Commentary/Opinion
Rolling with Root: A Cinematic Take on The InsurTech's 4Q23 Epic and Full-Year Saga 🚗
🎬 Lights, Camera, Action! 📈 Imagine if "The Wolf of Wall Street" met "The Transformers" in the #insurtech world—welcome to Root Inc.'s 4Q23 earnings review! 🚗💨
Just like a plot twist in a classic Michael Ray movie, Root's latest financials have us on the edge of our seats. Revenue is up (cue the Rocky victory dance 🥊), but so are their expenses (think "Home Alone" chaos but with numbers). And their combined ratio? It's like a suspense thriller all on its own.
But here's the blockbuster twist: There's a goldmine of lessons for regional carriers. From strategic investments to embracing tech like you're Iron Man designing your next suit, Root's saga is more than just numbers—it's a roadmap for innovation.
So, grab your popcorn 🍿 and let's dive into the action. Because in the world of insurance, sometimes you have to roll the credits on tradition to script a future filled with innovation and success.
Kaenan Hertz, InsurTech Advisors
Got the Insurance Blues? Auto and Home Insurance Costs are Soaring
Auto insurance is up more than 20 percent from a year ago. In many places, private home insurance isn’t available at all. Consumers are steaming.
Car insurance is on an amazing run. For 13 straight months, insurance is up at least 1.0 percent. For 20 straight months car insurance is up at least 0.7 percent.
Home insurance, if you can get it at all from any private insurer, is also rising at a fast clip as the lead chart shows.
Mike Shedlock
Creating an EV Insurance Strategy - Floow
As the EV market surges ahead, The Floow's data reveals that range anxiety is fading into the rearview mirror, with EV journey lengths outpacing ICE vehicles by 13%.**
Moreover, EVs are proving to be smoother operators, driven with 4% more finesse—perhaps thanks to advanced cruise control and regenerative braking. Plus, with a 2% lower rate of mobile phone-induced driver distraction, EV tech is steering us towards safer, focused roads ahead.
When electric vehicles first hit the market insurers were nervous about the risks associated with the changing technology.
- Would batteries catch fire?
- Would the vehicle get written off more easily?
- Would the existing repair networks be able to cope with the new technology?
- Would their silent nature and heavier weight result in more pedestrian accidents?
In addition to this, many of the newer vehicles have more expensive tech, significant torque and ludicrous 0-60 times (for a family car). But does any of this make them a higher risk?
News
AXA XL's U.S. Mid-Market insurance business rolls out XL Plus, a GL broadening endorsement for mid-size businesses
AXA XL's U.S. Mid-Market insurance business is extending its general liability coverage for mid-size businesses with its new XL Plus broadening endorsement offering more than two dozen expanded protections.
According to Chris Fallon, Head of U.S. Mid-Market Product & Analytics, "Unexpected events –an on-site injury, a contract dispute, a costly lawsuit - impact businesses of all sizes. That's why we are continuously reviewing our coverage to ensure it adequately addresses the constantly evolving risks our mid-size clients are facing. By including a broadening endorsement, our mid-size clients can enjoy a more comprehensive insurance package, reducing potential gaps in coverage and enhancing their financial protection against a wider range of risks."
The XL Plus endorsement expands the scope and depth of coverage and broadens the range of protections, covering additional risks that are not included in the base policy. The expanded protections include coverage for:
Damage to premises rented to the mid-size business across a range of perils
Automatic Additional Insured status when required in a written contract or agreement
Blanket Additional Insured agreements for Managers or Lessors of Premises, Lessor of Leased Equipment, Mortgagee, Assignee or Receiver, vendors, state or governmental agency, among others.
Extension of bodily injury coverage to include mental anguish.
Erie Indemnity Reports Full Year and Fourth Quarter 2023 Results
Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the full year and quarter ending December 31, 2023. Net income was $446.1 million, or $8.53 per diluted share, in 2023, compared to $298.6 million, or $5.71 per diluted share, in 2022. Net income was $110.9 million, or $2.12 per diluted share, in the fourth quarter of 2023, compared to $65.5 million, or $1.25 per diluted share, in the fourth quarter of 2022. Full Report
Trucking bankruptcies fuel 'hyper-competitive' insurance marketplace
According to a new report from Morgan Stanley, relative to other sub-sectors of insurance, reinsurers “continue to have a solid path”, generating strong ROE, with robust underwriting and steady premium growth.
Morgan Stanley noted that investors have been asking if the firm continues to favour reinsurers going forward, given the slower pricing environment when compared to 2023.
Morgan Stanley said it does, for now, favour reinsurers going forward, however, it explained that a re-evaluation will take place as the hurricane season draws closer.
“From our perspective, reinsurers continue to generate strong ROE, with solid underwriting and steady premium growth. Relative to other sub-sectors of insurance, we believe reinsurers continue to have a solid path,” Morgan Stanley said.
“The tightening of the freight market caused tens of thousands of trucking authorities to be deactivated over the last year, which meant that many insurance carriers and MGAs looking for double digit growth were not able to meet or exceed their goals,” Jennifer Nuest, Amwins SVP, transportation practice leader, told Insurance Business. “This has led to a hyper competitive marketplace in certain segments of trucking.”
The freight industry has struggled in recent years to cope with staffing shortages, rising wage demands and cost spikes across necessities like fuel and insurance.
Reinsurers "continue to have a solid path" relative to other insurance sub-sectors
According to a new report from Morgan Stanley, relative to other sub-sectors of insurance, reinsurers “continue to have a solid path”, generating strong ROE, with robust underwriting and steady premium growth.
