Insurtechs race to beat the cash burn clock. Perfect storm for talent intensifies.  January 10th 2023

Should Hippo Be in Play?

As we did recently for Lemonade let's dive into Hippo's investor day and quarterly figures.

In a previous edition of this newsletter, I highlighted Hippo's "connected home approach and the embedded component [I like both these elements] and the bloody technical results of their book of business {I don't like them].

The positive signs shown by Hippo in the second quarter have been confirmed in the third.

On the claim side, the signs are less positive. Last quarter had a 110% loss ratio, despite seven percentage points of favorable development from claim reserves. The performance was far worse than at the top 10 homeowner insurers even though they had a horrible 98% loss ratio in Q3 '22, according to S&P Global data).

Matteo Carbone, InsurTech Thought Leader

The Perfect Storm: How Insurers Can Weather a Talent, Skills Gap

As older generations of employees are retiring from the workforce and younger generations are resigning in search of lifestyle or career changes, insurance carriers are facing a big challenge of attracting talent with the right skills to transform a legacy industry, experts say.

Executive Summary

High rates of employee turnover due to retirements and resignations have kept the insurance industry on its toes for the past several years, and this is coupled with challenges this industry is facing regarding inflationary pressure, climate risk and technological disruption. In Aon’s 2022 P&C Performance Outlook webinar in December, Charlie Gall and Jeff Rieder discussed how the industry can prioritize employee fulfillment, workplace culture, and develop a new generation of leaders as it seeks to attract and retain talent.

Terms like The Great Resignation and quiet quitting have popped up to describe what’s happening in the workforce amid a slew of retirements and resignations, and this comes on top of an already challenging environment with inflationary pressure, supply chain shortages, and climate risk. Charlie Gall, associate partner of insurance within Aon’s Ward Benchmarking team, said during Aon’s 2022 P&C Performance Outlook webinar last month that all of these changes are beginning to add up.

“It does feel a little bit like a perfect storm, where there already is a lot of change, but there’s going to continue to be a lot of change as you see our aging workforce,” he said. “We’re trying to find [talent for] skilled positions … I think in some of the key roles, we’re having to hire over a third of them with entry level experience.”

He said this is most apparent in claims, as Aon’s research shows this is a sector with high employee turnover in the industry right now.

Has the Remote-Work Trend Peaked?

When the pandemic hit nearly three years ago, the world didn't have a choice: Everyone who could work from home worked from home. And after we all sorted through the many kinks -- figuring out when to mute ourselves so colleagues didn't hear toilets flushing on Zoom calls, how to keep the cat from jumping onto the keyboard and in front of the camera, how to firmly signal to the kiddos that Mommy and Daddy are working, etc. -- work from home seemed to go well. Companies reported increased productivity, and employees appreciated the flexibility, as well as the time and money they saved by not having to commute.

The question was whether the trend would last. Certainly, some major companies indicated it would, by moving out of big chunks of office space. And employees who want to work remotely seem to still have considerable leverage, given the low unemployment rate and number of job openings. But some companies, especially in the tech world and in finance, have initiated returns to the office, and they are often bellwethers.

So, where do we stand? Well, LinkedIn has weighed in with data based on a study of paid employment ads on their site, and the answer is: Yes, remote work seems to have peaked last summer.

Actually, the study isn't just from LinkedIn and based on 60 million paid job postings. It's from a longtime friend and colleague from my days at the Wall Street Journal, George Anders, who is now senior editor at large there. I trust LinkedIn's data plenty. I trust George implicitly.

Now, the data don't even show that the percentage of job postings for remote workers has headed back down to where it was at the beginning of 2021, after vaccines had started to become available, let alone to where remote work was during the first, unrelenting wave. But it does show what looks to me like a significant trend.

George quotes Marc Benioff, the CEO of Salesforce, who was an early enthusiast about remote work, as worrying in December about whether remote work "could undermine the cohesive, get-it-done culture of the physical workplace. 'Are we not building tribal knowledge with new employees without an office culture?' Benioff asked in an internal Slack message at Salesforce. He played coy in his note, saying he was 'asking for a friend.' But Benioff’s message quickly leaked to the media, generating wide debate about whether remote work might not be such a win for employers after all."

Paul Carroll, Editor-in-Chief, Insurance Thought Leadership

Road Deaths Surged Alongside Covid — But Who Died, Exactly?

The surge of traffic deaths in the first year of the pandemic can't be completely explained by quarantine-emptied roads that made speeding easy — and new data on who, exactly, was involved in those crashes may lead to more questions than answers.

In a bombshell recent analysis from AAA, researchers used advanced statistical models based on pre-pandemic trends to forecast what would have most likely happened on U.S. roads between May and December of 2020 if Covid-19 had never upended American lives. (The ultra-anomalous months of March and April, when road deaths were still low because of strict quarantine orders, were excluded from the analysis.) The analysis, notably, included not just where and when traffic deaths would have occurred, but also who, specifically, would or would not have died.

