News
AM Best Says Losses from California Storms Largely Uninsured, Underinsured
The economic losses from the latest round of California storms will be significant, with many of these losses may not be insured because only 2% of California residents have purchased flood insurance, David Blades, associate director, industry research and analytics, AM Best, wrote in a report out this week.
“Soaking rains from two different atmospheric rivers have led to repeated flooding events will therefore shine a spotlight on private flood insurance in California,” Blades wrote.
California is still the second-largest state in private flood premium despite the low take-up of private flood insurance. The state trails only Florida. Private flood insurance accounts for nearly 50% of California’s entire flood market, according to the AM Best report.
California accounts for 4% of policies from the National Flood Insurance Program, and since NFIP insurance is limited to $250,000 per residence, many of the homes in California protected by NFIP insurance are likely underinsured, the report states.
People want to buy EVs. Why are electric car sales so sluggish? :
Sales of electric vehicles were increasing rapidly ... until they weren't. The auto industry is still looking ahead toward an EV future, but worries that moving too fast would hurt the bottom line.
Bad headlines for electric vehicles have been piling up lately.
Sales leveled off at around 9% of the new car market, and even dipped down at the start of the year. Hertz is selling off a bunch of EVs, citing low demand for them. Ford is slashing production of the F-150 Lightning. GM cut its near-term investment in EVs and is now bringing back plug-in hybrids, which run on electricity and gasoline.
Even Tesla, the all-electric juggernaut that has shaped the rise of EVs in the U.S., warned investors that it's in between "growth waves" and has a quieter year ahead.
Is it the end of the road for the much-touted EV transition?
Not so fast. Take a closer look, and a different picture emerges.
After a record year in 2023, EV sales are expected to set another record in 2024. The CEO of Hertz says the company "may have been ahead of ourselves" in how quickly it moved toward EVs — but maintains it's the right long-term plan. Ford and GM are shifting their timelines, not their targets. And Tesla, of course, remains all in on EVs.
A slowdown in sales growth doesn't signal that EVs aren't coming. To the extent that it's prompting a reckoning, it's over the pace of the journey, not the destination.
"We're just going from, we like to say, rosy to reality," says Stephanie Valdez-Streaty, with Cox Automotive.
Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.
Commentary/Opinion
Challenges in electric vehicle repairs and insurance
Welcome back to the latest episode of The Future of Automotive on CBT News, where we put recent automotive and mobility news into the context of the broader themes impacting the industry.
Steve Greenfield from Automotive Ventures discusses the increasing cost of vehicle insurance. video
Last year, we witnessed all 10 of the top auto insurers in the U.S. raise rates by double digits.
U.S. auto insurers had a tough time adjusting in 2023 as rate increases failed to keep up with jumps in claim frequency and severity. A report from S&P Global observed that increases in severe auto crashes have resulted in a rise in litigated claims, and severe weather and a surge in vehicle thefts resulted in higher losses in comprehensive coverage.
And it’s worth calling out EVs, when it comes to their cost to repair.
Research
Insurance Fraud on the March
Bonnie and Clyde, Ma Barker, Baby Face Nelson and Willie Sutton robbed banks. When asked by a journalist asked why he did, Sutton famously replied “because that’s where the money is.” If banks’ $3.1 trillion in cash and invested assets draws criminals to steal from banks, the insurance industry’s $10 trillion in assets arguably tempts fraudsters yet more. And it does.
Whereas banks’ annual losses from fraud are on the order of $2.7 billion, insurance fraud measures a staggering $308.6 billion annually. The FBI, which prosecutes significant insurance fraud cases, affirms the insurance industry’s massive size “contributes significantly to the cost of insurance fraud by providing more opportunities and bigger incentives for committing illegal activities.” And from the fraudster’s point of view, insurance fraud is a crime not requiring a gun, a mask or a getaway car. In an era of congressional hearings on how to reduce the cost of insurance for consumers, one solution is to attack insurance fraud. Insurers’ fraud-related losses are passed onto all policyholders. If insurance fraud were wiped out premiums would be 10 percent lower.
