Commentary/Opinion
Shifting population, inflation drive rise in storm losses
Rising insured losses caused by severe convective storms can largely be traced to substantial expansion in exposure values in affected geographies rather than significant meteorological shifts, experts say.
The tornadoes, hailstorms and high winds produced by such storms are tearing through areas with higher insured values as a result of several factors, including population expansion and inflation.
Losses due to severe convective storm have been driving annual catastrophe losses for several years, and 2023 marked the first time insured natural catastrophe losses topped $100 billion without a single, larger event driving the total, sources said.
Global insured losses from natural catastrophes totaled an estimated $123 billion in 2023, according to a report from Gallagher Re, the reinsurance brokerage of Arthur J. Gallagher & Co. Severe convective storm losses accounted for about 58%, or $71 billion, of the total, with $60 billion of the losses arising from claims in the United States, where six of the year’s top 10 costliest insured events were severe convective storm events.
“There’s just more of an expanding target of exposure, meaning more people and stuff that's in harm’s way that can be affected by these events,” said Steve Bowen, Chicago-based chief science officer with Gallagher Re.
Research
'The Future of AI in Insurance' | Reuters Insurance
There's no doubt that Generative AI holds the potential to revolutionize the insurance industry as we know it. Treading carefully will be key, but those that fall behind run the risk of being left in the dust. To help you navigate this dynamic field, we asked 700+ insurance companies where they are investing in AI, what the key blockers are, and how successful it’s been – so you can benchmark your strategy against insurance-specific examples.
Download the full report here: 'The Future of AI in Insurance'
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News
California storms – what's the damage?
[Ed. Note: much of the property damaged by flooding and mudslides are not covered by homeowners insurance in California this week with the NFIP and growing protection gap in the spotlight]
The wind-whipped storm that dropped an historic amount of rain on California this week killed two people and has caused as much as $11 billion in damage and economic losses.
A preliminary calculation from Accuweather put the estimated losses at $9 billion to $11 billion after more than 10 inches of rain fell in the mountains west of Los Angeles, making it one of the wettest two-day periods in 147 years, AccuWeather said. One man died after being struck by a tree limb and another was killed when a tree fell on his home, the governor’s office said.
The storm marked the second strong atmospheric river — long plumes of moisture off the Pacific Ocean — to hit California in a week. A year ago a string of atmospheric rivers killed 22 people and caused as much as $34 billion in damages in the state, according to Accuweather. Scientists predict global warming will make California’s wet and dry seasons more extreme, resulting in more intense deluges and droughts.
Cincinnati Financial posts net income of $1.84 billion in full-year results
Insurer Cincinnati Financial Corporation has reported a full-year 2023 net income of $1.84 billion, compared with a net loss of $487 million in 2022.
For Q4 alone, the firm posted a net income of $1.18 billion, compared with a net income of $1.01 billion for the same quarter of 2022.
This came after recognising an $824 million Q4 2023 after-tax increase in the fair value of equity securities still held.
Cincinnati Financial suggests that the $170 million increase in Q4 2023 net income reflected the after-tax net effect of a $126 million increase in after-tax property casualty underwriting profit, a $25 million increase in net investment income and a $13 million increase in net investment gains.
The firm reported a 87.5% Q4 property casualty combined ratio, improved from 94.9% for the fourth quarter of 2022.
CNA FINANCIAL ANNOUNCES Q4 2023 NET INCOME
CNA Financial Corporation (NYSE: CNA) today announced fourth quarter 2023 net income of $367 million, or $1.35 per share, versus $239 million, or $0.87 per share, in the prior year quarter. Net investment gains for the quarter were $5 million compared to net investment losses of $26 million in the prior year quarter. Core income for the quarter was $362 million, or $1.33 per share, versus $265 million, or $0.97 per share, in the prior year quarter.
Our Property & Casualty segments produced core income of $434 million for the fourth quarter of 2023, an increase of $92 million compared to the prior year quarter driven by higher investment income and higher underwriting income. P&C segments, excluding third party captives, generated gross written premium and net written premium growth of 10%, driven by new business growth of 16%, retention of 85% and renewal premium change of +5%.
