News
![Number of Billion-Dollar Disasters in 2023 Highest on Record: Aon Report](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923383/original_ratio_extra_large_5a3e3b06-1dcd-494a-bff9-2e2af59bc057.jpg)
Number of Billion-Dollar Disasters in 2023 Highest on Record: Aon Report
Aon plc (NYSE: AON), a leading global professional services firm, today published its 2024 Climate and Catastrophe Insight report, which identifies global natural disaster and climate trends to help make better decisions to manage volatility and enhance global resilience.
The report reveals that the 398 global natural disaster events caused a $380 billion (2022: $355 billion) economic loss during the 12-month period under review – 22 percent above the 21st-century average – driven by significant earthquakes and relentless severe convective storms (SCS) in the United States and Europe.
Global insurance losses during the year were 31 percent above the 21st-century average, exceeding $100 billion for the fourth year in a row. With insurance covering only $118 billion (2022: $151 billion), or 31 percent of total losses, the 'protection gap' stood at 69 percent (2022: 58 percent), which highlights the urgency to expand insurance coverage.
The number of large-loss natural hazard events reached record levels in 2023, with 66 billion-dollar economic loss events, and 37 billion-dollar insured loss events. Earthquakes caused the most economic losses, while severe convective storms were most costly to insurers. New Zealand, Italy, Greece, Slovenia and Croatia all recorded their costliest weather-related insurance events on record.
The report highlights that 95,000 people globally lost their lives due to natural hazards in 2023 – the highest number since 2010 – resulting largely from earthquakes and heatwaves. In terms of climate, 2023 was the hottest year on record with 'unprecedented temperature anomalies', and all-time highs observed in 24 countries and territories.
"Amidst increasing volatility and complexity, there is a significant opportunity for organizations to become more resilient to the climate and catastrophe risks highlighted in our report," said Greg Case, CEO of Aon. "By working across the private and public sector we are accelerating innovation, protecting underserved communities and better addressing the economic impacts of extreme weather to create more sustainable outcomes for businesses and communities around the world."
![Cat insured losses in 2023 exceed long-term average by 31%: Aon](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923380/original_ratio_extra_large_f8393898-339a-4f75-b3c0-4b853b48627e.jpg)
Cat insured losses in 2023 exceed long-term average by 31%: Aon
Insured losses from natural catastrophes and climatic events totaled $118 billion in 2023, 31% above the long-term average, according to a report Tuesday from Aon PLC.
There were 37 insured loss events of $1 billion or more, a record yearly high and more than twice the annual average of 14. Some two-thirds, or 67%, of insured losses occurred in the United States, according to the report.
The single costliest event was the earthquakes that hit Turkey and Syria in January and February, causing an estimated $5.7 billion in insured losses and $92 billion in total economic losses. Economic losses for the year were $380 billion, 22% above the long-term average.
Severe convective storm was the most damaging peril for insurers, causing an estimated $70 billion in insured losses, or 59% of the total. Flooding was the second costliest at $13 billion.
Of the 37 billion-dollar insured loss events, 25 were severe convective storms, 21 of which occurred in the U.S.
No single loss event reached $10 billion in insured losses, but the 37 billion-dollar events “underlines the growing frequency of medium-sized events, particularly severe convective storms, and their impact on global losses,” the report said.
![Insurance challenges rise with surge in empty offices](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923381/original_ratio_extra_large_c343ac9f-b390-471d-95b8-ef74901aba2f.jpg)
Insurance challenges rise with surge in empty offices
Office building owners, faced with a record level of vacancies driven by the continuing shift to hybrid work, may experience pushback from insurers that previously were eager to provide coverage for the risks.
Policyholders with low-occupancy buildings should review their property insurance policies to better understand how vacancies could affect their coverage, experts say.
Securing coverage can be more difficult and costly because vacant properties are viewed as more exposed to potential losses, such as from fire, theft and vandalism, they say.
The U.S. office vacancy rate rose to a record 19.6% in the fourth quarter of 2023, up from 19.2% in the third quarter, and 18.7% in the fourth quarter of 2022, according to a report by Moody’s Analytics, a unit of Moody’s Corp., issued Jan. 8. The previous record of 19.3% was set in 1991 during the savings and loan crisis, Moody’s said.
