News
Global insurance market sees moderate pricing pressures amid capacity expansion and underwriting flexibility
In the fourth quarter of 2023, the global insurance market exhibited resilience in the face of inflationary pressures, according to the latest insights from Aon’s Q4 Global Insurance Market Dynamics report.
Despite inflationary forces, pricing in the insurance market remained relatively moderate.
However, risks with challenged profiles and adverse loss experiences, such as those exposed to natural catastrophes or significant U.S. liabilities, experienced more pronounced price increases.
Established insurers expanded their appetite, while new entrants targeted growth markets, resulting in healthy competition and ample capacity for well-performing risks.
Conversely, risks with challenging profiles or adverse loss experiences faced capacity limitations, prompting many to seek alternative risk transfer solutions.
While insurers maintained discipline in underwriting practices, year-end growth targets led to increased flexibility and options for clients, particularly for preferred risk types.
AIG General Insurance Q4 Income Up 19% on Underwriting, Investments
American International Group (AIG) during the fourth quarter 2023 recorded underwriting income of $642 million within its General Insurance segment — a slight increase from $635 million during the same quarter the prior year.
Adjusted pretax income (APTI) in the segment increased 19% to about $1.44 billion in the fourth quarter on a 38% increase in investment income to $795 million.
Chief Executive Officer Peter Zaffino said General Insurance booked a 15% increase in full-year underwriting income to $2.3 billion.
“Our unwavering commitment to underwriting excellence and ability to manage volatility remain fundamental to the sustainability of AIG’s underwriting income growth,” Zaffino said of General Insurance results in a statement. “The full-year 2023 combined ratio of 90.6 represents an improvement of 130 basis points year-over-year.”
“2023 margins and underwriting income were the best results achieved in recent history,” continued Zaffino, adding that the portfolio led to “exceptional success” at Jan. 1 reinsurance renewals.
Research
Only 24% trust insurance industry with data, research finds
The study, which surveyed over 12,000 global consumers, delved into consumers' attitudes towards online brands and services.
In today’s digital age, where personal data is a commodity, trust is paramount. However, recent research from Thales‘ 2024 Digital Trust Index paints a concerning picture for the insurance industry. Only 24% of consumers surveyed named the insurance sector as one they trust with their personal data, highlighting a significant trust deficit.
The study, which surveyed over 12,000 global consumers, delved into consumers’ attitudes towards online brands and services. Shockingly, it revealed that 26% of consumers have abandoned a brand in the past year due to privacy concerns, indicating the importance consumers place on safeguarding their personal information.
Where does the insurance industry stand?
So, where does the insurance industry stand in the hierarchy of trust? According to the Thales index, banking, healthcare, and government services reign supreme as the most trusted sectors when it comes to handling personal data. Insurance sits in fourth place.
The research underscores the importance of robust data protection measures and stringent regulatory frameworks.
Danny de Vreeze, vice president of identity and access management at Thales, shed light on the findings:
“Consumers place more trust in banking, healthcare and government services when it comes to sharing their personal data – a universal trend we’ve seen across all the markets surveyed. This is perhaps unsurprising when considering how highly regulated these industries are, the types of information they are responsible for handling, and the measures they have put in place to keep consumer data secure.”
Here's How IIHS Crash Tests Have Evolved Over Almost 30 Years
The Insurance Institute for Highway Safety or IIHS was actually founded back in 1959, and then was reinvented ten years later as an independent research organization to use a scientific approach to identify the full spectrum of options to reduce crash losses. The IIHS opened its Vehicle Research Center in central Virginia in 1992 and began conducting crash tests to both educate consumers and encourage automakers to produce safer vehicles.
Through the years, the IIHS has carried out hundreds of crash tests, and it has continuously developed new crash test protocols to better represent real-world accidents. It even recently began testing new car crash avoidance technology like headlight efficacy, automatic emergency braking systems, and vehicle pedestrian detection.
The IIHS’ highest ranking is good, and an IIHS analysis of 14 years of crash data shows that the driver of a model rated good in the original moderate overlap crash test is 46 percent less likely to die in a head-on crash with a similar vehicle than the driver of a model rated poor. The work that the IIHS has done since its inception has saved countless lives and has resulted in significantly safer new cars, but this slideshow dives into the history of IIHS crash tests.
