News
Progressive Q4 Net Income Up 141% as Combined Ratio Exceeds Goal for 2023
Progressive Corp. today said fourth quarter 2023 net income jumped to nearly $2 billion compared to about $826 million a year ago during the same period.
The Mayfield Village, Ohio-based insurer reported some quarterly and year results as it announced its monthly tally for December of $901.2 million in net income.
Progressive recorded a fourth quarter 2023 combined ratio of 88.7 and a full-year combined ratio of 94.9—exceeding its goal of 96 for 2023. Personal lines improved on its 2022 combined ratio of 96 by logging a combined ratio of 93.8 for 2023.
Net income for all of 2023 was $3.9 billion compared to the prior-year total of $721.5 million, which was down about 78% from net income of $3.35 billion for the year 2021 due to losses in its investment portfolio. Investment income rebounded in 2023 to about $1.9 billion versus about $1.3 billion in 2022. A net realized loss on securities of about $1.9 billion in 2022 was reversed to a gain of about $353 million in 2023.
Fourth quarter net premiums written increased 21% to about $15.1 billion.
The Hartford latest to pull back from California homeowners insurance
The Hartford has become the latest insurer to pull back from homeowners insurance in California.
The Hartford will no longer offer new personal property insurance coverage in California from February 1, a spokesperson confirmed to Insurance Business.
“The homeowners’ insurance environment in California has unique challenges that have required us to reconsider the viability of writing new homeowners’ business in the state,” The Hartford spokesperson said. “Based on these challenges and our analysis of the trends, we have decided to stop offering new homeowners policies starting Feb. 1, 2024.
The homeowners pull back does not affect The Hartford’s other existing products in California, including business insurance and personal auto insurance.
The Hartford will “continue to renew existing homeowners' business consistent with our underwriting guidelines,” the spokesperson said.
Florida Senate Committee Adopts Litigation Funding Rules; Expands Wrongful Death
Litigation financing could soon become more transparent and less influential in Florida, but a 34-year-old restriction on who can file medical malpractice wrongful death claims would be expanded under bills approved Monday by a key Florida legislative panel.
The Senate Judiciary Committee, by a vote of 10-0, endorsed Senate Bill 1276, which supporters said would require full disclosure on who may be funding lawsuits and would bar those lenders from directing or influencing the litigation.
“This will give control back to Floridians by ensuring that all rights to make decisions in a lawsuit remain with the person who was harmed,” said Sen. Jay Collins, R-Tampa, who sponsored the bill.
Third-party financing of major lawsuits has become a top issue for insurers and corporations around the country, and a number of states have passed similar legislation designed to shine a light on who’s footing the bill. Bloomberg news service reported last fall that the funding efforts have grown rapidly in recent years. One investment group, Fortress, has plowed $6 billion into litigation funding.
Proposed class action raises question of insurers' obligation to pay for loss
A proposed class action against Progressive Insurance stands to resolve an open question about whether insurers are required to pay certain damages.
The suit, captioned Alexander v. Progressive, contends that Progressive Advanced Insurance Co. fails to compensate third-party claimants for their vehicles’ loss of value sustained in accidents caused by the defendant’s insureds.
“This case presents a single primary legal issue: Whether diminution in value is recoverable property damage in the commonwealth of Pennsylvania,” the plaintiffs said in a Jan. 18, 2024, complaint filed in the Philadelphia Court of Common Pleas by Saltz Mongeluzzi Bendesky.
According to Saltz Mongeluzzi partner Patrick Howard, the question is one that has yet to get a clear answer in Pennsylvania. While some other states have grappled with the issue, he said the outcomes have varied based on state laws.
The plaintiffs in Alexander argue that Pennsylvania’s adoption of a particular section of the Restatement of Torts and part of the state’s civil jury instruction support the claim that they are entitled to diminution in value damages as a result of an automobile accident.
Research
New Global Research by Novidea Reveals 75 Percent of Insurance Organizations Will Change Insurance Management Technology Platform by 2025
Hobbled by Aging Technology, 99 Percent of Insurance Organizations Plan on Making Significant Upgrades to their Core Management System
Seventy-five percent of Insurance organizations worldwide are preparing to implement new core insurance management platforms in the next two years. That’s one of the key findings in a comprehensive new report commissioned by Novidea, creator of the cloud-based, data-driven insurance management platform for brokers, agents, MGAs/MGUs, carriers, and wholesalers.