The "when" was particularly surprising. The study verified that the absence of traffic jams played some role in allowing drivers to reach dangerous speeds on too-wide roads, but the researchers also found that the most significant differences between their forecast and real-world death totals happened in the dead of night, when most roads have always been congestion-free.

Between 10 p.mm and 1:59 a.m., deaths were nearly 22 percent higher than expected; during the typical morning rush hours, by contrast, deaths were actually 6.3 percent lower than the model anticipated they'd be. The late afternoon and evening rush hour, meanwhile, "did not differ significantly from the forecast."

45 States Will See Car Insurance Costs Increase in 2023

Americans may be in for insurance sticker shock in 2023 - insurers are expected to raise car insurance premiums by an average of 8.4% in 2023 after a slight 0.6% increase in 2022 according to ValuePenguin's State of Auto Insurance in 2023 report. The average cost of auto insurance is expected to reach $1,780 per year annually, and 45 states will see their car insurance premiums increase in 2023

2023 Auto Insurance Rate Predictions:

**Auto insurance is expected to increase by 8.4% in 2023 with 45 states seeing their rates increase by at least 1%.

**The average cost of full coverage car insurance in 2023 is $1,780/year, with Michigan, Florida, and Rhode Island residents paying the highest premiums.

**Have the need for speed? Drivers with traffic violations in 2023 will see their premiums jump 52% on average.

**Car insurance for new Electric Vehicles will be 28% higher than new gasoline-powered cars. The Porsche Taycan ($3.576) and Tesla Model Y ($3,110) will have the highest insurance premiums in 2023 with the Honda CR-V as the cheapest car to insure in 2023.

6 surprising things auto insurance policies don’t cover

Chipped windshields, vandalism and auto accidents are among the most common incidents that result in auto insurance claims that policyholders expect to be covered. However, when it comes to auto insurance claims, expectations often outpace reality as drivers often assume more coverage than what is actually provided.

In fact, among policyholders that filed a claim in the past five years, 40% had an event where the policy did not respond as they had expected, according to a 2022 survey by VIU by HUB. The survey also found that 80% of policyholders said there are aspects of their home and auto policies that they want to learn more about or understand better.

“Consumers are right to be concerned about the possibility of coverage gaps, as the economy is changing quickly and many people are unknowingly underinsured,” Bryan Davis, executive vice president, head of VIU, said in a release. “Education and insight can help alleviate those concerns while the advice of an expert can ensure ideal coverage and protection.”

4 Insurance-Related Resolutions

The new year is a time to think about how you want to refresh, renew and recharge. But it can be more than just dieting and hitting the gym. What about taking a fresh look at one of your biggest investments—your home?

Erie Insurance has four simple steps that can go a long way to protect your home in 2023.

**Regularly cleaning out your dryer vent is just one of the many ways to keep your home safe this new year.

**Regularly cleaning out your dryer vent is just one of the many ways to keep your home safe this new year.

**Know your shut-off valves. Few people know where the emergency shut-off valves are located for gas, water and electricity.

**Take a moment and find them, and make sure everyone in your house knows where to find them.

CEO scammers are now 'shipmentlifting' physical goods

Business email compromise (BCE a.k.a., CEO fraud) attacks are a highly targeted form of phishing where scammers impersonate a C-level executive or a critical supplier by spoofing websites, hijacking emails, faking social media profiles, leveraging deep fake video and other tactics, to make their identities appear more believable and trustworthy. They then instruct victims to carry out unauthorized wire transfers, purchase gift cards, update billing and banking information or other common financial transaction. BEC scams are probably one of the most profitable, low-tech cybercrimes. Global businesses lost a whopping $43 billion to BEC between 2016 and 2021. Some estimate BEC is 64 times costlier than ransomware attacks.

In a recent evolution of BEC tactics profiled in an FBI joint cybersecurity advisory, bad actors are using BEC techniques to snatch food shipments worth hundreds of thousands of dollars. As The Register so aptly put it, “The escalation from shoplifting to shipment lifting is, if nothing else, black-market capitalism in action.”

"Shotgun" submission approach won’t work in hard market, agents warned

Retail agents beware, taking a “shotgun approach” to submissions will not be tolerated in today’s hard market, at least not in Burns & Wilcox’s personal insurance practice.

This is according to Burns & Wilcox corporate senior vice president, national personal insurance practice leader Bill Gatewood.

“I have instructed our practice that if we receive a submission that we know a retail agent has sent to five other wholesalers, we’re just going to pull out the decline and then move on to the next one, because we’ve talked about the amount of time and resource that we have,” Gatewood said.

“And that sort of transactional mentality just doesn’t work in a hard market like we’re in today.”