Jerry Theodorou is the director of the Finance, Insurance and Trade Policy Program
Full article link
Claims/Payments
Insurance claims – a gateway to tech-driven careers
In this first part of a three-part series, we examine how insurance technology integrates with many roles across the industry and provides young professionals with unique career opportunities. The insurance claims industry might not be the first sector that comes to mind for those seeking a rewarding technology career. However, with the rise of sophisticated claims technologies and platforms, insurance is becoming an exciting arena for young professionals, particularly for workers keen on marrying technical skills with a purpose-driven career. In this three-part series, we'll explore how technologies like proprietary software systems, technical platforms, and NLP and AI products integrate into many roles within the insurance industry. For young, early career professionals looking to work in technology, targeting insurance roles over more traditional, ultra-competitive tech industry jobs might be a strategic career move. Here's why:
Similar to other business industries, the insurance sector places a strong focus on early career programs for its young professionals. Interestingly, in our industry, you don't always need a traditional college diploma to find an entry path to a career. Life experience, licensing and a simple self-starting attitude can open doors to apprenticeships, intern programs and independent contractor roles. This is especially of interest for Gen Z workers, who are increasingly opting out of the debt burden of an expensive four-year college degree, in favor of apprenticeships, trade education and other non-college tracks after high school.
Douglas Dell is Vice President – Executive Leader Learning & Development for Sedgwick
Verisk Introduces Generative AI Tool to Expedite Insurance Claim Processing
Verisk has launched its automated generative artificial intelligence (generative AI) record summary feature within Discovery Navigator.
The platform is recognised for its efficacy in medical record review systems tailored for property and casualty claims professionals.
Discovery Navigator’s auto-summary feature accelerates access to essential medical data for property and casualty insurance professionals, allowing them to focus on higher-value tasks, boosting productivity. This efficiency may lead to better resource allocation, reducing claim leakage and ensuring resources are used effectively. Verisk prioritises ethical and responsible use of generative AI, embedding privacy, security controls, human oversight, and transparency into its solutions for enhanced operational efficiency and client profitability.
Discovery Navigator has demonstrated remarkable efficiency, boasting speeds up to 90% faster than manual record reviews and accuracy rates of up to 95%. The introduction of the generative AI auto-summary feature aims to further streamline the claims settlement process, enabling professionals to reach resolutions with precision and efficiency.
“In an era of a shrinking skilled workforce and rising costs in claims handling, generative AI isn’t a luxury, it’s a lifeline,” said Maroun Mourad, president, Verisk Claims Solutions.
He added: “Discovery Navigator’s new auto-summary will empower our customers to do more with less, unlocking new efficiencies that fuel continued growth.”
InsurTech/M&A/Finance/Collaboration
Ryze Claim Solutions Partners with Bain Capital Insurance to Support Continued Organic Growth and Launch Strategic Acquisition Initiative
Investment to drive organic and inorganic growth into new service offerings, geographies, and customer segments.
Ryze Claim Solutions ("Ryze" or the "Company"), a full-service claims management business, today announced it has entered a definitive agreement to be recapitalized by Bain Capital Insurance ("Bain Capital"), the dedicated insurance investing unit of Bain Capital.
Following the transaction, Ryze will be majority-owned by Bain Capital Insurance with members of the management team and select individuals, including VJ Dowling, Dave Delaney, and Stuart Myers, retaining a meaningful ownership stake in the business. Ryze will continue to operate under its current management team led by Executive Chairman, Tony Grippa, and President, Scott St. John. Financial terms of the private transaction were not disclosed.
Ryze is a provider of full-service residential and commercial claims management solutions to the insurance carrier, hybrid or fronting carrier, and managing general agent (MGA) markets. Since its inception in 2014, Ryze has expanded its core residential property loss adjusting services to include desk, end-to-end third-party administration (TPA), alternative dispute resolution, lender placed, and virtual solutions, and has diversified its customer base to include the residential property, commercial property, and casualty end-markets. Included under the Ryze umbrella is Certus, which provides TPA claim services to specialty and casualty insurance companies and the MGA market. A fully scalable platform, Ryze is supported by a technology-enabled proprietary system that includes tools that manage a claim’s life cycle from receipt to close.
Bain Capital Insurance was advised by Kirkland & Ellis and Waller Helms. Ryze was advised by McDermott, Will & Emery, and Dowling Hales.
Innovation
Parametric reinsurance a “beacon” in a challenging market: Augment Risk
Parametric re/insurance solutions can be a “beacon” in a challenging market environment as they can provide clients an alternative to traditional products, alongside catastrophe bonds, industry-loss warranties (ILW’s) and retrocession, Augment Risk believes.
