News
The World Economic Forum at Davos 2024 | McKinsey & Company
McKinsey is a strategic partner to the World Economic Forum (WEF). Read our latest insights around the key topics discussed at the Davos 2024 conference.
Every year, the World Economic Forum Annual Meeting brings together top decision-makers from government, business, and civil society to address major global issues and priorities for the year ahead. At the Annual Meeting 2024, taking place in Davos, Switzerland from January 15 to January 19, more than 300 public figures, including more than 60 heads of state and government, will focus on rebuilding trust amid uncertainty and rapid change, centered around the following areas:
- achieving security and cooperation in a fractured world
- creating growth and jobs for a new era
- artificial intelligence as a driving force for the economy and society
- a long-term strategy for climate, nature and energy
Secondary Perils Drive Global Insured Losses to Estimated $123B in 2023
Non-peak (secondary) perils and record-setting weather and climate events drove global insured losses from natural catastrophes to an estimated $123 billion in 2023, the fourth consecutive year to exceed $100 billion, according to Gallagher Re’s annual Natural Catastrophe and Climate Report.
The report said that six of the top 10 costliest insured events were severe convective storms (SCS) – or those secondary perils — in the United States.
Of the total estimated insured losses, private insurers covered $110 billion while public insurance entities covered $13 billion.
The global economic cost of all natural perils was estimated at $357 billion – the eighth consecutive year when global losses surpassed $300 billion, Gallagher Re said.
Insured Price Tag for Natural Disasters Was $95B in 2023 With Economic Cost of $250B
When looking solely at climate and weather events, which excludes losses from earthquakes and other non-atmospheric-driven events, insured losses were estimated at $116 billion, while economic costs reached an estimated $301 billion. (Overall economic losses include insured losses).
California Department of Insurance Approves Verisk's ISO Wildfire Mitigation Filings for Homeowners, Dwelling, Commercial Property, Commercial Inland Marine and Businessowners Programs
Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, today announced that the California Department of Insurance (CDI) has approved its ISO wildfire mitigation filings for homeowners, dwelling, commercial property, commercial inland marine and businessowners programs.
This critical filing enables insurers to incorporate and reflect specific wildfire mitigation discounts in their rating plans, as mandated by a CDI regulation implemented last year.
Verisk has been engaging with CDI to assist insurers in responding to the mitigation regulation and navigating the changing environmental landscape. As the climate science progresses and more insurance industry data becomes available, Verisk will continue to assess the impact of mitigation for insurers. This proactive approach has positioned Verisk as an industry leader, being among the first to have its filings approved.
"As the insurance industry evolves and its understanding of the complexities of wildfire exposure grows, Verisk remains committed to supporting insurers in their efforts to provide robust coverage options to policyholders, and our actions to support the ISO filings with the California Department of Insurance demonstrates this dedication," said Ron Beiderman, senior vice president of Core Lines Services Product at Verisk.
"By gaining approval for our ISO wildfire mitigation filings, we are empowering insurers to effectively assess and manage risks associated with wildfires, ultimately benefiting both insurers and policyholders."
AI in Insurance
5 AI trends in insurance underwriting for 2024
The year 2023 witnessed the prominence of generative AI, with terms such as ChatGPT and large language models permeating the lexicon. In the insurance sector, generative AI not only expedited processes but also facilitated more precise risk assessments.
In 2024, generative AI remains at the forefront of insurance technology innovation. However, while 2023 delved into the intricacies of the technology, the new year will witness a concerted effort within the industry to address challenges such as data mischaracterization and worse, misinformation. Just as importantly, data-sourcing transparency emerges as a paramount consideration to counter the threat of inaccurate data and instill confidence in the insights generated by AI.
Insurance organizations will continue evaluating workflows to harness generative AI for improvements. Simultaneously, they must stay proactive in anticipating new regulations that advocate for the ethical use of AI
Prakash Vasant is CEO of NeuralMetrics, a provider of AI-generated commercial underwriting data.
