Commentary/Opinion
How Better Data Can Turn Auto Insurance Around
There’s more data on drivers than ever, and if insurers know how to use it, they can reverse customer defections this winter.
KEY TAKEAWAYS: - Insurers must price risks more accurately, or they will lose their low-risk customers -- those with the highest lifetime value. That means moving beyond proxies such as age, credit history and gender and using actual driving behaviors. - Many insurers have avoided using telematics data because they don’t want a monitoring period that requires them to wait until they’ve collected sufficient driving data to price accurately, but monitoring periods are no longer required. - While the insurance industry has made strides in using telematics for upfront discounts, insurers can also communicate with customers about their driving during the term of the policy and can improve renewal pricing to increase loyalty.
Henry Kowal is director, outbound product management, insurance solutions, at Arity, an Allstate subsidiary company that tackles underwriting uncertainty with data, data and more data about driving behavior gathered via telematics.
Is Lemonade Out of the Woods?
Lemonade's current approach makes much more sense than the original plan, but they still seem far from delivering.
KEY TAKEAWAYS:
- If you look at Lemonade as a way of examining what insurtech approaches are working and which aren't, you see that everyone, including incumbents, must use data and technology for risk selection, pricing accuracy and automation. Most have already started.
- State Farm's vision about a platform play and the smart home strategy represents an area that is frequently ignored and could be fertile territory.
Matteo Carbone is founder and director of the Connected Insurance Observatory and a global insurtech thought leader
[Ed.. Note: Recommended] Six Things - Insurance Thought Leadership
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President on attracting the best and brightest into the insurance profession
Having taken his first insurance class in high school before going on to study financial management of risk at university, Mike Mulray’s (pictured) career trajectory bucks the trend of so many of his market peers who “fell” into insurance. In a recent interview with Insurance Business, Mulray, who became president of Everest’s North America Insurance division earlier this year, highlighted why attracting and retaining great talent is at the top of his growth agenda.
“There’s a constant war for talent out there, so trying to attract the best and brightest, and continuing to develop the talent we have and retain them through training and development opportunities is so important,” he said. “And as an industry, we need a bigger pipeline coming into the market, that’s one of the main challenges we’re facing – getting more people attracted early on.”
Mulray noted that going out to schools and universities to promote the idea of an insurance career as rewarding and fulfilling is essential and how to do that at scale is a pressing topic for him as a leader. Being one of the relatively few individuals in the market with a degree in insurance underscores why having studied insurance is not a pre-requisite to enjoying a great career, he said, and why the sector needs to continue to focus on attracting individuals from all disciplines.
“You can teach people insurance,” he said. “You can’t teach people hard work, or about having a growth mindset, or to ask the right questions, or to be flexible. There are certain things like having passion and drive and energy that you just can’t teach. To me, having people who come from different backgrounds and who bring diverse experiences is just as valuable… Of course, we still want to hire people with insurance and risk management degrees and qualifications, but to our mind, it’s not necessary.”
Understanding the societal value of insurance To people not yet on the path to exploring insurance as a career option, Mulray has a clear message – “this is a great career path, which offers the opportunity for huge societal good”. It’s all too easy to lose sight of the force for good that insurance can be for individuals, businesses, communities and societies, and the industry needs to get better at telling its story and why nothing really happens in the economy without the safety net provided by insurance.
News
Cleanup underway after severe storm, floods hit Northeast US
Nathan Sennett, a cook at the Quarry Tap Room in town, waded through hip-deep water to move furniture from a flooded patio.
"We were supposed to have a couple of parties today and tomorrow, and just kind of sporadically throughout the weekend," he said. "But obviously, we've had to cancel those."
More than 5 inches of rain fell in parts of New Jersey and northeastern Pennsylvania, and parts of several other states got more than 4 inches, according to the National Weather Service. Wind gusts reached nearly 70 mph along the southern New England shoreline.
In New Jersey, a house surrounded by floodwaters caught fire Tuesday in Lincoln Park and firefighters were unable to get to it. Police said it was unoccupied.
Maine Gov. Janet Mills closed state offices Tuesday to allow time for power restoration and cleanup efforts from the storm, which took down many trees and closed roads.