The report, Legacy Out, Digitalization In: The State of Modern Insurance Technologies 2024, is based on data collected in a 2023 survey of 330 full-time, C-level insurance leaders across eight countries. The research underscores the struggle insurance organizations face with aging, disparate technology that is difficult to manage, scale, and leverage to meet digital transformation needs. The average organization manages six different insurance technology systems, and the average age of these systems is five years or older. Further, these leaders need help adequately training their employees to extract the most value from their technology systems, especially when staff work remotely.
Aon’s Global Risk Management Survey (GRMS): US Results
Aon’s Global Risk Management Survey (GRMS) is designed to assess business leaders’ attitudes about risk management generally and about specific risks. The 2023 results for the United States show respondents are concerned about the impact on current and future operations of ongoing macroeconomic uncertainty and escalating geopolitical volatility. Along with their counterparts globally, U.S. respondents are challenged by the increasingly interconnected and compounding nature of risk, including operational and people risks.
Top 10 Risks Facing United States Organizations Now
Top 10 Current Risks
- Cyber Attack or Data Breach
- Economic Slowdown or Slow Recovery
- Failure to Attract or Retain Top Talent
- Supply Chain or Distribution Failure
- Regulatory or Legislative Changes
- Business Interruption
- Failure to Innovate or Meet Customer Needs
- Workforce Shortage
- Damage to Brand or Reputation
- Cash Flow or Liquidity Risk
What do the wealthy need from their insurance agents?
According to data from the Federal Reserve, the number of U.S. households with net assets over $1 million grew 63% from 2019 to 2022.
Canada has also seen a significant increase in millionaires, with their numbers increasing 23% in 2021 alone, according to Credit Suisse. This means there are now more millionaires in North America than ever before, and with increased wealth comes increased risk.
For Chubb’s inaugural Wealth Report, released in December, researchers surveyed 800 individuals in the U.S. and Canada who had investable assets of at least $500,000; although the majority of respondents (79%) reported assets between $1.5 million and $50 million. Some of the most prevalent concerns about risk held by the respondents were the possibility of damage to their property from weather-related events or climate change, protecting their fine art and collectibles, and being targeted in liability lawsuits.
While 92% of respondents told Chubb they are concerned about the size of a verdict against them if they were to find themselves as a defendant in a liability case, only 36% report having excess liability insurance.
Around 80% of respondents said they collect valuable items like fine art, jewelry, wine and cars, but some of these collectors may be leaving themselves exposed to risk by not having these items property protected. This may be especially true for younger investors, as the report notes: “Many young collectors own valuable articles and assets before they buy their first house, and may not think about insuring those items – this creates a challenge for insurers to find new ways to establish a relationship with them.
Brittney Meredith-Miller is assistant editor of PropertyCasualty360.com
Commentary/Opinion
The Dot-Com Bust's Lessons for AI's Boom
The only thing better than having smart friends is having smart friends who've been around a little while, gaining perspective.
In my case, the smart friend often turns out to be Chunka Mui, whom I've had the pleasure of working with for more than 25 years and with whom I've written four books. He recently published some sharp insights on how the lessons from the dot-com bust of the early 2000s should shape our thinking about today's boom in generative AI, and I'll summarize for you here.
Chunka knows whereof he speaks. He was one of the pioneers of digital strategy back in the mid-1990s--I first heard the term from his lips when we were partners at Diamond Management and Technology Consultants. He was also co-author of "Unleashing the Killer App: Digital Strategies for Market Dominance," a best-seller that has been described as the bible of the internet boom.
Diamond became known as "the killer app firm," and he advised on loads of projects. After he and I published "Billion Dollar Lessons" in 2008, on what to learn from major corporate failures, we consulted with major companies on how to tell whether they had a killer app or a killer flop, before they risked tens of millions of dollars.