Commentary/Opinion
The uninsurable world: what climate change is costing homeowners and insurers, Mike Daly
“Michael Heffner had owned his detached house a short drive from the seafront in Virginia Beach, on the US east coast, for exactly one year when his home insurer abruptly cancelled coverage. “They just dropped me,” says Heffner, a US Navy officer.
“There was no, ‘Hey, do you want to stay on with us if we charge more?’ Nothing.” Scrambling to find a new insurer, he found his existing premium of about $1,200 a year impossible to replicate. Instead, he received quotes ranging from $2,000 to $3,200. ”
Heffner, and millions of other homeowners worldwide are on the front line of an insurance affordability crisis. Global warming is making extreme weather events such as storms, floods and wildfires more frequent and severe, and therefore increasingly difficult for the sector to cover. As firms exit some areas and demand higher premiums in others, affordable home insurance cover — for many an essential annual outlay, often a condition of their mortgage debt — is getting harder to secure.
It's not just the USA. Continental Europe, Australia, and even in the less extreme climate of the UK the Bank of England warned in its 2021 climate survey that, in a scenario of governments failing to act on climate and global warming reaching 3.3C above pre-industrial levels by 2050, about 7% of UK households currently covered would be forced to go without insurance due to unavailability or expense.
Such a trend could test the sector’s limits, some say. If yearly losses stick above the $100bn level, and firms are forced into further price rises and pullbacks to protect their balance sheets, it could “harm the whole proposition of the insurance sector to society”, says one reinsurance chief executive. There will be growing “patches” where buying insurance is uneconomical, Swiss Re has predicted.
Mike Daly
The world of insurance in 2024: Stiffening competition, AI & generation gaps
A lot of industry professionals ask, “What’s changing in the insurance world?” The better question might be, “What’s not?”
These last few years have been a wild ride for insurers, with disruption coming from almost every angle, from a global pandemic to a global recession. In 2024, expect to see even more disruption, but what kind and how will the industry remain competitive?
Insurers should be prioritizing how they move faster. The sector has a great history. Unfortunately, a mindset has emerged. Given that it is a regulated sector and we have a set of individuals who spend their whole lives thinking about risk, it’s very easy for them to say, “Well, we’ll do that later. We’ll do that next.” But what that tends to lead to is underestimating the risk of not moving faster.
For carriers to succeed in this environment, the most important thing for them to do is to find ways to get started sooner. And particularly, as you’d imagine given the many discontinuities we’ve seen in recent years — pandemics, climate change, etc., being able to do so based on data. And more than simply having the ability to analyze that data, how is it that you use the outputs of that data to operationalize innovations in your business?
In 2024, here are several trends I see coming to fruition:
Stiffening competition
We’ve seen a significant price-hardening cycle over the past couple of years. That may not end instantaneously, but I think we’ve seen the end of the cycle’s first phase. From here, we’re likely to see a transition as affordability of the premiums is biting into insurance carriers’ abilities to continue to grow their business, despite much better performance in terms of profitability and combined ratios.
Aaron Wright is director of strategy at Earnix
Amazon Insurance Store: Coming to a state near you?
Amazon may have shuttered its UK insurance store, but there is no guarantee that the big tech giant has said “goodbye” to insurance forever – and here’s why agents may not want to rest on their laurels just yet.
The Amazon Insurance Store sputtered to a close in January, just 15 months after opening its virtual doors. However, Amazon will have gleaned information from the short-run enterprise that it could put to better use in the US or elsewhere.
The UK is a solid sandbox to pilot an online insurance project with strong regulation and insurance permeation. Its personal lines consumers and insurers are digital-first, but while this may seem like a net benefit for any incoming online insurance business there is a caveat that may be at the heart of Amazon’s failure there.
UK personal lines insurance is dominated by price comparison websites (PCWs), which each serve up offerings from more than 100 insurers.
Stop the man or woman on an American street and ask them which insurers they know, and (assuming they don’t express their anger over skyrocketing homeowners’ insurance costs) they might reply Allstate, GEICO, State Farm, or Progressive
Jen Frost
InsurTech/M&A/Finance💰/Collaboration
Davies announces acquisition of forensic accounting firm MDD
Deal set to introduce new line of service to group’s portfolio.
Specialist professional services group Davies has announced its acquisition of Matson, Driscoll & Damico (MDD), a forensic accounting firm.
The acquisition positions MDD as a new pillar within Davies’ Global Solutions division, introducing a global forensic accounting service line to the company’s portfolio. Global Solutions, which already encompasses Davies’ Consulting, Technology and Insurance Solutions businesses, is spearheaded by CEO Mark Grocott.
