News
US catastrophe exposed insurance rates rise up to 50% in 2023
Across the United States, last year, most of the fastest rising insurance rates for residential and commercial property have again been seen in the areas with the most significant exposure to catastrophe risks, according to MarketScout.
Reporting on insurance rates over the fourth-quarter of 2023, MarketScout’s data shows an overall rise continuing, but Richard Kerr, CEO of Novatae Risk Group which owns MarketScout, continues to highlight that catastrophe exposed property has been rising fastest, in terms of the cost to insure property.
Composite personal lines insurance rates were up by 4.61% across the full-year, bu the largest rate increases continue to be for catastrophe exposed homes.
“We continue to see the largest composite rate increases in homes over $1,000,000 in coverage A value, most likely because this includes all of the large homes in catastrophe exposed locations,” explained Richard Kerr, CEO. Who added that, While the composite rate for large homes was 5.9% for 2023, some homeowners in tough areas or with prior losses are experiencing rate increases as high as 50%.”
The insurance industry continues to catch-up, in terms of charging what it and its models feel are risk commensurate rates for property in catastrophe exposed locations, it seems.
Navigating the Hard Market: Expert Advice from Trusted Choice® Panel DiscussionNavigating the Hard Market: Expert Advice from Trusted Choice® Panel Discussion
Recently, the Trusted Choice® Board of Directors hosted its annual meeting with carriers in Alexandria, Virginia. During this meeting, Trusted Choice highlighted initiatives it implemented to support Big "I" members in 2023 and 2024.
The meeting featured a panel of industry experts who shared their invaluable insights to help independent insurance agents navigate the current hard market.
The panelists included Jeff Ogard, vice president, agency relations, Liberty Mutual, Safeco and State Auto Insurance; Craig Welsh, head of traditional and non-traditional distribution, Westfield Insurance; Matt Simon, president, CoverLink Insurance; George Daly, division president, The Horton Group; and Nathan Riedel, Big “I" senior vice president of federal government affairs.
Rather than retreating in the face of the hard market, panelists urged agents to proactively seek out opportunities to engage in meaningful conversations with clients. “We've talked about the need to be proactive rather than reactive and how we think about risk mitigation," Welsh said. “The human mind can't process the potential for future risk but we're at a time when we have to."
Commentary/Opinion
Has IoT Passed the Tipping Point?
So many pilots have delivered major returns by now that it may be time for an industrywide rollout.
Fun fact of the week: I learned from a new biography of Milton Friedman that he had intended to become an actuary but failed the licensing tests and decided to become an economist instead. That's just one more reason to respect all you actuaries out there who, unlike one of the two most important economists of the 20th century (along with John Maynard Keynes), prevailed in your rigorous training. Well done.
Now on to business:
A webinar I conducted recently with John Riggs, chief technology officer at Hartford Steam Boiler, and Matteo Carbone, the founder of the IoT Insurance Observatory, made me rethink my expectations for the Internet of Things. I've been a proponent of its potential ever since I first heard the term, more than a decade ago, but they convinced me that it's time to stop thinking about potential and to start thinking about mass deployment.
The key exchange, for me, came when John described a 639% return on investment on their IoT work and Matteo, after coyly asking if it was okay for him to be controversial, said the ROI was TOO HIGH. He wasn't doubting the number. His concern was that the high ROI meant companies were ignoring lesser, but still highly promising opportunities, in the interests of demonstrating the potential of the IoT.
READ FULL ARTICLE HEREship.com/six-things-commentary/has-iot-passed-tipping-point)
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Insurance pricing has become expensive – but does it need to be?
When my car insurance renewal quote came through a few months ago and I saw it had shot up to more than double what I paid the previous, I took to LinkedIn hoping to spark a debate. Luckily, the insurance industry was happy to oblige. Maybe my network was just humouring me, but 100 comments later, it feels safe to say that I’m not alone in thinking that something’s seems to have gone a little wrong and premium pricing has gotten out of hand.
So what can we do about it? Some things we can influence and others we cannot. A mentor once told me, worry more about the things that we can control and just keep an eye on the things we cannot control. The tools we use in-house is one of the things that we do have control over. In my view it’s time to get serious about how the insurance industry uses good tech to support new ways of thinking to reshape the existing pricing model and bring down the cost of premiums.
Insurance pricing is all wrong
One LinkedIn connection suggested I call my insurance provider to ask for an explanation for the astronomical increase to my premium. I’m not sure what I was expecting but I had a feeling as to how the conversation would play out. I was right.