"We are expecting a multi-day recovery effort," she said.
Software firm Ebix files bankruptcy after short-seller attacks, debt woes
Insurance software firm and short seller target Ebix Inc. filed for bankruptcy after struggling to bounce back from high interest rates and looming debt payments.
The Johns Creek, Georgia-based firm listed assets and liabilities of at least $500 million each in a Chapter 11 petition filed in Texas. The filing protects the company from creditors while it seeks court approval of a plan to repay them.
Publicly traded Ebix is the parent of Indian fintech company EbixCash, which facilitates payments, foreign exchange and prepaid gift cards. The company’s nearly 200 affiliates outside the US are not included in the bankruptcy filing, according to a statement.
In bankruptcy, the company plans to sell its North American life insurance and annuity assets to help pay off its debt.
Insurance firm Zinnia, backed by Todd Boehly’s Eldridge Industries, will kick off the auction with a $400 million opening bid. The firm and its advisers will “conduct a fulsome marketing and sale process” for the assets of the company, according to the the statement.
The bankruptcy filing is not Ebix’s first encounter with trouble. A decade ago, a deal for Goldman Sachs Group Inc. to buy the company fell apart after a US criminal probe came to light. Neither the Department of Justice nor the Securities and Exchange Commission, which conducted its own probe, ended up taking action against Ebix.
Over $4.8bn in claims levelled against Vesttoo entities by bankruptcy creditors
It appears that, in aggregate, creditors to the bankruptcy of forged reinsurance letter of credit (LOC) linked insurtech Vesttoo have filed over $4.8 billion in claims against the company and its entities, which provides another signal of the ramifications of and amount of value the market feels has been lost due to the fraud.
We already knew that nearly $3.36 billion of value in standby letters of credit (LOC) for reinsurance deals are assumed to have been fraudulently created by former employees of Vesttoo.
But the claims for damages that are being levelled against the insurtech by its creditors to the bankruptcy proceedings extend far beyond this number.
Which indicates parties involved feel particularly injured by the fraud and are claiming much more than the simple value of the LOC’s that proved to be fraudulent.
While also showing that the true financial cost of the fraud at Vesttoo is particularly significant.
Research
CCC Trends: 2023 repair costs rise due to labor costs, UAW strike & theft
The latest trends report from CCC Intelligent Solutions that looks back on 2023 found three trends have continued, and need to be improved upon in the new year, which “requires both shops and carriers to explore new ways of operating and delivering on customer expectations.”
Repair costs, the weekslong United Auto Workers (UAW) strike, and a rise in auto thefts took their toll on both industries over the past year, according to the report.
While the total cost of repairs saw “subtle fluctuations,” CCC says increases in new vehicle sales and a changing vehicle age mix could cause concern in the coming years, as early as 2024.
“As powertrain diversity and ADAS technology become more widespread across the car parc, complexity and the demand for specialization increase,” CCC Industry Analytics Director Kyle Krumlauf told Repairer Driven News.
“This involves factors such as tooling, technical expertise, parts access, safety considerations, and shop configuration (notably for calibration operations). Shop owners, regardless of size, should be mindful of how the vehicle pool is evolving and the profound implications these changes have on their business.”
COMPLETE REPORT HERE Year in Review: Three Auto Industry Trends That Defined 2023
People
NICB Announces New Board of Governors Chair and Vice Chair
The National Insurance Crime Bureau, (NICB) the nation's leading not-for-profit organization dedicated to combatting and preventing insurance crime, announced the election of Matthew C. Murphy of The Hartford as the new Chair of its Board of Governors. Murphy previously served as Vice Chair of the Board and replaces James McSheffrey. Along with Murphy's election, Jeremy T. Connor of GEICO was elected Vice Chair and will assume that role.
"I look forward to working with Matthew and Jeremy in their new roles as Chair and Vice Chair of NICB's Board of Governors," said David J. Glawe, President and CEO of the National Insurance Crime Bureau. "With their leadership, we will continue to build upon the great work over the past three years to help modernize and transform NICB into a data and intelligence-driven organization that is leading the way in preventing and deterring insurance crime and fraud."