The inclusion of MDD’s forensic accounting expertise is set to broaden Davies’ service offerings, enabling access to independent forensic solutions across five continents. MDD has a professional team of over 330 serving more than 1,000 clients worldwide from over 40 offices spanning North America, Latin America, Europe, Asia, and Australasia.
Paul McGowan, CEO of MDD, will directly report to Grocott and will be included in the Global Solutions executive leadership team.
Waller Helms Advisors acted as exclusive financial advisor to MDD in connection with this transaction.
Nationwide partners with DigitalOwl
Nationwide is partnering with DigitalOwl, a startup offering a solution for analyzing and summarizing medical records.
DigitalOwl’s platform enables the processing and analysis of “vast volumes” of medical records, including both conventional and electronic health records. The solution is designed for life underwriters to navigate medical documents by organizing the critical information needed to thoroughly assess the holistic view of an applicant’s medical history.
“By partnering with DigitalOwl, Nationwide is bringing in an engaging AI technology for our underwriters that ultimately benefits our potential members. This partnership perfectly aligns with our commitment to digitalization, automation and the use of generative AI in the life underwriting process.” – Erin McClintock, Director of Underwriting Innovation for Nationwide’s Life insurance business.
Insurtech Startup Buddy Raises US$7.2 Million
Insurtech startup Buddy has raised US$7 million from 49 investors, bringing its funding total to $8 million
Buddy reportedly offers its software to brokerages and insurance carriers on a subscription basis, charging a monthly fee for each insurance product available. The insurtech also provides accident insurance, which is aimed at outdoor enthusiasts who want coverage for intensive activities like rock climbing or mountain biking.
Launched in by CEO, Charles Merritt, insurance veteran Jay Paul and Martin Agency alum David Vogeleer, subscribers have access to Buddy’s platform, allowing them to manage and present products to their clients. Customers can also conveniently purchase coverage through the interface provided by Buddy. Additionally, Buddy levies a fee for each transaction facilitated through its platform.
According to SEC filings, the insurtech, which is known for its software solutions for insurance companies and on-demand accident insurance for outdoor enthusiasts, raised the capital from notable investors including Sequoia Capital, Plug and Play, and Atypical Ventures.
Sure launches Anywhere Insurance to liberate insurance industry from grip of incumbent rate service organizations and legacy vendors
Sure, the insurance technology leader that unlocks the potential of digital insurance, today announced the launch of Anywhere Insurance to liberate the insurance industry from the control of incumbent rate service organizations (RSOs) and legacy insurance product filings. Anywhere is a simple solution for complex insurance products. Anywhere provides first of its kind insurance programs designed for carriers, MGAs, and global brands that want unique, customizable, go-to-market ready insurance products paired with end-to-end SaaS technology and APIs that can scale to hundreds of millions of customers.
"For too long, legacy rate service organizations have had a stranglehold on the insurance industry. They have controlled the plumbing and pricing, creating challenging and unnecessary barriers to launch modern insurance programs," said Wayne Slavin, co-founder and CEO of Sure. "Anywhere is reinventing how insurance programs are built and launched in the digital age. We are solving the fundamental challenges in the insurance industry with a new turnkey, technology-driven approach that dramatically reduces time to market, minimizes launch and operating costs, and revolutionizes the customer experience. Anywhere is something no other insurtech is capable of taking on and one of our most ambitious undertakings yet."
2024 PREDICTIONS
Mobileye CEO Expects More Driverless Vehicles on the Road Within 2 Years
Six years ago, automakers and tech companies thought they were on the cusp of putting thousands of self-driving robotaxis on the street to carry passengers without a human driver.
Then an Uber autonomous test vehicle hit and killed a pedestrian in Arizona, multiple problems arose with Tesla’s partially automated systems, and General Motors’ Cruise robotaxis ran into trouble in San Francisco.
Yet the technology is moving ahead, says Amnon Shashua, co-founder and CEO of Mobileye, an Israeli public company majority owned by Intel that has pioneered partially automated driver-assist systems and fully autonomous technology.
Already, Mobileye systems are at work in vehicles that take on some driving functions such as steering and braking, but a human still has to be ready to take over. Systems that let drivers take their eyes off the road and fully autonomous systems are coming in about two years.
Shashua talked with The Associated Press about the next steps toward autonomous vehicles. The interview has been edited for length and clarity.