News
Internal Report Shows Cruise Didn’t Think Its Robotaxi Dragging A Pedestrian Was A Big Enough Deal To Fix The Cars
In October of last year, GM’s autonomous cars division, Cruise, had their self-driving license revoked by the state of California due to an incident that happened on October 2, 2023.
In the incident, a pedestrian was hit near the intersection of 5th and Market streets in San Francisco. The pedestrian was initially hit by a human-driven Nissan, which launched the person into the path of an autonomously-piloted Cruse Chevy Bolt, which does make an attempt at an emergency stop. Unfortunately, the person was trapped underneath the Cruse AV, which then attempted a “pullover maneuver,” dragging the pedestrian under the car for about 20 feet, making their injuries significantly worse.
Today, a report was released by GM from Quinn Emmanuel Trial Lawyers called REPORT TO THE BOARDS OF DIRECTORS OF CRUISE LLC, GM CRUISE HOLDINGS LLC, AND GENERAL MOTORS HOLDINGS LLC REGARDING THE OCTOBER 2, 2023 ACCIDENT IN SAN FRANCISCO, and while much of the report is about Cruise’s response to the incident and their subsequent hiding of crucial information to the media, it also reveals information that highlights some of the issues and reasons why this sort of disaster happened at all.
We covered the cover-up and media/regulatory handling of the incident earlier today; what I’d like to do now is talk about parts of the report that seem to confirm some speculations I made a number of months ago about the fundamental, big-picture causes of why the accident occurred, because I think it’s important for the automated vehicle industry at large.
Cruise has had a permit to operate AV robotaxis in California without human safety drivers since 2021, and as of 2022 had a fleet of 100 robotaxis in San Francisco, expanding to 300 when they got approval for nighttime operation. The robotaxis have had incidents before, but none as serious as the October 2 event with the pedestrian. The person lived, by the way, just so you’re not wondering. So that’s good, at least.
The $10 billion cyber-insurance industry sees a dangerous year in cybercrime ahead. AI, ransomware, and war are its biggest concerns
It’s rare to find an insurance policy against war breaking out, but there’s a $10 billion market for cyber-insurance that guards against the threat of ransomware attacks. With the world as violent and turbulent as it is right now, though, lines between the two are blurring.
The ongoing wars in Ukraine and Gaza have insurers on such high alert that many simply aren’t offering coverage any longer, on top of which AI is creating new and unpredictable cybersecurity risks. And insurers expect a “significant” increase in hacks in 2024, to boot.
Those were the three key findings of a new report on cyber-insurance trends from consultancy Woodruff Sawyer. Insuring against cybercrime has grown from a tiny niche to a $10 billion market, with firms that offer coverage ranging from small specialty carriers to household names such as Chubb and Travelers. They offer coverage for losses incurred relating to companies’ IT and computer systems—for example, if companies are hacked and lose data or have to pay ransoms to get it back.
Woodruff Sawyer surveyed over 40 of its clients and found that the industry has a gloomy outlook this year: 56% of respondents said they believed cyber risk would “increase greatly” in 2024. They pointed to ransomware and war-associated risks as two of their biggest concerns.
“If you have an attack that is part of a war campaign, it can affect private companies across the globe that have nothing to do with war,” said Woodruff Sawyer national cyber practice leader Dan Burke in an interview with Fortune. “That is the true risk that’s elevated by conflict and war and geopolitical tension. That’s really what underwriters are mostly concerned about.”
A famous example of this type of ransomware attack was a virus called NotPetya, which circulated in 2017. Originating in Ukraine, it quickly went global and compromised the computer systems of dozens of companies, including drug giant Merck and shipping company Maersk. The White House estimated it caused $10 billion in damages.
Commentary/Opinion
Fast Start For 2024: The Urgency of Talent Management
From a human capital standpoint, insurers need to take a portfolio view of their resources and align them more in a way that matches up with how technical and operational needs will continue to evolve in the future.
With the books now closed on 2023, now is the perfect time for CIOs and other senior executives at insurance carriers to clarify plans for the new year. The Q1 window is always a critical one for carriers looking both to get the year started on a strong footing while concurrently accelerating to execute on the final approved budgets and plans. While there’s nothing new about needing to focus on both of these parallel tracks, the sheer level of change happening in both the business, and the economy, elevates the importance of prioritization. With everything else in flight, it would be easy to lose sight of human capital management as being a foundational element for pretty much everything else. This comes through with stunning clarity in recent discussions across multiple industry platforms.
