News
USGS: Nearly 75% of U.S. Could Experience A Damaging Earthquake
Nearly 75% of the U.S. could experience damaging earthquake shaking, a recent U.S. Geological Survey report shows.
A USGS-led team of more than 50 scientists and engineers in the latest USGS National Seismic Hazard Model created a color-coded map that pinpoints where damaging earthquakes are most likely to occur based on insights from seismic studies, historical geologic data and the latest data-collection technologies.
The NSHM update, which was requested by Congress, was created as a tool to help engineers and others mitigate how earthquakes affect the most vulnerable communities by showing likely earthquake locations and how much shaking they might produce.
The update identifies nearly 500 additional faults that could produce a damaging quake. The latest iteration, the first 50-state comprehensive assessment, was updated from previous versions published in 2018 (conterminous U.S.), 2007 (Alaska) and 1998 (Hawaii).
![Are we ready for the next major volcanic eruption?](https://dxj7eshgz03ln.cloudfront.net/production/link/image/919462/original_ratio_extra_large_63100753-2bca-420d-8dd9-c02203f333bd.jpg)
Are we ready for the next major volcanic eruption?
Gordon Woo from Moody’s RMS and WTW’s James Dalziel consider the unique challenge posed by the unpredictability of volcanic risks, and consider whether insurers should turn to downward counterfactual analysis, learning from near-misses to prevent future catastrophic events.
Volcanic eruptions are relatively uncommon when compared to the frequency of other geohazards such as earthquakes, but volcanic unrest is a phenomenon that occurs much more often.
A period of volcanic unrest is signified by the observation of precursors such as seismicity, ground deformation, release of volcanic gases and increased heat flow. Periods of unrest can be prolonged, lasting for months or even years – for example, in the 1930s there were several years of unrest on the volcanic Caribbean island of Montserrat.
There was no eruption following the unrest in the 1930s, nor in the 1960s when there was further major unrest on the island. But both periods warned of the potential for an eruption, which eventually began on 18 July 1995, claiming 24 lives and destroying nearly two-thirds of the island.
Could Montserrat and the insurance industry have been better prepared? Reflecting on the unrest in the previous decades, could a deeper analysis of “what could have been” – employing downward counterfactual thinking– have spurred more robust preparedness measures?
Tepid demand for volcanic risk modelling
Costly disasters in the 1990s such as Hurricane Andrew highlighted the inadequacy of existing risk management practices and catalysed the emergence of the catastrophe modelling industry. But while models for weather-related and seismic risks gained traction, volcanic risk models did not enjoy comparable adoption, even in the wake of the Montserrat eruption.
Higher Auto Claims, More Frequent Accidents Continue to Outpace Premium Hikes
As claim severity rises, U.S. personal auto results are on the decline, according to AM Best’s Market Segment Report, issued in December 2023.
The 112.2 net combined ratio in 2022 for personal auto was an almost 11-point deterioration from 101.5 in 2021, and about 10 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 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 market segment report, noted in a video discussion of the report that even if there had been no increase in loss costs, carriers would “still need double-digit rate increases just to get to [the] level of being able to break even.”
![Commercial insurance rates rise 5.6% in Q4](https://dxj7eshgz03ln.cloudfront.net/production/link/image/919800/original_ratio_extra_large_a287fe15-a550-4427-9d5b-9ee4248cd50e.jpg)
Commercial insurance rates rise 5.6% in Q4
U.S. commercial insurance rates rose 5.6% on average in the fourth quarter and 4.6% for all of 2023, insurance exchange MarketScout Corp. reported Friday.
U.S. commercial insurance rates rose 5.6% on average in the fourth quarter and 4.6% for all of 2023, insurance exchange MarketScout Corp. reported Friday.
Commercial property insurance rates again saw the biggest increase at 8.3%, followed by commercial auto, up 7%.
In other major lines, umbrella/excess rates were up 6.7%, general liability rates increased 5.3%, professional liability rates rose 4.7%, and directors and officers liability rates were up 2.7%.
Workers compensation rates were flat.
![General liability rate hikes ease, auto still tough](https://dxj7eshgz03ln.cloudfront.net/production/link/image/920172/original_ratio_extra_large_c67667a0-853b-4448-90b1-7a8d4b905554.jpg)
General liability rate hikes ease, auto still tough
General and excess liability policyholders saw some slowdown in the pace of rate increases at year-end renewals, but buyers with a significant auto liability exposure continued to see hefty price hikes.
Primary general liability coverage saw more easing than excess layers, and policyholders who were willing to restructure their programs were sometimes able to achieve flat renewals, experts say.
But a general softening market is not yet in sight as underwriters continue to cite increased claims costs resulting from general inflation, medical inflation and higher court verdicts and settlements.
Policy language continues to tighten as insurers seek to exclude so-called forever chemicals and biometric risks and exert more control over claims settlements, they say.
Gavin Souter, Editor, Business Insurance
Commentary/Opinion
![In Conversation: Clara Analytics' Kieran Wilcox on Claims Technology](https://dxj7eshgz03ln.cloudfront.net/production/link/image/922985/original_ratio_extra_large_f1d53dab-5c39-4031-8e0c-65dd6610b0eb.jpeg)
In Conversation: Clara Analytics' Kieran Wilcox on Claims Technology
“The future of innovation in claims handling is helping adjusters with what they do, how they operate, taking the mundane tasks off their desks to allow them to do what they do best — things like speaking to people, investigating claims, and settling claims,” said Kieran Wilcox, AVP of claims at Clara Analytics.
Risk & Insurance writer Abi Potter Clough spoke with Wilcox at the 2023 National Comp Conference about trends in claims management and how technology is changing the industry and improving work for claims adjusters.