Commentary/Opinion
Traffic deaths rose 30% in the past 10 years. Here's what it will take
The president of Arity maintains that our transportation system is broken, and it’s incurring a significant human cost. But it doesn’t have to be this way.
Your drive into the office likely takes longer than ever. Your holiday travel plans may have been delayed, then delayed again. And you’ve probably noticed how common it is for the driver next to you to be distracted by the blue glow of their phone.
Whether you’re stuck in rush hour traffic, behind an erratic and dangerous driver, or witnessing a crash on the side of the road, it’s easy to feel like our transportation system is moving in the wrong direction—that driving is getting worse instead of getting better.
Unfortunately, you’re not wrong.
Despite technological advancements, driving has grown more time-consuming, more frustrating, and more dangerous. Crashes are increasingly costly and severe. Drivers are more distracted, more reckless, and more aggressive. Major U.S. cities are full of congestion, even with fewer people consistently going into the office. And smaller cities and towns are experiencing new transportation difficulties as people move away from big cities en masse.
Worst of all, more people are dying on our roads. In fact, traffic deaths have risen by a shocking 30% over the past decade.
Our transportation system is broken, and it’s incurring a significant human cost. But it doesn’t have to be this way.
As we look to the new year, there’s no better time to reimagine a better future of mobility—a future of transportation that’s safer, smarter, and more useful for all of us. What’s stopping us from realizing that?
GARY HALLGREN IS THE PRESIDENT OF ARITY
Research
The Storm Before the Storm: Q1 2024 Supply Chain Outlook | S&P Global Market Intelligence
2023 was a year of recovery, giving the air of a return to normal. Sadly, normal for supply chains means guiding operations through the middle of a storm of potential disruptions. Looking ahead to 2024, some disruptions are already visible, including the knock-on from conflict in the Middle East and the prospect of a renewed wave of trade protectionism. Others will emerge by surprise, reinforcing the importance of investments in resilience.
Announcements
OnStar Insurance to Rebrand as General Motors Insurance
GM Financial announced this week that its OnStar Insurance brand will undergo a transformation to General Motors Insurance beginning January 2024.
According to GM Insurance President and GM Financial Executive Vice President Andrew Rose, the transition will grow awareness and understanding about the product among GM customers and allow for more opportunities to reach customers at key milestones in the vehicle ownership life cycle.
“Transitioning to GM Insurance establishes stronger alignment with General Motors’ core strategies and operations, allowing us to realize further enterprise-wide synergies,” he said.
GM Insurance is currently available in Arizona, Texas and Illinois with growth and market expansion expected in 2024 and beyond.
The Insurer becomes part of Reuters News
Since 2018, The Insurer has sought to become the go-to source for news, analysis and data on the (re)insurance industry, and we have quickly grown to reach over 45,000 individuals across our digital platform of publications.
We are excited to confirm the next phase of our development, with the news that World Business Media Limited (WBML), the publisher of The Insurer, Program Manager, E&S Insurer, ESG Insurer and The Insurer TV, has been acquired by Thomson Reuters Corporation.
The transaction, on undisclosed terms, will see WBML and its cross-platform, subscription-based offerings providing editorial coverage for the (re)insurance industry become part of the Reuters News division of Thomson Reuters.
In an announcement this morning, Thomson Reuters said the acquisition is in line with Reuters’ strategic priority to provide must-have news and insight for new customer markets and professional verticals.
Reuters president Paul Bascobert said the transaction will extend its mission to provide “trusted, must-have content” for professionals across industries and borders deeper into the insurance and reinsurance markets.
People
Dyad names Jeff Wargin as Chief Product Officer
Dyad, a insurance software and services provider, announced the appointment of Jeff Wargin as Chief Product Officer (CPO).
The announcement comes at a pivotal moment for Dyad, which recently unveiled its new brand on January 2, following a successful acquisition in 2023, signaling the company’s commitment to expansion and innovation.
