News
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
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.
Claims
Agero's Crash Response Volume Doubled in 2023, as More Top Insurers Embrace Telematics-Driven Crash Detection
Agero, the leading white-label provider of digital driver assistance services and software for the majority of automotive and auto insurance brands, announces the expanded deployment of its Crash Response technology after experiencing record growth in 2023. The expansion enables Agero to roll out its critically important Crash Response offering, which immediately works with emergency services to dispatch support after a crash has been detected, to more consumers across the U.S. - particularly important as vehicle accident rates and severity continue to rise.
With two additional Top 10 carriers launching programs last year, Agero’s Crash Response dispatch volume doubled. This means not only twice the number of opportunities to realize savings associated with capturing vehicles from accident scenes, but also twice the number of potentially life-saving customer interactions.
“Safety is always the paramount concern whenever a collision occurs,” said Ben Zatlin, Vice President and Head of Accident Management at Agero. “At Agero, we’ve long been proud of our ability to get to the scene quickly and help clients recover the vehicle. Now with increased Crash Response deployments, we’re excited to do even more for our clients’ customers in their time of need.”
Through partnerships with leading telematics technology providers, Agero’s Crash Response team is immediately notified once a crash is detected and validated. Their team then follows up with the driver, triages the situation and determines the level of support needed. Considering that the U.S. Department of Transportation considers emergency response time to be “a major factor ensuring an injured person receives the medical care they need to survive a crash,” Agero’s reliability in responsiveness is a life-saving capability.
Accident details are shared immediately with the insurer’s claim system to begin the claims process and dispatch a tow. Without Crash Response, it takes the typical policyholder eight days to report an accident to their insurer, per a P&C insurance industry study. Crash Response helps enable earlier accident reporting to reduce secondary costs by as much as $800 to $1,000 by minimizing costs associated with extra storage, tows, and rental days.
A Smarter Way to Navigate Insurance Claims (Part 3)
An insurance claim is a formal request to an insurance company for coverage or compensation for a covered loss or policy event. — source: www.investopedia.com Once initiated, the claim goes through often a complex process with one of two possible outcomes — the claim is either accepted leading to a settlement, or rejected. The claims process would typically be:
contact the insurance company
start of the claimant investigation
check the policy coverage
evaluate the damage and
arrange compensation payment
The figures within the UK insurance industry are staggering. On a daily basis, an average of £47 million is disbursed for motor claims, £17 million for policy protections, and £1 million for travel claims. The average bodily injury claim hovers around £14,000, with an acceptance rate of nearly 99% for motor claims. The annual cost incurred due to fraudulent claims stands at £1.1 billion. These substantial claim expenses can result in underwriting losses, particularly noticeable in motor insurance, where an underwriting profit has occurred only once over the past two decades. (source: abi.org.uk).
Clearly, insurers are faced with many challenges including high operational costs, constantly increasing customer demand, increased fraudulent claims, and lengthy claims settlement processes — all affecting customer dissatisfaction. Additionally, high IT costs, lag in change requests, and poor IT and third-party integration increase the operational cost, and ultimately leading to an underwriting loss. Despite the ongoing efforts of improving claims processes and fraud prevention, there is a scope for significant improvements focusing on better customer service and customer experience, improving operations, and managing the claims more effectively both in terms of time and resources.
Written by Natasha Mashanovich, Data scientist, team leader, university lecturer advancing ML/AI across industry, government, academia
CCC® Inbound Subrogation Streamlines Claims Resolutions
CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, announces the official launch of CCC® Inbound Subrogation, a solution designed to help carriers assess inbound demands in minutes and determine what they owe. Inbound subrogation, the process of evaluating and resolving claims demands initiated by third parties, is a crucial aspect of insurance operations. CCC Inbound Subrogation leverages AI and advanced technology to streamline the claims review process, improving cycle time and reducing manual intervention.
“The integration was seamless, and adjusters quickly adopted the new easy-to-use capabilities. We are seeing increased efficiency and accuracy in handling our claims, enabling us to serve our customers better.”
“Reviewing inbound subrogation demand packages, some as long as 200 pages, can be a painstakingly slow and manual process prone to inconsistencies, which can lead to inaccurate payments and unnecessary delays,” said Jeff To, senior vice president of Subrogation at CCC Intelligent Solutions. “To address this challenge, CCC designed an inbound subrogation solution that streamlines this process and uses AI to extract data and reduce errors for all parties involved. Leading carriers have run demands through the new solution, including several of the top 10 auto carriers.”
With the introduction of CCC Inbound Subrogation, the company becomes the first in the industry to offer an end-to-end AI-enabled subrogation solution. CCC provides carriers with a centralized system that utilizes AI and workflow to manage both inbound and outbound, enhancing operational effectiveness for carriers.
Research
Mercedes-Benz performs X-ray of crash test, captures 100 images at impact
Mercedes-Benz recently performed the first vehicle manufacturer X-ray of a crash test, a press release from the OEM says.