Of course, core system modernization remains front and center as a critical issue for Life and Annuity carriers. Unlike both P&C carriers and banks, which generally deliver short liability tail products and services, L&A carriers face profoundly different circumstances driven by extraordinarily long tailed liabilities. An ironic consequence is that the systems being deployed now could well be retired and replaced with new platforms before some of the existing old legacy record keeping platforms run their last cycles. Coincident with this reality is another one key to future state planning: the products being sold today could well still be on the books long after the people supporting them at inception have, themselves, retired.
One of the topics that emerges from this fits nicely under the banner of talent management. With demographic shifts rolling forward, 75 percent of the US Labor Market will be comprised of Millennials and Zoomers by 2030. As Younger Boomers and Older Gen X’ers eye the exits, this has profound implications for many functional areas. While IT is clearly impacted, so are many other high skill areas like Claims, Underwriting, and Actuarial. Viewed through this prism, virtually all carriers face a daunting set of recruitment and retention issues. Considering that Boomers may have been happy with employment relationships that lasted 30-40 years, they may carry huge levels of institutional knowledge. Transitioning that into a workforce that sees “tours of duty” that last only 3-5 years should cause notable concern around just exactly what comes next.
Rob McIsaac is the President and CEO of RPM Ventures NC, LLC, an organization focused on developing deep and actionable insights that are specific to the insurance industry in North America.
Insurance Industry Issues create Challenges but Provide Growth
Every industry is in the midst of change — not just insurance. But insurance is tied to every industry, geography, and nearly every consumer or business, so the pressures insurers face are magnified by the pressures everyone else faces and vice versa. We’re all in this together.
Today’s macro-economic factors are impacting all industries, including insurance. For insurers, this has impacted profitability and growth in particular, creating stress. While stress can be a negative, it can also be a positive because it creates opportunities to overcome business stressors that give us a sense of optimism. We are an innovative industry of quick learners with a track record of resiliency. We can adapt and make substantive improvements for the good of our industry, our companies, and our customers.
For a deep dive into both the stressors and the trends, be sure to read Majesco’s Thought Leadership report, 10 Trends Shaping the Future of Insurance in 2024. For a quick look at how many companies will be dealing with stress in the coming year, keep reading.
Denise Garth is Chief Strategy Officer responsible for leading marketing, industry relations and innovation in support of Majesco’s client centric strategy, working closely with Majesco customers, partners and the industry.
Announcements
InsurTech NY startup contest deadline nears
Applications for the InsurTech NY Global startup competition close Monday, February 5.
The annual program highlights startup companies with less than $250,000 in revenue. The top 10 finalists will present at the InsurTech NY Spring Conference in New York on March 20-21. Three winners will be chosen from among the finalists at the conference.
The finalists and winners are chosen by a panel of judges from insurance carriers and venture capital firms. Finalists will get exposure to more than 10 early-stage investors and insurance leaders. Over $200,000 worth of prizes, in the form of products and services for insurtechs, will be distributed to the three top insurtech startups after the conference.
For more details, see InsurTech NY
InsurTech/M&A/Finance💰/Collaboration
Aon and Porch enter $30m strategic agreement including release of Vesttoo fraud claims
Porch Group, a software-driven financial services firm and Aon have entered into a $30 million strategic agreement whereby the re/insurance broker will provide services to the company. Interestingly, the agreement includes the release of all claims Porch had against the broker related to the Vesttoo fraud.
This collaboration is with Aon and its reinsurance broking arm, and sees Aon pay $25 million in payments to Porch upfront, with a further $5 million in payments over the following four years.
Porch says that it sought a strong partner that was able to deliver strong outcomes with reinsurance placements and provide other services across the Group, such as data modelling and more. The parties will now work together to place 2024 reinsurance coverage at the April 1st renewals.
But what is perhaps most notable is that as part of this agreement, Porch has confirmed that the pair have signed a release of all claims arising from the Vesttoo fraud.
Canada
Why personal property results should concern insurers
Even though overall financial results for the Canadian P&C insurance industry were only slightly worse in 2023 compared to the previous year, personal property lines should raise concerns for underwriters, according to a new report from the Property and Casualty Insurance Compensation Corporation (PACICC).