Morgan Stanley noted that investors have been asking if the firm continues to favour reinsurers going forward, given the slower pricing environment when compared to 2023.
Morgan Stanley said it does, for now, favour reinsurers going forward, however, it explained that a re-evaluation will take place as the hurricane season draws closer.
“From our perspective, reinsurers continue to generate strong ROE, with solid underwriting and steady premium growth. Relative to other sub-sectors of insurance, we believe reinsurers continue to have a solid path,” Morgan Stanley said.
Research
Millennials More Likely to Embrace AI in P&C Insurance than Other Generations, According to Insurity’s 2024 AI in Insurance Report
The Insurity 2024 AI in Insurance Report sheds light on the evolving landscape of artificial intelligence (AI) adoption in the Property & Casualty (P&C) insurance industry with critical implications for insurers
Insurity, a leading provider of cloud software for insurance carriers, brokers, and MGAs, today unveiled insights from its 2024 AI in Insurance Report that millennials are much more likely to view AI as a positive development in P&C insurance compared to other generations. The Insurity 2024 AI in Insurance Report underscores the contrasting perspectives of different generations toward AI technology and its impact on insurance.
This report reveals that millennials, born between 1980 and 1994, emerge as the most enthusiastic proponents of AI in P&C insurance, with 33% responding that they would recommend their carrier to adopt AI. Millennials view AI as a transformative tool in the industry and recognize its potential to streamline processes and enhance customer experiences. Their endorsement stems from the practical benefits AI offers, including time-saving efficiencies and ease of use in their day-to-day lives. As millennials juggle demanding careers and growing families, AI provides a lifeline by automating routine tasks and providing instant support. Insurers adopting AI technologies into their operations will not face as much apprehension with this group.
InsurTech/M&A/Finance💰/Collaboration
Blu Clarity Names Irys Insurtech as Foundational Technology Platform
Blu Clarity, a value-based risk management solutions, has chosen Irys Insurtech as its foundational technology platform. This strategic move empowers Blu Clarity, an MGA, to quote and bind policies in real-time with any Irys platform user.
Houston, Texas-based Blu Clarity said the partnership revolutionizes the data exchange process not only for sales but also for comprehensive policy servicing.
Pascal Ray, CEO and Co-Founder, at Blu Clarity, shared, “Partnering with Irys Insurtech is a game-changer for us. It not only streamlines our operations by allowing real-time quoting and binding but also transforms how we service policies, ensuring that our commitment to sustainability is reflected in every aspect of our customer interactions.”
The collaboration leverages Irys’s unique “no API needed” technology, facilitating improved connectivity within the insurance ecosystem. This ensures that data exchange—from initial quotes to ongoing policy management—occurs seamlessly.
Margeaux Giles, CEO of Irys, said, “Our vision at Irys has always been to bring about a transformation in the insurance industry through technology. By enabling Blu Clarity to conduct real-time quoting, binding, and servicing with any platform user, we’re not just streamlining processes; we’re also supporting their mission of sustainability.”
Insurance M&A activity hits new low
The global insurance sector witnessed a decline in mergers and acquisitions (M&A) activity in 2023, with 346 completed deals compared to 449 in the previous year, according to Clyde & Co’s latest Insurance Growth Report.
This downturn was observed globally, with reductions ranging from 37.5% in the Middle East and Africa to 13.3% in the Asia Pacific region.
Despite the global slowdown, the Americas continued to lead in M&A activity, though Europe is closing the gap. The latter part of 2023 saw a reversal of the downward trend, with Europe experiencing a 22.9% increase in deals, contrasting with declines in the Asia Pacific and the Middle East and Africa regions.
Peter Hodgins, a partner at Clyde & Co in Dubai, attributed this decline to the challenging economic conditions marked by high inflation, which has made funding for transactions difficult to secure.
“Meanwhile, with over half of the global population expected to be called to the polls in 2024, as well as a number of escalating regional conflicts, heightened geopolitical risks have become a persistent concern,” Hodgins said. “In the face of this market uncertainty, deal-makers have remained in wait-and-see mode, with a negative impact on overall transaction volume in 2023.”
People
Lockton reveals change at the top
Lockton executive chair Ron Lockton, who served as chief executive from 2017 to 2020, is reprising his role as CEO.
In a statement sent to Insurance Business, a spokesperson for the global brokerage said: “Ron Lockton is returning to the role of chief executive officer of Lockton, effective immediately.
“The Lockton board of directors, Mr Lockton, and former CEO Peter Clune have mutually agreed that now is the moment for Peter to step down as CEO.”
The company, a family organization, did not elaborate on the leadership change.
Clune joined Lockton from Zurich Insurance Group in 2006. In 2020, he became “one of very few non-Lockton family members to be CEO” of the biggest independent insurance broker in the world. His previous roles include president and chief operating officer of Lockton US.
Arturo appoints InsurTech industry titan as new Chief Strategy Officer
Arturo, a leading property intelligence company, has appointed InsurTech industry titan Jeffrey Taylor as its new Chief Strategy Officer.
This appointment coincides with Arturo’s plans to enter neighbouring markets and enhance its commitment to furnishing actionable property intelligence and risk profiles, aimed at bolstering global protection efforts.
His expertise extends to navigating challenges faced by the property and casualty (P&C) insurance industry, particularly concerning climate change and outdated data systems. His vision aligns with Arturo’s goals of leveraging accurate and swift property intelligence to address industry challenges and enhance customer experience.
Taylor brings a wealth of experience to his new role, having served in various leadership capacities at Xactware, subsequently acquired by Verisk. His tenure spanned over two decades included significant contributions in product development and partnerships within the insurance and property sectors.