News
AM Best Revises Outlooks to Negative for Amica Mutual Insurance Company and Subsidiaries
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” (Superior) of Amica Mutual Insurance Company (Amica Mutual) and its wholly owned subsidiary, Amica Property and Casualty Insurance Company (together known as Amica Mutual Group).
At the same time, AM Best has revised the outlooks to negative from stable and affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of Amica Life Insurance Company (Amica Life), a wholly owned subsidiary of Amica Mutual. All companies are domiciled in Lincoln, RI.
The Credit Ratings (ratings) reflect Amica Mutual Group’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings of Amica Life reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM.
The negative outlooks for Amica Mutual Group reflect the decline in its balance sheet strength, specifically a deterioration in risk-adjusted capitalization in recent years. Increased loss costs in both the auto and homeowner’s line of business have driven substantial underwriting losses in 2022 and 2023, which has significantly impacted the group’s surplus position and overall liquidity. Nonetheless, the group’s liquidity profile remains supported by Federal Home Loan Bank borrowing capacity, reinsurance and portfolio cash flow. Additionally, Amica Mutual Group’s results rely heavily on net investment income and realized capital gains, which have contributed collectively to positive net earnings in most years. However, this benefit was muted in 2022 and 2023 due to the turbulent investment markets and rapid increases in interest rates, which caused underwriting losses to outpace investment earnings.
AM Best notes that Amica has implemented multiple strategic initiatives, which are expected to correct performance gradually. These include substantial rate increases in both the auto and homeowners’ line of business, as well as a renewed focus on profitable geographic areas and reducing dividends. While this is expected to improve the group’s operating performance in the more near term, it is not expected to replenish its loss of surplus within that same time frame. Additionally, the negative outlooks further reflect the potential for continued capital erosion as management’s strategic action plan comes to fruition.
Commentary/Opinion
Oops! The Futurologists Were Wrong
Amazon's closing of its Insurance Store shows the strength of incumbents. AI and telematics offer routes to even better results.
Last week, Amazon shut down its U.K. homeowner insurance comparison website, as Google did for its auto insurance site several years ago.
Over the past days, we have primarily heard exactly what was said eight years ago about Google shutting down Google Compare (look at the string of comments under that old post):
- they didn't succeed, but they will be back
- they did well, but not enough for their standard, and they make more money on other businesses
- they come to learn, they did it and they are working on the disruption
- the market was not ready
- the insurance sector is heavily regulated...
What seems missing is any acknowledgment that insurance incumbents, their employees and their intermediaries do their jobs pretty well, and that many of them are even taking essential steps in the usage of (new) data and technology in their core business.
Matteo Carbone is founder and director of the Connected Insurance Observatory and a global insurtech thought leader.
Racing to the future in the auto insurance market
Navigating consumer pricing, embedded insurance, advanced driver assistance systems and autonomous vehicles
The auto insurance industry is accelerating toward a new era, marked by swift changes in market dynamics, technological advancements, and the emergence of autonomous vehicles.
As insurers grapple with increased loss costs and complex challenges, four key areas stand out as critical to the evolution of the auto insurance market:
- Consumer pricing trends
The auto insurance landscape has undergone a significant shift in consumer pricing, witnessing a notable increase in premiums over the past few years. This surge is primarily attributed to claims frequency returning to pre-pandemic levels, riskier driving behaviors, and the rising repair costs associated with more complex and technologically advanced vehicles. As cars become more intricate and interconnected, insurers face the challenge of balancing covering the expenses of cutting-edge repairs while remaining competitive in the market.
The increased complexity of vehicles is driven in large part by sophisticated vehicle design and vehicles equipped with advanced driver assistance systems (ADAS), have prompted insurers to reevaluate their pricing models.
Insurers must explore various strategies to better compete in the market with insurance rates rising steadily over the past few years — up 15% over the past year. Usage-based insurance and telematics emerge as crucial tools in tailoring premiums based on individual driving behavior, ensuring more accurate pricing for consumers and fostering a more sustainable insurance landscape.
Michael Anderson is the auto insurance industry advisory lead at Guidewire, a leading provider of technology solutions and innovation to the P&C insurance industry.
Destination Digital: Focus on CX Will Determine Winners in 2024
Carriers that invested wisely in digital transformation two to three years ago have now fully embedded advanced digital technologies into their operating models—and they’ve already seen their efforts bear fruit.