Andre Symes Group CEO at Genasys
Research
Trends reports say UBI, AI & telematics here to stay, industries still learning pros & cons
An insurance intelligence trends report from J.D. Power, released in mid-December, called 2023 “the year of disruption” for the insurance industry from surging rates to underwriting automation, carrier selection, and the channels through which customers access policies.
“According to data collected by J.D. Power, 2024 will present plenty of new challenges and shifting trends in the insurance industry — from an evolution in the way customers shop for their policies to the way insurers service those policies,” the report said.
One such trend is customers are increasingly interested in usage-based insurance (UBI), which is disrupting decisions to bundle auto and homeowners insurance.
The five forces and trends J.D. Power found were:
- “Inflation is driving rates and rates are driving shopping;
- “UBI is taking a larger role in shopping and may break the ‘bundling mold;’
- “Insurers are increasingly targeting the most profitable consumers (‘Robinsons’);
- “Insurers are pulling back as more consumers are shopping; and
- “Less satisfying claims experiences are beginning to influence more consumers to shop.”
Claims/Payments
Verisk Creates Claims Advisory Board
To address ever-evolving needs of claims organizations and to continue delivering cutting-edge solutions and value, Verisk has formed the Verisk Claims Advisory Board.
From accuracy to Generative AI and fraud, the insurance industry is at a pivotal point and leading claims experts will advise on Verisk’s development of industry-leading products and solutions
To address the ever-evolving needs of claims organizations and to continue delivering cutting-edge solutions and value, Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, has formed the Verisk Claims Advisory Board.
Comprised of a group of former chief claims officers across the insurance industry, the Board will advise Verisk’s Claims Solutions on its innovation roadmap to ensure the company is enriching the claims ecosystem by continuing to streamline client workflows, improve claims management and support superior customer experiences.
The wealth of industry experience from the experts on this Board will help Verisk drive the industry forward with the latest in thought leadership and industry-leading products and solutions.
The Verisk Claims Advisory Board is comprised of the following experts:
- Eric Brandt
- Darla Finchum
- Grace Hanson
- Ken Rosen
- Mike Sieger
“At Verisk, we value learning and collaboration as important and effective ways to continue moving the industry forward through value co-creation with customer and ecosystem partners,” said Maroun Mourad, president, Verisk Claims Solutions. “We are excited to begin our work with the Verisk Claims Advisory Board and are confident that through their partnership and ongoing guidance, we will continue to deliver innovative and impactful value-adding solutions that will help meet the ever-changing needs of our clients throughout the entire claims ecosystem.”
InsurTech/M&A/Finance/Collaboration
GLOBAL M&A INSURANCE MARKET UPDATE | 2023 Review and 2024 Outlook | Gallagher
ABOUT GALLAGHER’S GLOBAL M&A PRACTICE
The 30+ specialists that make up our global Transactional Risks team consist of qualified corporate lawyers, former M&A underwriters, tax experts, and insurance professionals who have a breadth of deal experience spanning a range of sectors and jurisdictions. Gallagher has invested in M&A insurance teams based across the globe to tackle complex cross-border placements and local law challenges.
Whether it be Warranty & Indemnity (W&I), Representations & Warranties (R&W), Tax, Contingent Risk, Legal Indemnities or Due Diligence, our specialist M&A teams in the UK & EEA, USA, Canada, Asia-Pacific, India, South America, Africa and the Middle East will be able to assist
CONCLUSION
We anticipate premium rates will continue to fall in the short term, albeit at a decreasing speed in 2024. Insurers will increasingly adopt commercial and practical approaches to underwriting and enhance their claims assessment and management capabilities. As a critical tool in the M&A tool box, dealmakers and advisors will continue mitigating and managing risk in M&A transactions through use of transactional risk insurance solutions (W&I/R&W insurance, tax and other contingent risk insurance products) for both private and public M&A transactions to enhance and protect value for shareholders. 2024 will still be challenging, but the expectation is that interest rates will continue to stabilise. In turn, this should create more certainty around borrowing, which could lead to a greater uptick in M&A. Either way, the M&A market continues to be resilient, through both innovation and creativity.
CONCLUSION ---- M&A INSURANCE MARKET
Insurers will increasingly adopt commercial and practical approaches to underwriting and enhance their claims assessment and management capabilities.
Thomvest Ventures closes $250M fund to invest across fintech, cybersecurity, AI
Thomvest Ventures is popping into 2024 with a new $250 million fund and the promotion of Umesh Padval and Nima Wedlake to the role of managing directors.
