The Lawsuit That Had to Happen  March 20th 2024

2024 U.S. Property Claims Satisfaction Study | J.D. Power

Amica Ranks Highest in Property Claims Satisfaction

There were 28 catastrophic weather events in 2023 that each caused more than $1 billion in damage—more than any previous year—and caused a combined total of $92.9 billion in damage nationwide1. According to the J.D. Power 2024 U.S. Property Claims Satisfaction Study,SM released today, the increase of severe storms has led to a larger number of high-severity claims and notably longer time frames for all major steps of claims—estimating the damage, paying the customer and completing the work—all negatively affecting satisfaction, which declines to the lowest level in seven years.

“Catastrophic weather events are straining an already fragile system still experiencing supply chain issues that affect the availability and cost of materials,” said Mark Garrett, director of claims intelligence at J.D. Power. “Resources become strained for both insurers and the contractors doing the work. Unfortunately, it’s when claims last beyond three weeks that J.D. Power sees things decline. When claims last less than three weeks, satisfaction improves, so it’s the longer claims that are solely responsible for the decline. Insurers are challenged to manage expectations and proactively communicate during longer claim periods as customers tend to have more questions when experiencing delays.”

Following are some key findings of the 2024 study:

• Repair cycle times through the roof

• Live by efficiency improvements, die by efficiency improvements:

• Higher costs take their toll amid rising premiums

• Digital is helping, but still falling short of customer expectations

COMPLETE ARTICLE HERE

When good insurance customers pay for bad ones

By using advanced data and analytics in areas like marketing and underwriting, insurers can provide a seamless, expedited experience to the low-risk customers while triggering in-depth underwriting for higher risk prospects.

The recent reactionary response to combat the profitability problem for many P&C insurers has been drastic to say the least. Insurers have pulled out of markets, stopped writing policies or chose to “quiet quit” profit-challenged states.

Personal lines customers experienced rate increases to the point many are now choosing to significantly reduce coverage or not carry insurance at all due to affordability issues. In fact, in just one year, auto insurance rates have jumped by 26% across the U.S., according to Bankrate, with even the “good” drivers paying an average of $2,543 annually in 2024.

It’s no wonder, then, that we have seen an uptick in personal lines shopping. Policyholders who stayed with the same carrier for years are becoming increasingly reactionary themselves as they look for lower rates.

TransUnion reports that over the past 2 years, the insurance shopping population has had the highest number of high-credit score consumers than previous years. Insurers are losing their most loyal, most profitable customers because they are bearing the brunt of the profitability problem. The best customers are seeing rate increases, even in cases where they have no accidents and a clean driving history. This puts every insurance carrier at risk, as losing their best customers will further add to their profit challenges.

The goal for the insurance industry should be to avoid adverse selection at all costs.

QBE North America plots turnaround after 'very disappointing' year

QBE North America will continue to manage down its property book and scale up in financial lines and accident & health following a 2023 result that left a lot to be desired.

The insurer will also look to up its game on broker service, having struggled to communicate its appetite and growth areas in the past.

That is according to QBE North America CEO Julie Wood (pictured), who stepped into the US top role at the insurance group on a permanent basis last fall.

Wood’s ascendancy came months before the insurance carrier reported an operating loss for last year, with what the CEO labeled a “very disappointing” combined ratio (CR) of 103.7% that dragged behind the rest of Australian parent QBE’s global portfolio.

“The market has faced, I’d say, a capacity crisis in general around areas that are wind exposed,” Wood said. “We’re seeing this come out with new modeling, in 2024 … what everyone thought was exposed, that’s going to increase.

“We have been ahead of that in the past year around: how are we going to make sure that we’re managing less limit exposure, as well as price adequacy? Ultimately, that also gets to risk selection.”

Waymo robotaxis spark controversy with new L.A. fleet

Automating tasks has revolutionized many industries, from grocery stores to banking, but citizens in Los Angeles are questioning whether it’s worth the risks to automate cars. Waymo, owned by Google’s parent company, Alphabet, is launching 50 autonomous vehicles in L.A. after having tested the robotaxis in various neighborhoods for more than a year.

Drivers and property owners already face higher premiums in California compared to other states, according to Bankrate. The rise of robotaxis in San Francisco and L.A. could further complicate insurance options and take jobs away from thousands of taxi, rideshare and truck drivers. Some citizens and government officials plan to regulate and restrict the spread of robotaxis, while others celebrate the advanced technology.

Dangers of driverless cars

Robotaxis will start roving the roadways in L.A. in the coming weeks as Waymo rolls out its latest fleet, though they will not roam the freeways just yet. Drivers, passengers, cyclists, pedestrians and policymakers, along with developers and regulators, will need to adjust as safety issues arise.

Critics wonder about the safety of these vehicles, ranging from fender-benders to serious crashes and casualties. Some skeptics have gone so far as to put obstacles in the way or block off areas with cones to stall the robotaxis. While the concerns in L.A. are hypothetical, cities where Waymo and other companies already operate offer real-life examples of safety concerns. full article

Commissioner unveils plan for home insurers to base rate hikes on catastrophe prediction models

In an effort to staunch the exodus of home insurers fleeing the state, California Insurance Commissioner Ricardo Lara unveiled a proposal for letting those insurers use computer models of possible future catastrophes to justify rate increases.

The plan Lara unveiled Thursday is part of yearlong effort to overhaul regulations and ease the insurance market crisis in the wildfire stricken state.

Insurers use catastrophe models to calculate rates in every other state, but California has instead required the companies to use only historic loss experience based on the past 20 years. Insurers say that keeps them from pricing the growing risks from a warming climate into policies. In recent years many insurers have stopped offering new coverage and dropped customers in wildfire risk areas, forcing them to buy bare-bones, last-resort policies at two or three times the cost.

“We can no longer look solely to the past as a guide to the future,” Lara said in a statement Thursday. “My strategy will help modernize our marketplace, restoring options for consumers while safeguarding the independent, transparent review of rate filings by Department of Insurance experts, which is a bedrock principle of California law.”

Consumer advocates behind the 1989 Proposition 103 voter initiative that set the state’s current insurance regulatory framework have criticized computer modeling as proprietary “black box” formulas that amount to fancy risk estimates insurers would use to drive unwarranted rate hikes.