2024 can see several risks on the horizon that lend themselves to parametric placements, the broker explains, particularly the upcoming transition from El Nino to LaNina which, coupled with warming oceans, may lead to a particularly active Atlantic storm season.
As the world faces these challenges, Augment Risk’s goal is to revolutionise reinsurance with alternative solutions such as parametrics and a client-focused approach to broking.
Last year, the reinsurance broker launched a dedicated parametric risk transfer division, led by former Aon and Inver Re weather and parametrics specialist Kurt Cripps.
“Augment Risk’s Global Parametric Specialty is championing the progression of parametric reinsurance with its transformative approach, transitioning from indemnity-based products to parametric, driven by improved data and a desire for more efficient risk and capital management,” the company stated.
People
LEADERSHIP SPOTLIGHT: Kobi Bendelak, CEO and Founder of InsurTech Israel
From front line fatigues to the startup circuit, Kobi Bendelak swapped his successful military career for the insurance industry - and now supports tech entrepreneurs seeking to disrupt through innovation.
A familiar figure on the global insurance scene, Kobi Bendelak is a busy man. Based in Tel Aviv, he travels frequently, and is an enthusiastic advocate for inventive entrepreneurs seeking to transform the staid and steady insurance industry into a vibrant and dynamic space with a thriving insurtech ecosystem
His itinerary is exhausting, and yet, he’ll be the first person to tell you that he thrives on the excitement, fuelled with boundless energy. It’s little wonder then, that Bendelak, who spent 29 years in the military serving his country, also began a career in the insurance industry that ran in parallel to his soldierly duties. He was so successful that he launched an MGA, sold it to Generali Group, and then had the opportunity to retire – all before he hit 50. Insurtech Insights finds out more.
Interviewed by: Joanna England, an award-winning journalist and the Editor-in-Chief for Insurtech Insights
See the entire interview article here
Events
Discover the Future of Insurtech coming from Israel Tickets, Tue, Mar 5, 2024 at 3:30 PM | Eventbrite
Discover the Future of Insurtech coming from Israel : Join Us in Columbus, Ohio on March 5
Embark on a journey into the cutting-edge world of insurtech as we welcome the top Israeli startups to Columbus. Hosted by One Columbus, JobsOhio, InsurTech Ohio, and Insurtech Israel, this exclusive social event promises an evening filled with innovation, networking, and insightful discussions.
2024 PREDICTIONS
Demand for parametric solutions to increase in 2024: Aon
Demand for parametric covers from corporates and public entities will continue to increase to provide quick liquidity after a disruptive event, address gaps in traditional insurance coverage, and cover non-traditional risks, according to Aon’s Q4 2023 Global Insurance Market Insights Report.
Aon suggested that parametric solutions have now been tested in claims events around the world and are “behaving as expected”, which will reportedly lead to a much higher comfort level in “going down the parametric road”.
The firm additionally noted that capacity will continue to flow into the space, both from established players increasing their capabilities and new players arriving on the scene.
“This will include both traditional capital sources (insurance and reinsurance companies) as well as non-traditional (e.g., insurance-linked securities funds),” Aon explained.
The result of this capital influx will be “not only more competition on programs but also smarter and more effective structures for clients”.
A Shifting Insurance Market Requires Shifting Priorities in 2024
InsurTech partnerships will continue to bridge the technology gap, enhancing risk assessment accuracy, streamlining operations, and customizing experiences for both insureds and distribution partners.
With the first month of 2024 already drawing to a close, the insurance industry finds itself facing immense challenges in volatile market conditions. In a bid to prepare for these conditions, we can expect to see a shift in carrier behaviors, with a renewed focus on claims management, increased investment in risk mitigation, and renewed focus on partnerships to deliver more value to their customers.
Elevating Claims Management
Claims management will take center stage for insurers and MGAs in the year ahead as we battle an increasingly aggressive plaintiff’s bar. The status quo isn’t serving insurance providers or their customers, and carriers will seek out new ways to resolve claims in the quickest and most cost-effective way. Using traditional claims processes can take years to resolve, creating stress and financial uncertainty for both carriers and especially small businesses who don’t have the resources and experience to defend themselves.
Mike Levins is Head of Insurance at Counterpart