The Denver, Los Angeles, Philadelphia, San Francisco and Seattle metro areas are among those that saw more than 1 million square feet in office space vacated last year.
Building owners should review their property insurance policies to better understand how “vacancy” is defined and what steps they may need to take to maintain coverage, said Jeff Buyze, Fort Lauderdale, Florida-based vice president, national property practice leader, at USI Insurance Services LLC.
Typically, “there’s a vacancy clause that specifies if, how and when coverage would be restricted if a property is vacant,” Mr. Buyze said.
Class Actions Filed Over Builders Mutual, Progressive’s Own Data Breaches
Progressive Casualty Insurance and North Carolina-based Builders Mutual Insurance Co. have been served with class-action lawsuits over data breaches on their own computer systems in 2022, cyber attacks that may have exposed the personal data of more than 411,000 people.
“Plaintiffs bring this class action against Builders Mutual for its failure to properly secure and safeguard Plaintiffs’ and other similarly situated individuals’ name, date of birth, Social Security Number, and workers compensation information … from hackers,” reads the amended complaint against Builders Mutual, filed last week in federal court in North Carolina.
In federal court in South Carolina, plaintiff Dodie Waden, a resident of Columbia, South Carolina, and others made similar allegations about Progressive, which had learned of a data breach in May 2023.
“Defendant knew or should have known that due the increasing number of well-publicized data breaches that have occurred in the United States, large data storage such as this require the highest level of protection, which Defendant failed to provide,” reads the complaint.
While insurers worldwide in recent years have faced insured losses from cyber attacks on their policyholders, as well as some thorny litigation about the extent of coverage, relatively few carriers have seen class actions over reported breaches in their own computers.
Marsh & McLennan Companies were famously sued by an employee after a 2021 computer breach reportedly exposed personal information to cyber criminals. That case is still pending, but an appeals court ruling last fall opened the door for more U.S. lawsuits alleging harm from cyber attacks, even when plaintiffs provide no evidence that the data was improperly used.
Commentary/Opinion
![Why Insurtech Remains Steady As Other Fintech Segments Falter](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923421/original_ratio_extra_large_b68564d8-4efe-4397-bfc8-572822438670.jpg)
Why Insurtech Remains Steady As Other Fintech Segments Falter
Until 2023, payments companies could do no wrong in the eyes of fintech industry observers and participants. Businesses in this segment were among the few that successfully navigated IPOs and kept the public markets happy. Then came the H1 2023 results announcements from Adyen and Worldline and the party was over.
Adyen posted 21% revenue growth, below the predicted 40%, and its stock plunged. Meanwhile, Worldline blamed macroeconomic conditions and a stricter approach to fraud for its less than stellar outlook. Payments as a segment took a beating in the public markets, and the 39% drop in funding to payments companies in Q3 2023 shows the private markets felt similarly.
Other fintech segments also suffered last year, albeit not as dramatically. Wealthtech funding dropped 75% while the Capital Markets tech saw a 50% decline
Sarah Kocianski, Contributor, Fintech and Insurtech Strategy Consultant
Research
![Cellphone Use Is Biggest Cause of Distracted Driving, Triple-I Report Finds](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923166/twenty_by_nine_extra_large_966d287b-2a39-4fdd-80d9-229a49072310.jpg)
Cellphone Use Is Biggest Cause of Distracted Driving, Triple-I Report Finds
Cellphone use by individuals operating a motor vehicle continues to be the largest contributor to distracted driving in the U.S., according to the latest Issues Brief from the Insurance Information Institute (Triple-I).
“As drivers returned to the roads following the pandemic, distracted driving surged, causing higher rates of accidents, injuries, and deaths. This high-risk behavior has worsened in the years since, having huge implications for the insurance industry and their policyholders,” stated Dale Porfilio, chief insurance officer, Triple-I.
Triple-I’s just-released report, Distracted Driving: State of the Risk, examines the effects of distracted driving and how it is contributing to more hazardous roadways and a higher combined ratio for personal auto insurers. A combined ratio is the percentage of each premium dollar an insurer spends on claims and expenses. It is a benchmark measure which demonstrates profitability in a particular line of insurance.