Wilcox has a background as a former claims adjuster, giving him inside knowledge and insight into how adjusters work and what type of support they need from their technology. That background continues to inspire his work today.
We discuss what innovation looks like for the claims process, how technology helps adjusters do their jobs better, and what the future holds for the insurance industry. When asked what’s next in innovation, Wilcox called out AI and its possibilities for the claims process, saying “It’s not just AI for the sake of AI; it’s AI with a purpose. Finding tasks for that AI to do and accomplish is the future.”
Wilcox focused his thoughts on how Insurtechs and incumbent carriers can better work together to improve outcomes for injured workers, with a nod towards finding efficiencies to help claims adjusters along the way.
Research
Survey Shows Customers Expect 5-Day Claims Payouts, Not Paper Checks in Future
The vast majority of insureds expect claim payouts to take no more than five days, a new survey shows.
The survey shows 82% of customers expect claim payouts to take no more than five day, and 1% of respondents were “satisfied” with current processing timelines.
It also shows that while paper check claim payments are common today, 74% of customers expect insurers to eventually embrace fully digital payment methods – 70% expressed a preference for electronic bank transfer.
The survey, conducted by claim treasury and payment service provider Vitesse, involved 1,000 respondents in the U.S., and is intended to shed light on a gap between expectations and the reality of insurance claims processing. Using survey provider, Pollfish, two online surveys were conducted, one of Gen Z (250 respondents) who were assumed to have little or no experience of buying insurance policies. The other survey was of respondents over 18, earning a minimum of $25,000 (1,000 respondents), who were assumed to be existing insurance customers i.e. that they will have insurance policies of some type.
These surveys were conducted in April and May 2023, with respondents from across the U.S.
Events
2024 Technology Forum - Insurance-Canada.ca - Where Insurance & Technology Meet
Overview of the 2024 Insurance-Canada.ca Technology Forum (ICTF2024), “Becoming My Customer” – Tuesday, February 27, 2024, at the St. James Cathedral Centre, Toronto.
Becoming my customer; Stepping into their shoes
Change, the only certainty in life and business, challenges us all. The accelerating pace today is daunting.
Technology innovation continues to deliver mind-boggling new possibilities – and consumer expectations keep rising in tandem. Wild ducks in the insurance industry are breaking with traditional norms and revising established practices. Old risks are evolving as new ones emerge. Insurance businesses face unprecedented challenges to meet consumers’ needs and preferences.
Insurance providers – early-stage new entrants and innovative incumbents alike – are trying new approaches across all aspects of their business, from culture to product innovation, from customer service to new business models which will reshape marketing, coverages, claims, and more.
ICTF2024: “Becoming my customer…” will bring together industry thought leaders, insurance pioneers who are taking advantage of new models and platforms, and solution providers who are leveraging data and technology to help insurance practitioners grasp the opportunities.
Explore the new insurance horizon and show off the value of your offerings; find new ways of bringing prospects closer to “Becoming my customer.”
AI in Insurance
![Process before progress: AI’s role in optimizing insurance operations | Insurance Business America](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923024/original_ratio_extra_large_472f9201-b40f-4958-9a34-43ac0f8f5fde.png)
Process before progress: AI’s role in optimizing insurance operations | Insurance Business America
How can you ensurThe following article was supplied by AM Specialty Insurance Company.
Incorporating Artificial Intelligence (AI) in the re/insurance sector is more than a race toward digitization; it’s a march toward strategic enhancement. The real disruptor is not merely the technology itself but the preparatory groundwork that enables its successful adoption.
“Integrating AI is not just a technological leap; it’s a progressive transformation of foundational processes,” said Nishad Lad, Head of Data at AM Specialty Insurance Company.
Strategizing the AI implementation
A direct plunge into AI without refining underlying procedures can undermine potential benefits. A meticulous approach, where process optimization precedes technological adoption, is critical. AI’s effectiveness is exponentially heightened when improving already streamlined operations.
Thus article was supplied by AM Specialty Insurance Company.
People
![Sedgwick appoints Kimberly George global chief brand officer](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923036/original_ratio_extra_large_21a54274-943d-4085-8a24-19c72c3ade7e.jpg)
Sedgwick appoints Kimberly George global chief brand officer
Sedgwick Claims Management Services Inc. on Monday announced it has appointed Kimberly George as its first global chief brand officer.
Ms. George, who was among the Business Insurance Women to Watch in 2011, will serve as a member of the Memphis, Tennessee-based company’s marketing and communications leadership team.
In her 22 years at Sedgwick, Ms. George has held numerous roles in operational, innovation and product development and most recently served as global head, innovation and product development. She will continue to be based in Chicago.
Webinars/Podcasts/Interviews
AM Best: P/C Insurers Cut Expenses in the Wake of Deteriorating Personal Lines Results
Noticeable differences in advertising between the personal and commercial lines reflect the segments' diverging results, said AM Best Senior Industry Analyst Christopher Graham, referencing a Best's Special Report.
2024 PREDICTIONS
20 Issues to Watch in 2024
Electoral politics, especially at the state level; the economic outlook; geopolitical risks; and evolving employee benefits top the list.
Out Front Ideas with Kimberly and Mark kicks off yearly with our popular 20 Issues to Watch webinar.
While there are certainly more than 20 issues to discuss, we focused on the high-impact matters relating to risk management and employee benefits that need more attention. These are essential issues for every risk manager, HR manager and insurance professional to monitor in 2024.
Kimberly George is global chief brand officer at Sedgwick. Mark Walls is the vice president, client engagement, at Safety National.