So Chunka has seen the good, the bad and the ugly in major innovation efforts, like those companies are considering for generative AI.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
The Role Of The Insurance Industry In The Connected Era
In the future, when people look back at our era, they will undoubtedly see it as the "age of connectivity," a period during which we transitioned from our historical state of being relatively atomized individuals living in local communities to becoming an elaborately interconnected meta-organism of overlapping networks of both humans and (especially in the past decade) objects.
My industry, namely insurance, is inherently conservative and cautious by design, but we, too, have come to embrace the possibilities afforded by these rich new connections. As we do, the prevailing model of what insurance is at its core has evolved.
Historically, insurance has been in the "peace of mind" business—a hedge against adversity in exchange for a regular premium. Over time, as both technology and financial instruments continue to evolve, the goalposts for peace of mind have moved. Under many circumstances in today's world, our ability to predict adverse incidents before they happen enables us to prevent them from happening. This model, referred to as "predict and prevent," emphasizes the identification of risk conditions and patterns in advance to allow us to preempt adversity.
John B. Riggs, CTO & SVP, Applied Technology Solutions at HSB
Aon CEO Greg Case urges immediate action to address climate risks
In Aon’s 2024 Climate and Catastrophe Insight report, CEO Greg Case emphasizes that climate risk is not a mere probability but a certainty that demands urgent attention.
Reflecting on the severe weather events that transpired in 2023, including wildfires, floods, and record-breaking heatwaves, Case asserts that these events pose an existential threat to our way of life.
The report reveals that out of the 66 natural catastrophes causing a billion dollars or more in damages in 2023, a staggering 63 were weather-related.
Shockingly, only 40% of these weather and climate-related losses were covered by insurance.
Case sees this as a substantial opportunity to bridge the protection gap, offering tangible value to clients and bolstering the insurance industry’s impact on society’s response to climate risks.
Empathy remains critical in a tech-enabled insurance industry
In the ever-evolving landscape of the insurance industry, the role of technology has been transformative. But there’s a critical aspect that we often overlook — empathy.
Empathy in insurance context goes beyond simply settling claims promptly. It’s about understanding the unique needs of policyholders, recognizing their concerns, and showing a genuine commitment to their well-being.
Integrating empathy can drive customer retention and operational efficiency.
When customers feel understood and valued, they are more likely to stay loyal. Empathy in customer interactions, even in the digital realm, leads to a superior experience. Claims processes can be streamlined with a compassionate approach to handling customer hardships.
Moreover, refining claim processes with a human lens not only simplifies the experience but also fosters customer bonds, leading to higher retention and longer policyholder relationships. New technology such as chatbots can be trained to respond empathetically and improve adoption and experience.
Empathy doesn’t mean guesswork. By leveraging the wealth of available data, insurers and tech leaders can craft tailored insurance products that truly meet individual needs. Empathy-driven AI algorithms can analyze user behavior and preferences to recommend the perfect coverage.
Additionally, by understanding the specific risks and challenges faced by policyholders, insurers can take a proactive approach to risk management, not only minimizing losses, but also by demonstrating a genuine concern for customer well-being.
Jess Keeney is chief product and technology officer at Duck Creek Technologies
Events
Digital Insurance opens nominations for Women in Insurance Leadership and WIL NEXT Awards | June 27-28, 2024 | Boca Raton resort | FL.
The Women in Insurance Leadership Conference will take place the day before the DIGIN experiential insurtech conference scheduled for June 27-28 at The Boca Raton resort.
Strong leaders share a number of traits: They are good listeners, effective communicators, and are authentic, empathetic and decisive. In the insurance industry, these are particularly important traits, and Digital Insurance needs your help in identifying our current industry leaders as part of the Women in Insurance Leadership (WIL) program. We're also looking for the next generation of leaders for our Women in Insurance Leadership NEXT, which recognizes women who are under the age of 40 and are already demonstrating innovation and leadership abilities in a variety of areas.
Nominations are now open for the 2024 Women in Insurance Leadership and the Women in Insurance Leadership NEXT recognition programs. The nominations will be open through March 1, 2024, and nominees must be employed by a private sector insurance carrier or broker and be based in the U.S. or Canada.
The honorees will be recognized at the Women in Insurance Leadership Awards Dinner on Wednesday, June 26 following the Women in Insurance Leadership Conference at the Boca Raton Resort in Boca Raton, Fla.