Full Report Here [Distracted Driving: State of the Risk]
![Conning Survey: U.S. Insurers to Embrace More Portfolio Risk in 2024, Welcome AI Tools in Investment Process](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923405/original_ratio_extra_large_3f74e687-b0df-485c-8f6e-9797268939b4.jpg)
Conning Survey: U.S. Insurers to Embrace More Portfolio Risk in 2024, Welcome AI Tools in Investment Process
**Insurers outsourcing investment management reported lower levels of concern with key portfolio challenges((
- 62% of U.S. P&C/life insurers expect to add investment risk in 2024
- 51% expect their allocations to private assets will be at least 20% in the next two years
- Three in four insurers using or piloting AI in investment process
Over half (62%) of U.S. insurers say they are willing to take more investment risk in 2024 despite mounting concerns about election year politics, fiscal/monetary policy, persistent inflation and volatility, according to a survey sponsored by Conning, a leading insurance asset management firm. This is Conning’s third annual survey of insurers and was completed by 300 investment decision makers at U.S. insurance companies in November 2023.
“Outside expertise can be an answer for many.”
“Years of historically low interest rates demanded that insurers consider unfamiliar asset categories to help improve portfolio yields,” said Matt Reilly, Conning Head of Insurance Solutions and co-author of the survey report. “The increase in rates has helped make those more traditional investments appealing again. While many insurers appear poised to take advantage of those yields, they also remain committed to adding to less traditional assets such as real estate, private credit and private equity.”
InsurTech/M&A/Finance💰/Collaboration
![FRISS partners with research initiative FIN-X to advance responsible AI in insurance](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923379/original_ratio_extra_large_a812ce17-339a-4dd5-a920-65f5cdbb8b58.jpg)
FRISS partners with research initiative FIN-X to advance responsible AI in insurance
FRISS, an AI-powered fraud and risk solution provider for P&C insurers, has partnered with FIN-X, a research initiative by the University of Applied Science Utrecht that focuses on innovative technologies and responsible artificial intelligence (AI).
According to FRISS, this partnership underscores the company’s commitment to further advancing responsible AI practices within the insurance ecosystem, and aligns with its dedication to unleashing the full potential of AI technologies while mitigating risks.
FRISS has recognised the importance of responsible AI development, as it currently plays a pivotal role in transforming the insurance sector
“The collaboration with FIN-X represents a significant step and aims to remain at the forefront of ethical and compliant use of artificial intelligence in insurance,” the firm stated.
Through this partnership, FRISS will leverage the latest research and insights in responsible AI, ensuring that their solutions not only meet but exceed industry standards for ethical and compliant use of artificial intelligence.
![CoreLogic and Artigem Align to Launch Contents Estimation Capabilities for Seamless Insurance Claims Management](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923423/original_ratio_extra_large_51610091-8845-490e-b2cc-9bfd1886e7a9.png)
CoreLogic and Artigem Align to Launch Contents Estimation Capabilities for Seamless Insurance Claims Management
CoreLogic is working with Artigem on the launch of new contents estimation capabilities within the CoreLogic Claims | Workspace platform
CoreLogic is working with Artigem on the launch of new contents estimation capabilities within the CoreLogic Claims | Workspace platform
CoreLogic(R), a leader in global property information, analytics and data-enabled solutions, is working with Artigem on the launch of new contents estimation capabilities within the CoreLogic(R) Claims | Workspace(TM) platform, delivering a seamless contents estimation experience that benefits insurance claims adjusters and estimators. With these new capabilities, insurance claims professionals can access all tools needed to provide homeowners with accurate estimates in a timely manner following a property loss -- streamlining the previously disjointed and time-consuming process.
"Claims professionals are under more strain with rising catastrophic events impacting millions of homeowners across the country," said Jake Labrie, Executive Vice President, Insurance Solutions at CoreLogic. "By embedding Artigem into CoreLogic's Claims Workspace, professionals will be able to access everything they need to process an estimate in one place through a singular, continuous workflow."