New OnStar essentials package to come standard on MY 2025 GM vehicles
Beginning with model year 2025, some OnStar features will come standard on GM vehicles at no additional cost above the vehicle purchase price. All Chevrolet, Buick, GMC, and Cadillac vehicles will …Beginning with model year 2025, some OnStar features will come standard on GM vehicles at no additional cost above the vehicle purchase price.
All Chevrolet, Buick, GMC, and Cadillac vehicles will be equipped with the new “OnStar One Essentials” package that includes Automatic Crash Response, remote vehicle commands, and navigation and voice assistance features.
Automatic Crash Response is a comprehensive automatic crash notification system that connects customers to critical assistance in the first moments after an accident, even if they’re unresponsive.
Specially-trained OnStar emergency advisors call into the vehicle to provide medical assistance and relay vital information to first responders.
“By standardizing some of our most appealing OnStar features, we can deliver more technology and value at every price point, helping ensure our vehicles and customers stay connected for the long-term,” said Marissa West, GM North America president, in a news release. “With this move, every new vehicle in our lineup will include a compelling set of safety and connected services that is distinct to GM thanks to nearly 30 years of OnStar experience and innovation.
InsurTech/M&A/Finance💰/Collaboration
M&A activity reverts to pre-2021 levels
Deal activity in the insurance distribution sector has come full circle, and 2023 can be characterized as a return to normal.
The total number of transactions last year was 782, compared with 1,030 in 2022 and 1,108 in 2021, marking declines of 24% and 29%, respectively. Yet, compared with the average of the three-year period prior to 2021-2022, last year’s deal count was 11% higher.
These totals include U.S. and Canadian property/casualty and employee benefits brokerages, third-party administrators, managing general agent operations, life insurance/investment or financial management, consulting, and other business connected to insurance distribution. We collect the information from public announcements, buyer websites and other sources in a consistent manner from year to year, but it does not include all transactions, as many are never disclosed publicly.
Fairmatic Accelerates Growth with Appointment of Jim Hinchley as President of Insurance
Fairmatic, an insurtech 2.0 startup redefining commercial auto insurance by rewarding safety with savings, today announced Jim Hinchley's appointment as President of Insurance. Jim, who has led and built teams managing several billion dollars in premiums, is joining Fairmatic's global executive team to help accelerate growth and bring innovative new insurance products to market. Since coming out of stealth in September 2022, Fairmatic has fostered a 25% safety improvement and cost savings among its insureds.
Fairmatic serves businesses across a myriad of industries powering the economy, including artisan contractors, last-mile delivery, non-emergency medical transport companies, transportation networks and others. By providing businesses with an easy way to monitor driving safety, Fairmatic is giving businesses proactive control over how much they pay for insurance.
"Fairmatic is using advanced AI and machine learning technologies to flip the script on how commercial auto insurance risks are analyzed, priced, and delivered to fleets," says Jonathan Matus, CEO and Founder at Fairmatic. "Our vision is to make AI-powered insurance more ubiquitous. With Jim as President, Fairmatic will be well positioned to continue creating brand new commercial auto insurance products anchored on greater control over safety, costs, and operational efficiency."
Beem and TruStage™ Join Forces to Help Safeguard Americans Against Financial Uncertainties
Beem, the revolutionary Super App that makes life affordable for millions of Americans, has announced a strategic collaboration with TruStage, named by Forbes as one of America's Best Insurance Companies for 2024. This partnership underscores Beem's commitment to empowering individuals against the uncertainties of life, such as covered job loss or disability, through innovative tools and services.
Job loss can strike at any moment, leaving individuals and families struggling to make ends meet. However, with TruStage's Payment Guard Insurance solution as an integral part of Beem's offerings, our members could be prepared and gain an extra layer of financial assistance if or when it happens.
Beem's Super App has helped millions of working Americans prepare for financial uncertainties since 2021. With a monthly subscription customers can receive funds to help them during covered job loss or disability, file both federal and state taxes in any region, lower auto insurance premiums by 40% based on their driving behavior, get road-side assistance when needed, and earn cashback up to 20% on everyday transactions, among other benefits.