The X-ray device can capture 1,000 razor-sharp images per second and views details about injury and damage that have previously been unseen, the release says.
“In the milliseconds of the actual impact time, the X-ray system shoots around 100 still images,” the release says. “Combined into a video, they provide highly exciting insights into what happens inside safety-relevant components and in the dummy’s body during a crash. In this way, it is possible to observe in detail how the thorax of the dummy is pressed in or how a component is deformed.”
In partnership with Fraunhofer-Society, Mercedes used the X-ray camera to record a left-side impact on a vehicle carrying a female dummy at Ernst Mach Institute.
“The Mercedes-Benz X-ray crash sets a milestone in the development tools of the future,” said Markus Schäfer, Mercedes board member and chief technology officer, in the release. “With a direct view into the hidden interior, it can help to draw important conclusions for the further improvement of vehicle safety. Mercedes-Benz thus confirms its role as a safety pioneer in automotive engineering.”
Marcy Edwards, an IIHS senior research engineer, previously said in an article that digital modeling could one day make it easier to test various risk factors that are difficult to do with real-world crash tests. For example, modeling currently in development could perform a crash test multiple times with different body types.
Commentary/Opinion
The Lawsuit That Had to Happen
A lawsuit should clarify a key issue in auto telematics... but perhaps at the cost of a class action and probes by the FTC and Congress.
When I drive my car, who owns the data about the trip? Me? The car manufacturer? My insurer? A data broker?
Even as I've welcomed the spread of telematics, which I believe will not only let insurers price risk more accurately but will lead to safer driving, that question about data ownership has hung over the issue for me.
It would seem that the answer is obvious: I own the data. Car makers, insurers and data brokers need my consent to learn about when, where and how I drive. But many companies, in their thirst for data, seem to be hiding the request for consent deep in the fine print that no one reads when signing up for insurance or downloading an app from a car maker or insurer — and reporting suggests that many customers are signed up for tracking without their agreement.
A lawsuit filed recently against General Motors and LexisNexis Risk Solutions is likely to finally bring the consent and data ownership issues to a head. The plaintiff seeks class action status for the suit, and there may well be investigations by the Federal Trade Commission and Congress — one senator has already raised the prospect.
At the very least, I suspect that anyone wanting data from drivers will have to be completely up-front about requesting consent. No more hiding in the fine print. At worst... who knows? Class actions and federal investigations can take unexpected turns.
Paul Carroll, Editor-in--Chief, Insurance Thought Leadership
Your Connected Car Could Reveal Risky Driving Behavior to Insurance Companies: Report
On Monday, the New York Times published a report calling out automakers for sharing customer driving behavior directly with insurance companies.
Through manufacturers making the telematics data they collect through connected apps available to third-parties, insurers may be using customers’ information to hike rates — at least according to some owner’s claims.
Of course, this type of data collection is nothing new, as certain insurers offer potential discounts if you opt-in to a device monitoring your driving habits. The nature of today’s story covers the potential for less transparent collection policies where customers may not know certain data could ultimately be shared with insurance companies.
For example, Progressive offers its Snapshot program to “reward good driving behavior” for which drivers must enroll themselves, though it can raise your raises if it catches you engaging in risky behavior. Tesla also offers its own insurance option in which customers must opt into having their driving behavior tracked.
The NYT piece specifically drew attention to General Motors’ OnStar system. Its optional “Smart Driver” service, a free add-on to several OnStar subscription plans, tracks driving habits and provides insights to become a “smarter, safer driver”. While the company does say it collects “specific driving behavior data, including hard braking events, hard acceleration events, speeds over 80 miles per hour, average speed, late-night driving, when a trip occurs and the number of miles driven,” it does not disclose that telematics information may end up in third-party databases like LexisNexis, which insurance companies can access.
Today’s report goes as far to link automakers’ collected data to insurance companies only through customer opt-in features. However, some owners of high-performance GM models told the outlet that insurers targeted them for rate hikes after taking their cars to the track while the OnStar connected services suite was active.
People
Alan Kirshner, former Chairman and CEO of Markel Group, passes away
Alan Kirshner, 88, former Chairman of the Board and Chief Executive Officer (CEO) of Markel Group Inc. (NYSE: MKL), passed away on March 17, 2024. Kirshner joined Markel in 1960 and played a substantial role in transforming the company from a privately held regional insurer to a family of businesses with global reach. He joined the Board of Directors in 1978 and became Chairman and CEO in 1986, the same year Markel became a public company. Kirshner served as CEO through 2015, became Executive Chairman in 2016, and then became Chairman Emeritus in 2020. Over that period, the company grew from less than 300 associates to more than 20,000 today.
"This is a sad day," said CEO Tom Gayner. "It's hard to put into words the legacy and impact of Alan Kirshner. He was as savvy and hard-working a leader as anyone I ever met, but it was his commitment to people that really set him apart. Alan was by nature a builder and dedicated his life to building a company that could serve others for