There’s a lot of risk and uncertainty in the world right now. Inflation. Trailing supply chain issues from the tail-end of the pandemic. Continued upward wage pressure. Simultaneous, large-scale global conflicts in the Middle East and Europe. The rapid acceleration of climate change, with 2023 the hottest year on record. And elections coming up for the U.S., U.K., India, and Russia in 2024.
All this volatility means that, among both individuals and corporations, the need for protection has increased. This benefits insurers because they can charge higher premiums for their products. Indeed, premiums for everything from home insurance to car insurance have skyrocketed.
Incumbent insurers cannot rest easy, though. Competition is growing as new entrants looking to take advantage of the increased revenue and profit opportunities are being stood up with speed and scale. And the hard market won’t last forever. When the soft market returns, premium rates will drop, and insurers will have to differentiate themselves in the fight for growth.
Suhas Sethi, Global Insurance Leader, Genpact and Manu Aggarwal, Partner, Everest Group
InsurTech/M&A/Finance/Collaboration
Roofer.com raises $7.5 million
The company focuses on re-roofing residential homes for consumers.
Roofer.com, a technology company in the roofing industry, announced that it has raised a $7.5 million Seed round led by Mucker Capital with participation from Soma Capital, HF0, Asymmetric Capital Partners, Alumni Ventures, HustleFund, The Council, GoAhead Ventures, Mirada Capital and several angels.
The company is headquartered in Dallas, Texas and plans to use the funding to launch into Austin, Texas, it’s second market.
Roofer.com uses drones and AI, to examine roofs. Drones take detailed pictures, and computers analyze them to figure out if a roof needs fixing or replacing and how long it will last.
Further, Roofer.com not only checks roofs but also does the actual roofing work.
Vesttoo bankruptcy case: Consolidation vs segregation now the focus
As the Vesttoo bankruptcy case continues in the Delaware court, it’s apparent that a difference of opinion that emerged near the beginning of the saga, over ownership of segregated cells and their contents, remains the key issue of disagreement between a range of creditors and parties involved.
The question of ownership of segregated cells, that were used in the collateralized reinsurance transactions where Vesttoo had provided letters-of-credit (LOC) that are now know to have no value due to being forged, and the contents of those cells, was raised very early on in the process.
Right back in August 2023, Vesttoo had itself claimed ownership of segregated cells or accounts that housed some reinsurance transactions, after Aon had filed in a Bermuda court to pursue recovery of any value remaining in cells that had been used for transactions where its clients where parties to them.
There are cells remaining in structures linked to the debtor Vesttoo, as well as in other vehicles that housed reinsurance deals where Vesttoo had been involved, which have some value remaining.
AI in Insurance
Enhancing Customer Satisfaction and Reducing Operations Costs with Generative AI
Beyond automation, generative AI will drive a more efficient, responsive, and customer-focused insurance industry, with enhanced customer service, lasting customer loyalty, and reduced operations costs.
AI is transforming the way the insurance industry operates. Its ability to analyze, evaluate and generate new content has given insurers a significant opportunity to streamline and optimize processes, increase automation, and deliver personalized offerings and services to their customers. Insurers are on the brink of unlocking AI’s numerous benefits, including enhanced customer experience and reduced overall operational costs.
Generative AI represents a significant leap forward in AI technological evolution with the potential to reimagine the customer experience and operational excellence altogether. The opportunity is vast—insurers can significantly benefit from generative AI and its ability to streamline the underwriting and claims processes, boost agent productivity, and provide more seamless and personalized services to valued customers. The industry is adapting to advancing technology, and generative AI can help organizations differentiate themselves from competitors, exceed customer expectations, and achieve organizational excellence.
Manoj Pant is a Senior Director and Insurance Industry Principal at Pega.
Vouch introduces AI Insurance
AI Insurance is a safety net for AI startups.
Vouch Insurance has introduced AI Insurance, an insurance product that helps AI startups survive lawsuits and innovate faster.
AI Insurance offers coverage for financial losses from AI products or services including top-of-mind risks like large language model (LLM) hallucinations, algorithmic bias, regulatory investigations, and claims of IP infringement in systems that utilize AI algorithms.
As the AI sector navigates class-action lawsuits, regulatory uncertainty, and heightened scrutiny of risks, AI Insurance is an unprecedented safety net for AI startups. It can pay for defense costs and damages, irrespective of fault, with Vouch expertly handling the claim so startups can conserve capital and maintain momentum.