Beem's CEO, Akshay K, remarked, "Beem steps in with the Super App for Consumption Smoothing, a transformative solution that has guided millions through the ebbs and flows of their financial circumstances. Through our strategic alliance with TruStage™, we broaden our mission, safeguarding Americans from drastic financial disruptions like job loss and disability, championing their financial resilience."
SURE Becomes One of the First Demotech-Rated Insurers to Create Capacity by Offering Surplus Lines Homeowners Coverage in California
SureChoice Underwriters Reciprocal Exchange (SURE), a policyholder-owned coastal insurer, in partnership with SageSure, one of the largest managing general underwriters focused on catastrophe-exposed markets, today announced the launch of its surplus lines homeowners insurance in California, making SURE one of the first Demotech-rated insurers in the state to offer this product. SURE has earned a Financial Stability Rating® of A, Exceptional, from Demotech, Inc., a nationally recognized statistical rating organization specializing in evaluating the financial stability of independent, regional, and specialty insurers.
“For four decades, Demotech has been the trusted financial analysis firm for independent insurers that serve challenging regions. We are excited to see SURE and SageSure bring their substantial expertise and experience to this market and to demonstrate the national scope of carriers securing Demotech’s Financial Stability Ratings®.”
SURE’s product arrives at a crucial time for the California home insurance market. As seven of the state’s largest insurers restrict coverage or retrench due to wildfire risk, the demand for private-market capacity is high.
“California’s residual market has nearly doubled in recent years, illustrating the gap left by private insurers and the need for financially stable, reliable coverage options,” said Ed Konar, President of SURE. “SURE was built to bring innovative solutions where they are needed most. We look forward to serving this state for years to come.”
Kin announces $15M in fresh financing from new investor Activate Capital
Kin, the pioneering digital, direct-to-consumer home insurance company, today announced the closing of $15 million in financing from new investor Activate Capital, a growth-stage VC firm focused on the sustainable, resilient transformation of the global economy.
“We believe that Kin’s unique approach to homeowners insurance unlocks new levels of agility in adapting to market challenges and providing necessary coverage in many underserved regions.”
Raising at an increased valuation, greater than $1 billion, is an achievement that’s becoming increasingly rare as other technology companies continue to have trouble securing capital. Kin has maintained systematic, capital-efficient growth, increasing revenue by more than 50% year-over-year and maintaining positive net income in 2023. With this incremental capital, Kin can accelerate its growth investments, including multiple new markets and products, which will widen the gap with legacy insurers that aren’t able to quickly respond to changes in climate, technology, and consumer preferences.
“Investors appreciate our focus on the fundamentals – maintaining positive unit economics, using technology for accurate pricing and better underwriting, and eliminating unnecessary steps in the insurance journey,” said Sean Harper, CEO of Kin. “We ended the year with approximately $85 million in cash, which doesn’t include the cash in the reciprocal exchanges we manage. But in this environment, having a strong balance sheet is particularly beneficial, which is why we’re excited to partner with Activate on the investment.”
Events
InsurTech Hartford Symposium 2024 Announces Keynote Speaker, Heidi Sirota, Chief Pet Officer at Nationwide
InsurTech Hartford is thrilled to announce the keynote speaker for the much-anticipated InsurTech Hartford Symposium, taking place on April 17-18, 2024 at the Mohegan Sun Resort in Uncasville, Connecticut. This year's event, focused on delivering the greatest value of insight and inspiration in the insurance technology sector, will open with Heidi Sirota sharing her journey to the top with an appropriately titled keynote address 'Purr'fectly Imperfect Leadership: How to Become the Top Dog'.
For Heidi Sirota, meeting your full potential doesn't mean being perfect. It's about leaning into the talents that make you stand out and effective. This session not only promises to offer invaluable leadership insights but also key actions to take your career and business to the next level.
"We are exceptionally proud to host this influential leader at our Symposium," says Stacey Brown, President of InsurTech Hartford. "Her presence underlines our commitment to bringing cutting-edge perspectives to the forefront of insurance technology. This is more than an event; it's a catalyst for transformation."