With an illustrious career spanning over 25 years in the Property and Casualty (P&C) Insurance software market, Jeff Wargin brings a wealth of experience to Dyad.
His expertise lies in delivering cutting-edge and future-proof products and solutions to insurers and stakeholders across the value chain. Wargin’s extensive background in technology is complemented by a profound understanding of the intricacies within the P&C Insurance industry.
Industry analysts have taken note of Dyad’s strategic move, with Jeff Goldberg, Independent Consultant at Goldberg Strategies, remarking, “Jeff Wargin brings decades of deep insurance industry experience to Dyad, with a strategic vision for insurance core systems and a track record of evolving the industry towards modern, data-driven platforms.”
Innovation
LexisNexis Flyreel AI-Driven Solution Now Available to Help U.S. Commercial Property Insurers Cut Costs, Improve Profitability
LexisNexis® Risk Solutions, a leading data, analytics and technology provider, today announced the availability of LexisNexis® Flyreel® for the commercial insurance market. Flyreel is an advanced property survey solution delivered through an industry-leading user experience that equips carriers with actionable data using AI-driven insights that help carriers assess property risk at both new business and renewal.
Flyreel and its AI-assistant seamlessly guide commercial policyholders through the capture of property insights via a convenient, self-guided experience, using advanced computer vision technology to automatically capture and document property insights for the policyholder and the insurer. The AI-powered solution consolidates these critical insights into an actionable report based on the carrier's unique underwriting practices and risk appetite.
"LexisNexis Flyreel has gained exciting momentum in the home insurance market as an innovative solution designed to streamline and scale underwriting programs through AI-enabled automation," said** David Zona, senior vice president of commercial insurance, LexisNexis Risk Solutions.**
2024 PREDICTIONS
Fitch: Inflation Tied to Claims Severity Boosts U.S. P/C Insurers’ Reserve Risk in Casualty Lines
Fitch Ratings said it expects the U.S. property/casualty insurance industry to generate modest underwriting improvement in 2024, following poor auto insurance results and inordinate catastrophe losses in 2023.
Persistently high inflation and slowing economic growth, along with an expectation for GDP to drop to 1.2% in 2024, raise the potential for an unfavorable shift in loss reserve adequacy that clouds the earnings picture, led by commercial auto and other liability product lines, according to Fitch.
“We anticipate that a higher proportion of individual companies will report unfavorable loss reserve development in this environment,” the ratings agency said. “However, few insurers are expected to have material capital deterioration from forthcoming loss reserve weakness, with capital for issuers expected to remain within ratings expectations.”
According to Fitch, the accuracy of insurers’ loss projections for claims severity tied to inflation and litigation risks in commercial auto and other liability business will determine if the P/C industry will reach its streak of 18 consecutive years of favorable calendar-year loss reserve development in 2024.
5 Top Trends Shaping The 2024 Insurance Landscape
Like the holiday serving platter overflowing onto the dinner table, satiating our appetites, and building the excitement for all that is to unfold in our lives this new year, so too are the platter of abundant choices available to customers across the insurance domain. From tech-enabled processes to insights-driven engagement and tailored reinsurance services, the abundance is apparent, yet one that should be tempered with reasoning and intelligent choices. The insurance industry is facing an inflection point- the build-up of InsureTech-led AI initiatives over the years has brought us to a threshold of a buffet of seamless experiences. However, to utilize them effectively and capably, other factors such as ethics in AI insurance, value creation, granularity in decision-making, and precision in insurers’ choices will unveil what can be looked forward to in how the rest of the year follows.
Based on our experiences, research trends, forecasts, industry talks, and discussions, below is what we foresee for this year regarding how the insurance industry will unfold.
CHARLEE.AI
Charlee.ai is a patented, predictive analytics platform solution that uses natural language processing (NLP). Charlee.AI enhances and shortens claims workflows, helps reduce severity, litigation, managing reserves and fraud efficiently for P&C carriers/MGAs