Innovation
Embedded insurance – the next logical step for agents?
Agents and carriers are tapping into commercial lines embedded insurance
Tapping into embedded insurance could have big benefits for agents but stragglers risk being left behind if they do not get on board, Applied Systems SVP of commercial lines Raghav Tanna (pictured) has cautioned.
Applied Systems’ Tarmika Insured went live with its commercial embedded insurance proposition earlier this year. The software house hopes that its US agents will use the embedded insurance technology to make the most of untapped routes to customers, according to Tanna, who joined the insurance software giant last year on its acquisition of Tarmika.
Carriers have looked at bringing direct to consumer commercial lines propositions to fruition, including big names such as Liberty Mutual and Progressive.
The risk is that if agents do not get on board, this effectively “shuts out agencies”, according to Tanna.
Applied Systems’ embedded commercial insurance launch intended to give D2C tools “back to agencies”
“Our goal with this product launch was to say, if carriers can do it and carriers go direct to consumer, why can’t agencies go direct to consumer?” Tanna said. “We’re essentially giving all of the direct-to-consumer tools that carriers have back to agencies so they can put it on their point-of-sale systems, they can put it on the websites, they can put in their affinity partnerships, and they can get business from places where you typically wouldn’t see people buying insurance.”
The embedded quoting application can be included on a company’s website or on a custom-built landing page, ideally at a stage when a customer would be buying another product for which insurance would be relevant.
“We want consumers to be able to buy insurance when they’re buying other things and it makes sense to buy insurance,” Tanna said. “If you’re doing your taxes, you should buy insurance, if you’re buying a new car for your business, you should buy a commercial auto policy.
Awards
Erie Insurance ranks No. 1 in J.D. Power 2023 U.S. Home Insurance Study
Erie Insurance (ERIE) is the best in home insurance customer satisfaction, ranking No. 1 in both homeowners and renters insurance business lines, according to the J.D. Power 2023 U.S. Home Study.
ERIE earned the highest homeowners insurance ranking of all rank-eligible property and casualty (P&C) carriers with a score of 856 on J.D. Power's 1,000-point scale. That's 37 points higher than the homeowners insurance segment average for 2023. The Fortune 500 company, which has been serving customers for nearly a century, increased its 2023 ranking and score during a year when the study cited overall homeowners satisfaction as flat compared to the previous year. Consumers ranked ERIE No. 1 in the J.D. Power 2023 homeowners insurance segment study factors of interaction, policy offerings and price.
In the renters insurance segment, ERIE led with a score of 881 out of 1,000, outperforming the next best rank-eligible carrier by 25 points and ranking No. 1 in the J.D. Power 2023 renters insurance study factors of interaction, policy offerings, price, and billing process &policy information.
"We stand behind the quality of our products, as well as our promise to always be Above All in Service," said Jon Bloom, ERIE's senior vice president of personal products. "This recognition is a testament to the protection we provide with each and every policy."
The J.D. Power 2023 U.S. Home Insurance Study examines overall customer satisfaction within two personal insurance product lines: homeowners and renters. The study is based on online interview responses from 11,221 homeowners and renters conducted from May through July 2023.
2024 PREDICTIONS
Top 5 Insurtech Trends to Watch in 2024
Embedded insurance, customer-facing digital tools, telematics and the IoT, rich data sets and AI and ML will mark a paradigm shift.
Tech is revolutionizing the insurance industry by automating and enhancing efficiency, from customer onboarding to policy placement to claims handling. In fact, the global insurtech market was valued at $5.45 billion in 2022 and is poised for remarkable growth, as it's expected to expand at a CAGR of more than 50% from 2023 to 2030.
But what are the forces driving this?
There’s a vanguard of technological advancements, aka insurtech, driving unprecedented change in how insurance is conceived, developed and experienced: embedded insurance, customer-facing digital tools, telematics and the Internet of Things (IoT), reliance on rich data sets and AI and machine learning (ML).
With these five insurtech trends in mind, let's discover what they are and how they'll redefine the insurance landscape in 2024.
Jason Keck is the founder and CEO of Broker Buddha,