurance
Going Uninsured: 22% have considered going uninsured to save money
Making a Switch: 83% would switch insurance providers for lower cost premiums, while 59.5% would switch for better coverage
Call My Agent: 56.3% buy insurance through an insurance agent versus 36.3% who buy online through an insurance company’s website
News
Higher Auto Claims, More Frequent Accidents Continue to Outpace Premium Hikes
As claim severity rises, US personal auto results are on the decline, according to AM Best’s latest Market Segment Report.
The 112.2 net combined ratio in 2022 for personal auto was an almost 11-point deterioration from 101.5 in 2021, and about ten points over the ten-year average and median combined ratios for the line.
Deteriorating liability and physical damage resulted in a more than $4 billion net underwriting loss in 2021 for personal auto insurers. Insurers find rates can’t keep pace with the increasing number of accidents and costs such as economic inflation, supply chain disruptions and technological advances in vehicles, which increase claims costs.
In 2022, inflationary pressures on physical damage claims costs, rising medical expenses and greater claims severity caused the more than $33.0 billion underwriting loss. Even as insurers pursued premium increases, underwriting results in 2022 continued to trend adversely through the first half of 2023.
Christopher Graham, senior industry analyst and co-author of the latest market segment report, noted in a video discussion of the report that even if there had been no increase in loss costs this year, carriers would “still need double-digit rate increases just to get to [the] level of being able to break even.”
InsurTech/M&A/Finance💰/Collaboration
Apollo Taps BlackRock Veterans in Key Wealth and Insurance Units
Kate Swimley was recently hired to cover the ultra-wealthy and Andrew Stack was recently hired to focus on investments for insurance companies.
Kate Swimley was hired this month to cover the ultra-wealthy for Apollo’s family office business after almost a decade at BlackRock. Andrew Stack, former head of BlackRock’s life and annuity practice in its financial institutions group, joined Apollo in September as a managing director focused on investments for insurance companies.
Wealth management and insurance are key growth areas for Apollo as it seeks to amass $1 trillion of assets under management by 2026. The firm, like other alternative asset managers, is looking beyond its traditional base of institutional investors such as endowments amid an industrywide fundraising rut.
AI in Insurance
NAIC approves model bulletin for insurer AI use
As technology deployment increases to transform all stages of insurance interaction with consumers, the National Association of Insurance Commissioners (NAIC) recently approved a model bulletin on the use of artificial intelligence (AI) by insurance companies, an NAIC press release states.
The “Model Bulletin on the Use of Artificial Intelligence Systems by Insurers” passed during the association’s 2023 Fall National Meeting held earlier this month. It outlines the need for processes and controls to prevent possible AI inaccuracies, discriminating biases, and data vulnerabilities.
“This initiative represents a collaborative effort to set clear expectations for state departments of insurance regarding the utilization of AI by insurance companies, balancing the potential for innovation with the imperative to address unique risks,” said Maryland Insurance Commissioner Kathleen Birrane, who is the chair of NAIC’s Innovation, Cybersecurity and Technology Committee and drafted the bulletin.
The bulletin reminds insurers of established regulatory laws, such as the Unfair Trade Practices Model Act, that regulate unfair methods of competition or unfair or deceptive acts. It states governance and controls on AI systems are needed to comply with these laws.
Commentary/Opinion
Infrastructure Faces $600B Hit in Worst-Case Climate Shift: Study
Infrastructure investors face losing nearly a third of their money, or around $600 billion, if countries do not plan for an orderly shift to a greener economy by mid-century, a first-of-its-kind study shared with Reuters showed.
The researchers describe this worst-case scenario in terms of governments moving late, or unexpectedly, to impose taxes on carbon emissions. Those abrupt moves would drive an inflation-fueling price shock that would see interest rates rise, impacting the net-asset value of the investments.
Infrastructure portfolios could lose as much as half of their value, according to the research by the EDHEC Infrastructure & Private Asset Research Institute.
“There’s more risk than people think,” co-author Frederic Blanc-Brude told Reuters by phone, while the COP28 climate talks were taking place in Dubai. “They are going to become material sooner, and more than is expected, and people need to wake up.”
In an orderly transition, by contrast, where the system changes gradually to rein in emissions, the costs would be absorbed as part of normal business operations.
Both scenarios were assessed across 9,000 infrastructure assets – including airports, toll roads, power stations, seaports and pipelines – but did not include potential legal, market and technological costs, so were conservative, Blanc-Brude said
Innovation
Insurtech: How Technology Is Transforming the Insurance Industry
Like many business sectors and industries, the insurance industry is undergoing a digital revolution, and at the forefront of this transformation is insurtech. Insurtech is a subset of fintech, and refers to technological innovations that are created and implemented to improve the efficiency of the insurance industry. The fusion of insurance and technology is transforming how insurers and customers interact, and in recent years it has improved the sector by enabling insurance companies to improve customer experience, develop new products, lower costs and enhance underwriting and actuarial processes.
This blog explores the innovative world of insurtech, showcasing how technology is reshaping the insurance landscape, from underwriting and claims processing to customer experiences and risk assessment.
Real-World Applications of the Impact of Insurtech
Digital Underwriting: insurtech platforms use artificial intelligence and data analytics to assess risks more accurately, allowing for customized policy offerings and fairer premiums. Natural language processing and machine learning also help insurance professionals assess and manage risks better. This is done by understanding complex scenarios, evaluating probabilities and estimating outcomes.
Claims Processing: Automation and blockchain technology are streamlining claims processing, reducing fraud, and expediting settlements, providing customers with faster relief in times of need. Large language models (LLMs) can help improve claims processing and settlement by verifying the validity, accuracy and completeness of claims, and automate tasks including document review, damage assessment and payment calculation.