Determining the brand, quality and depreciation for various items -- from typical everyday household items like furniture and electronics to valuable jewelry -- has been a time-consuming and challenging process for claims estimators, who were left jumping from tool to tool across different platforms to accurately assign value to contents inventories. With CoreLogic's Contents Estimation(TM) solution powered by Artigem, the claims process is now more streamlined so that property estimation can be achieved in one place with improved accuracy and increased carrier efficiency.
Innovation
![Floodbase adds SAR data to enhance its parametric flood triggers - Artemis.bm](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923378/original_ratio_extra_large_6223eb4e-a38f-455f-a715-cb2381fad161.jpg)
Floodbase adds SAR data to enhance its parametric flood triggers - Artemis.bm
Insurtech Floodbase, which acts as a data provider and reporting agent for parametric risk transfer arrangements, is set to integrate 24/7, all-weather synthetic aperture radar (SAR) data into its flood solution, enhancing the coverage and granularity which can make parametric flood insurance and risk transfer triggers more accurate.
Water-level-parametric-floodSynthetic aperture radar (SAR) data differs to optical satellite imagery in a number of ways, while optical imagery is similar to photography, SAR data involves signals that are responsive to surface characteristics, like structure and moisture.
As a result, SAR data can be used to measure flood waters and another benefit is that SAR data can be collected at night and through clouds, as well.
Floodbase has partnered with Capella Space Corp., an American space tech company with data and satellite solutions for government and commercial applications.
The partnership with see high-resolution SAR satellite data collected by Capella Space Corp. used in Floodbase’s end-to-end solution for parametric flood insurance.
Floodbase said this will, “enable enhanced payout trigger certification of parametric insurance products by capturing the magnitude of flooding at high resolution and regardless of cloud cover.”
Canada
![The rise and fall of the P&C industry's financial results](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923158/original_ratio_extra_large_4f02d1d7-ad88-4c27-92d8-fe22a65af291.jpg)
The rise and fall of the P&C industry's financial results
As the Alan Parson Project once sang, “What goes up, must come down,” and predictions about industry profitability made two years ago are unfortunately coming true — including a marked downward trend of financial results in 2023, says one veteran industry analyst.
Two years removed from the Canadian P&C insurance industry’s record-breaking results, featuring total underwriting income of more than $8 billion, underwriting income has plummeted to approximately $1.1 billion during the first three months of 2023, says Phil Cook, chairman of Accelerant Insurance Company of Canada.
That’s on pace to finish at just under $1.5 billion for the year, a long way off from even the almost $5 billion of underwriting income in 2022.
“The final figures for 2023 have not come out yet, but preliminary indications are [the industry’s combined ratio] of 97% or 97.5% will probably hold,” Cook said at the Insurance Institute of Canada’s Industry Trends webinar, held last Thursday. “It might go up slightly, depending on what the impact is of the new actuarial requirements [e.g., IFRS-17], so it doesn’t look as though it’s going to be a banner year. In fact, [the industry’s COR] might even push up towards the 100[%] mark, which is not very exciting for anybody.”
Cook noted financial results in 2021 — which featured a hard market cycle in the middle of the global COVID-19 pandemic — were ground-breaking for the industry.
EMEA
![Amazon is shutting down its insurance venture](https://dxj7eshgz03ln.cloudfront.net/production/link/image/923417/original_ratio_extra_large_e5c707c7-5223-4e09-9c86-7cbafa4ec18d.jpg)
Amazon is shutting down its insurance venture
Amazon is shutting down the Amazon Insurance Store, an initiative that was introduced in October 2022 to allow consumers in the UK to shop for home insurance.
The retailer partnered with three insurers when the new venture was launched, Ageas, Co-op, and LV=, and it later added two additional partners – Policy Expert and Urban Jungle.
A statement by Vassil Gedov, head of the Amazon Insurance Store, was shared with Coverager:
“Over the last year, we have been evaluating various businesses and programs, and as a part of that we’ve made the difficult decision to discontinue the Amazon Insurance Store. Customers who have purchased policies will not see any changes to their coverage, claims in process at this time, or future claims they may make during their policy term. We will provide guidance to customers on any actions they need to take as a result of this change.”
Bottom Line: Amazon did the “worst thing” it could possibly do by adding more insurance partners to ultimately shut down this initiative possibly for the same reason QuickBooks terminated its insurance program. After all, if a tree falls in Amazon…