Indemn, the first AI-powered conversational insurance platform, secures $1.9 million in funding to transform how people learn about and buy coverage with AI agents
Indemn, the first AI-powered conversational insurance platform, secures $1.9 million in funding to transform how people learn about and buy coverage with AI agents
Indemn, a pioneering insurtech platform, announced it has closed a $1.9 million pre-seed funding round, marking its continued growth in delivering insurance products through natural conversation powered by AI. The round was led by Markd, with participation from Afterwork Ventures, Everywhere Ventures, and a group of prominent entrepreneurs and insurance leaders from Australia and the U.S.
Established in 2021, Indemn's AI-driven platform revolutionizes engagement with digital insurance products by making information, product configuration, and underwriting accessible through natural conversation.
Indemn's collaboration with innovative insurance carriers has resulted in a transformative customer experience. Their platform, built around Large Language Models, includes AI agents supporting all aspects of digital insurance, from quoting to purchase, thereby driving growth and reducing operational costs across distribution channels. The customer experience delivers AI agents directly to the user, and when desired, seamlessly connects the customer to human agents supported by an AI powered Copilot.
US Insurtech Market Report AI needs to show its work
Generative artificial intelligence captivated the public in 2023, with Google Trends showing an explosion of searches for the term "ChatGPT."
This was a huge leap forward for AI, but we think advances in explainable AI are just as important, if not more so, for the insurance industry. Explainable AI refers to techniques that help show, in ways humans can understand, how opaque models make predictions and decisions.
Insurance companies have been talking about AI for years, even prior to the release of ChatGPT in November 2022, based on a review of transcripts from publicly traded, US-based insurance underwriters, insurance brokers and insurance technology companies. More than 30 companies discussed the topic in each of the three years prior to 2022.
Insurtech companies should fully embrace AI and promote those efforts to investors. At the same time, the financial services industry needs advancements in explainable AI. Those will be key to alleviating regulatory concerns and should be even more useful to the industry than generative AI.
Improving customer experience through AI was a popular goal among the insurance companies we studied. As with insurance distribution itself, there are different approaches. Lemonade Inc. fields customer questions directly, with a chatbot named Maya that has answered questions in its mobile and web apps for years. In November 2023, Lemonade said it rolled out a generative AI-powered system that handles customer e-mails as well.
Conversely, some companies use AI to empower agents. Reliance Global Group Inc. said it has an AI-enabled customer relationship management system that provides "smart coaching" to agents in areas such as customer engagement and sales. On the sales and marketing front, AI is often used to segment markets and recommend products and services to customers.
Thomas Mason. This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
People
Kempton takes the helm of Nationwide's personal lines business
Casey Kempton has been tapped to lead Nationwide's personal lines property business.
Kempton brings to the role a strong track record of success spanning both personal lines and commercial lines. She'll report to Mark Berven, Nationwide P&C President and Chief Operating Officer.
“During the search process, we had the chance to meet several outstanding industry leaders,” Berven said. "Casey stood out in particular thanks to her strong track record of performance excellence, deep experience in using data insights and technology to fuel growth and innovation and her dedication to developing future-ready talent.”
Kempton comes to Nationwide from Chubb where she most recently served as executive vice president, digital business officer responsible for emerging small business digital acquisition channels via direct-to-consumer affinity partnerships, eBrokers and agent-carrier connectivity.
Prior to that, she led the personal lines agency channel at The Hartford including oversight of field sales performance, distribution strategy, marketing and product portfolio management. She also spent time with the ACE Group accountable for global personal and commercial lines as well as leading the operations and information technology for the Latin America region. Casey’s early career included working on P&C strategic initiatives at The Hartford. She's a graduate of the University of Connecticut.
Repaiify and AsTech Announce Appointments
Repairify announced the addition of Craig Edmonds as the President of asTech. The company also announced it promoted Cris Hollingsworth to Co-CEO of Repairify Global Holdings, and Rick Keister as the Co-Chairman of the Board.
Craig Edmonds was named president of asTech.
Edmonds brings over 36 years of experience in the automotive insurance space, having held key executive leadership roles at Progressive Insurance and Allstate. In his new role, he will oversee the ongoing evolution of asTech’s proprietary and market leading All-In-One technology platforms, lead development of key strategic partnerships and establish business strategies to further accelerate the ongoing growth of asTech.
Hollingsworth has been promoted to the role of Co-CEO of Repairify Global Holdings to oversee all global operations and continue to drive Repairify’s growth across existing and new markets. This includes all company operations, product development, global shared services, and global growth.