Customer-Centric Services: in a price-driven market characterized by low engagement levels, dealing with insurance companies can often be a negative experience. Insurance providers are using insurtech to improve customer experiences with user-friendly apps, chatbots, and real-time access to policy information.
BOLD Awards recognizes top companies, projects and individuals powering breakthroughs around the world.
A True Insurtech Story : How Arch’s Accident and Health Business Unit Is Using Technology to Streamline the Quote-Bind-Issue Process
When Arch launched its RoamRight® Travel Insurance platform in 2012, a key focus was to streamline the digital experience, making it easy for clients and travel advisors to research, compare and purchase travel insurance. Since launching, RoamRight has developed many innovative technology tools that improve the customer experience and enable its agents to grow their sales and deliver best-in-class service to their clients.
In the years since its inception, the RoamRight brand has grown substantially, and the digital experience has much to do with the brand’s success. Now, Arch Insurance is looking to replicate the success RoamRight has had in the travel insurance space with its accident and health business. The company’s new Arch APEX platform makes the process of quoting and binding accident and health policies easy for brokers and agents so they can rapidly and efficiently grow their businesses.
“The purchase process for these accident and health products needs to be simple,” says Jim Villa, SVP of Accident & Health. “Creating a streamlined digital experience was paramount to our success. The Arch RoamRight business has all the right pieces: ecommerce, broker portal, digital fulfillment — you name it. It’s a great base of technology on which to build.”
Jim Villa, SVP of Accident & Health, Arch Insurance
People
Ricardo Martinez Joins Cambridge Mobile Telematics Road Safety Board
Cambridge Mobile Telematics (CMT), the world’s leading telematics service provider, today announced the appointment of Dr. Ricardo Martinez, MD, FACEP, to the CMT Road Safety Board. Dr. Martinez is a former administrator of NHTSA and serves on the Executive Committee of the Transportation Research Board of the National Academies of Science, Engineering, and Medicine. Dr. Martinez brings a wealth of experience in traffic safety, emergency medicine, and crash injury research to the CMT Road Safety Board.
During his time at NHTSA, Dr. Martinez played a pivotal role in reshaping the agency’s approach to traffic safety. Under his leadership, NHTSA recognized traffic safety injuries as a national public health issue and implemented major regulations for vehicle safety. His efforts resulted in the lowest traffic fatality rate, the lowest percentage of alcohol-related fatal crashes, and the highest seat belt and child safety seat usage in American history from 1994 to 1999.
“Our capacity to develop groundbreaking solutions and gain profound insights into vital road safety matters hinges on our ability to analyze extensive and high-quality driving data,” said Dr. Martinez. “With CMT, we’re able to understand driving behaviors scale, putting us at the forefront of transforming the landscape of road safety. I’m excited about our mission and to join CMT’s Road Safety Board.”
Dr. Martinez is currently an Adjunct Associate Professor of Emergency Medicine in the Emory Department of Emergency Medicine. He also serves as a Senior Advisor of the Crash Injury Research Engineering Network at Emory in Atlanta. He practices clinically at Grady Memorial Hospital in Atlanta.
Victor Joseph Promoted to President & Chief Operating Officer of Mercury General Corporation
Mercury General Corporation(NYSE: MCY) announced today that Victor Joseph has been named President & Chief Operating Officer and has also been appointed to the Company's board of directors, effective January 1, 2024. Victor is currently Mercury's Executive Vice President & Chief Operating Officer, a position he has held since 2022. He will continue to report directly to Gabriel Tirador, Mercury's Chief Executive Officer.
"This announcement exemplifies Mercury's continued progress in building our leadership structure and vision for the future of the Company," said Tirador. "Victor has been a key contributor on Mercury's leadership team, providing creative problem solving and a deep-rooted passion for the Company. His energy and dedication to Mercury and the industry will further strengthen our position as one of America's leading insurance companies."
Victor has held a variety of positions since he joined the Company almost 15 years ago, including time as Chief Underwriting Officer, where he was instrumental in modernizing Mercury's underwriting function by creating new protocols to measure and mitigate risk. He currently oversees day-to-day operations, with most of the Company's business units reporting directly to him.
2024 PREDICTIONS
Best's Review Looks Ahead to 2024 Key Issues
In a new article, Best’s Review speaks to experts about what they see as the insurance industry’s top issues in the coming year.
Hot topics include natural catastrophes and climate risk, generative artificial intelligence, cyberrisk, litigation and nuclear verdicts, as well as the U.S. presidential election.
The insurance workforce is also in the spotlight as layoff announcements have accelerated. Read the full story in “Insurers Look Ahead to 2024 and Key Issues: Catastrophes, Inflation, Layoffs, AI and More.”
Best’s Review is AM Best’s monthly insurance magazine, covering emerging issues and trends and evaluating their impact on the marketplace. The complete content of Best’s Review is available here
Insurance industry set to undergo digital transformation in 2024: Fadata
Fadata, a provider of software solutions for the insurance industry, highlighted the pivotal role of digitalisation in shaping the future of insurance in 2024
The company identifies three major trends, predicting that the adoption of Cloud services, the integration of AI and analytics applications, and the rise of digital ecosystems will revolutionise the sector.
Additionally, the megatrend of sustainability is expected to exert a significant influence.
Fadata underscores the industry-wide shift towards the Cloud, particularly the public cloud, as a central theme in modernisation initiatives.
Insurers embracing Cloud solutions stand to benefit from enhanced agility, flexibility, cost efficiency, and scalability. The rise of Software as a Service (SaaS) solutions is anticipated to replace on-premises environments, enabling companies to swiftly adapt to market changes and introduce innovative services.
Akankshita Mukhopadhyay is a Journalist for Reinsurance News, reporting on reinsurance market news & trends