The latest issue of PACICC’s Solvency Matters reported the overall Net Insurance Service Ratio (NISR) in personal property lines was 111.6%. This means homeowners’ insurance was an overall drain on the capital base of Canada’s P&C insurers through the first nine months of 2023, wrote Grant Kelly, PACICC’s chief economist and vice president of financial analysis and regulatory affairs, in the article, Reverting to the mean.
“This is, in large part, due to catastrophic losses, which have already exceeded $3 billion in 2023 (according to CatIQ),” Kelly wrote. Catastrophe Indices and Quantification Inc. said at the beginning of the year the industry paid out more than $3.1 billion in claims related to NatCats for the second year in a row.
Sustainability/Resilience
Reducing Auto Claims by Embracing Sustainability
There is a misconception that sustainable solutions cost more. The reverse can be true, especially in auto claims and repair.
It may have started with changing the plastic straws at restaurants to paper ones, but sustainability is expected to continue trending in a much bigger way in the new year driven by consumer demand. Not only are consumers shifting behavior to embrace sustainability in the retail sector, but we’re also starting to see the popularization of B2B companies prioritizing sustainability.
In fact, a global survey by Solera recently found that 75% of drivers are willing to switch insurance providers for a greener policy. While some companies might look at this finding as a challenge to overcome, it’s more aligned with a golden opportunity for insurance companies to prioritize sustainability goals and, contrary to popular belief, improve their bottom line.
Bill Brower is senior vice president, industry relations and North America claims sales, at Solera.
QBE NA launches QBE Possibilities Fund to accelerate early-stage climate solutions
In a strategic move towards fostering innovative climate solutions, QBE North America has launched the QBE Possibilities Fund.
This initiative is dedicated to supporting collaborative early-stage climate projects aiming to contribute to a more resilient and sustainable future.
David Mulligan, Chief Operating Officer of QBE North America, highlighted the critical role of collaboration, partnerships, and strategic capital allocation in addressing today’s climate challenges.
The QBE Possibilities Fund aims to support early-stage climate innovations by providing philanthropic capital and building partnerships for impact-first investments through ImpactAssets, a donor-advised fund based in the US.
2024 PREDICTIONS
Insurance top trends 2024 | Capgemini
In response to uncertain macroeconomics and increasing insurability concerns, forward-looking organizations across the insurance industry are engaged in business and operating model restructuring. Looking ahead, we anticipate carriers will focus on initiatives that enhance underwriting profitability, promote sustainability and inclusivity, and leverage generative AI to fuel operational excellence.
Success drivers will include enhanced customer experience that boosts trust and loyalty, rapid product innovation, increasing up-sell and cross-sell opportunities, and identification of new revenue streams.
Read our new report, Insurance Top Trends 2024, to explore strategic insights and tactical use cases to help ensure profitable growth and future readiness across both P&C and life insurance domains.
US insurers willing to take more investment risk in 2024 despite concerns: Conning
Over half of US insurers are willing to embrace more portfolio risk in 2024 and to welcome artificial intelligence tools in the investment process, according to a recent survey by insurance asset management firm Conning.
The survey was completed by 300 investment decision makers at US insurance companies in November 2023.
It revealed that 62% of US insurers would take more investment risk in 2024 despite concerns about election year politics, fiscal/monetary policy, persistent inflation and volatility.
“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.
He added: “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.”
US Insurtech Market Report: Green shoots emerge
The US insurance technology space has grounds for optimism in 2024. Industry consolidation is well underway, and the companies strong enough to survive on their own have made progress on their expense reduction plans. Public market investors also seem less bearish on growth stocks, with many insurtech stocks rebounding in 2023.
We expect the insurtech space to continue recovering in 2024, as the industry keeps consolidating and companies with the best prospects for profitability survive. A return to the heady valuations of 2021, when interest rates were near zero, seems unlikely, and we would argue many companies were overvalued at the time. But a gradual decline in interest rates would help the sector, coaxing public market investors back into growth stocks and making venture funding less expensive for startups.
Regardless of the macro environment, we think artificial intelligence will be key for the space. It has the power to transform industries and, as we have seen, create more investor enthusiasm in tech stocks. Insurtech companies should fully embrace AI and promote those efforts to investors.
After a dismal 2022, public market investors warmed back up to the stocks of insurtech companies that have gone public on the major US exchanges in the past four years. A market-cap weighted index of these companies was up 22.2% in 2023 versus a decline of 54.0% in 2022.
S&P Market Intelligence