The Bay Area venture capital firm was started about 25 years ago by Peter Thomson, whose family is the majority owners of Thomson Reuters.
“Peter has always had a very strong interest in technology and what technology would do in terms of shaping society and the future,” Don Butler, Thomvest Ventures’ managing director, told TechCrunch. He met Thomson in 1999 and joined the firm in 2000.
As we’ve seen over the past few years, the venture capital industry can’t help but be cyclical. Thomvest has watched it for decades, and in 2010 decided to leave the generalist world behind to specialize in investment in a few key industries, Butler said.
“For example, every time a specialist in cybersecurity would speak, you knew that this was somebody who knew the market intimately, knew our competition, knew the customers, knew the market demand,” Butler said. “And we were like, ‘Okay, we want to be like them.’”
Openly Partners with Bees360 to Enhance Property
Bees360, provider of drone-assisted property inspection services powered by artificial intelligence (AI), is announcing a new partnership with Openly, the premium homeowners insurance provider sold exclusively by independent agents.
Openly’s adoption of Bees360’s state-of-the-art technology is poised to further streamline insurance claims property inspections and support the company’s policyholders. As the insurance industry continues to evolve technologically, policyholders increasingly expect streamlined, precise, and rapid claims inspections, setting a higher standard for how losses are evaluated. This partnership ushers in a new era of claims inspections and will ensure swift, well-informed decision-making that supersedes the human element of subjectivity.
“This partnership underscores the shared vision of Openly and Bees360 in pushing the boundaries of technological innovation within the insurance industry, ultimately benefiting insurance agents, policyholders, and the industry as a whole,” said Gina Reyes, Vice President of Claims at Openly. “We look forward to working alongside Bees360 to continue to deliver an efficient and transparent homeowners insurance experience for both agents and customers alike.”
Bees360’s drone and proprietary AI technology delivers a revolutionary claims inspection experience that improves accuracy and efficiency with precision in every pixel. Oftentimes the severity of wind & hail damage can be overlooked or misrepresented. Leveraging the technology advancements delivered by Bees360 mitigates those risks and provides a more reliable assessment.
Webinars/Podcasts/Interviews
Interview: CCC’s Dan Risley Details New Data Privacy Feature
Collision repair facilities are able to remove sensitive data before sharing with third parties.
CCC Intelligent Solutions Inc. (CCC) announced today the availability of an enhanced data security feature for collision repairers writing estimates on cccone.com. The new feature provides repairers with the ability to redact the last six digits of a Vehicle Identification Number (VIN) and Personally Identifiable Information (PII), including first and last name, address, city, state, zip, phone and email, prior to sharing estimate information via EMS export.
“Data security is a real concern for the collision repair industry as repair facilities face the risk of sensitive information being shared with third parties without their consent or knowledge,” said Dan Risley, vice president, Quality Repair & Market Development at CCC Intelligent Solutions.
“By empowering repairers to redact sensitive data, we aim to help our collision repair customers protect their customers’ information while simultaneously enabling them to provide necessary information to do business with their third-party partners. This new feature is the latest offering in our long-standing commitment to support repairers in navigating the evolving landscape of data privacy and security challenges.”
In the video embedded below, Risley details several industry concerns when sharing estimate data containing PII and VINs, and how the new features can benefit repair facilities.
Executive Exchange - CSAA - Debbie Brackeen - Climate Change
Triple-I CEO Sean Kevelighan sits down with CSAA's Chief Strategy & Innovation Officer Debbie Brackeen to discuss the steps the insurance industry can take around climate risk.
2024 PREDICTIONS
5 predictions for the insurance industry in 2024
Examine the challenges and opportunities 2024 might hold for the P&C insurance sector.
In 2024, we will see AI treated more as supplementary talent. Insurers will also test sourcing models for “complex” work that was closely held and traditionally developed
As we enter 2024, while we see many challenges for the insurance industry, we meet these with optimism. Insurance is a resilient industry with a deep sense of purpose — offering people, families and businesses protection and a more secure future.
Global macroeconomic forecasts for 2024 indicate both slowing GDP growth and continuing inflationary pressure. Talent shortages are most pronounced in the U.S. where unemployment is below 4% overall and hovering around 2% for the insurance sector.
Major markets are feeling consumer sentiment headwinds. Our research shows consumers in the U.S. are largely pessimistic due to lingering recessionary concerns. Meanwhile in the U.K., consumer pessimism is coming from uncertainties caused by recent tax changes and the rising cost of living.
What can the industry expect?
Kenneth Saldanha is the global lead for Accenture’s Insurance Industry Group