Research
Report: Vehicle Complexity, Labor ‘Reshaping’ Auto Insurance and Collision Repair
New technologies and rising labor costs are putting pressure on auto insurance carriers and auto repairers by making repairs more costly and increasing repair times, trends that a new report asserts are “reshaping” the industries.
The bottom-line message: Newer vehicles being produced may be safer from cashes, and better at helping drivers avoid crashes, but the advanced technology is contributing to costlier repairs, higher claims costs and longer cycle times, according to CCC Intelligent Solutions Inc., a cloud operation serving the property/casualty insurance industry.
CCC’s latest report for Q1 2024 is based on information from 300 million claims-related transactions as well as bodily injury and personal injury protection/medical payments casualty claims from CCC’s customers.
These emerging trends have contributed to the 60% increase in the amount of time it takes for vehicles to enter repair shops after estimate completion compared with before the pandemic, the report shows.
April 2024 Labor Market Pulse | The Jacobson Group
Unemployment continues to drop within the insurance industry, hitting 1.7% in March. At the same time, job openings are rising within the larger finance and insurance sector, with an average of 428,000 openings in January and February*. This is tracking above 2022’s record annual high of 393,000. Voluntary quits are also slightly increasing, hitting their highest level since January 2023, while hiring levels remain relatively consistent.
Within the overall U.S. economy, job growth accelerated in the first quarter of 2024. The U.S. unemployment rate also slightly decreased from 3.9% in February to 3.8% in March.
If you’re one of the many companies aiming to fill open roles, our most recent edition of Recruiter Report shares questions to help best assess candidates and make the most of interviews.
NAPHIA releases pet insurance market figurers
The North American Pet Health Insurance Association released its 2024 State of the Industry Report, which shows that the North American pet health insurance sector grew by 21.9% in 2023.
Based on the report, the North American pet insurance industry recorded $4.27 billion in total premiums sold in 2023, a 21.9% increase from $3.5 billion in 2022. Over 6.25 million pets were insured across North America, a 20.9% increase from the 5.17 million pets insured in 2022.
In the US, total premium volume (as reported by NAPHIA members) was $3.91 billion, a 21.6% increase over 2022. According to estimates, there are 154 million pets in the US and the average pet insurance penetration rate is 3.69% (5.07% for dogs and 1.84% for cats).
Access the full report here
News
Robust reinsurer earnings help rein in renewal price hikes
A rebound in reinsurance industry capital, prompted by strong reinsurer earnings, should help keep reinsurance pricing in check during 2024 renewals, according to sources and recent industry reports.
Bolstered by improved earnings in 2023, after significant price hikes in 2022, reinsurers have an increased risk appetite this year, they say.
In addition to more traditional reinsurance capital, insurance-linked security issuance has grown, providing more reinsurance and retrocessional reinsurance capacity, they say.
A key development driving the improved market for reinsurance buyers is the rebound in global reinsurer capital to $670 billion at the end of 2023 from $575 billion at the end of 2022, much of which has come from robust reinsurer earnings.
“The biggest form of new capital is the earnings being generated by the established companies … a decent chunk of which is going to get redeployed into the market,” said Mike Van Slooten, head of business intelligence for Aon PLC’s reinsurance solutions division in London.
Strong earnings also have translated into confidence in deploying capital.
“You’ve got reinsurers coming out of a very profitable year. They’ve got plenty of capital and their risk appetite is growing,” said James Vickers, London-based chairman international, reinsurance, at Gallagher Re, a unit of Arthur J. Gallagher & Co. “A lot of that, interestingly, is self-generated. There’s been very few new capital raises or new capital coming into the market.”
Recent April 1 reinsurance renewals, across Japanese and other Asian markets, and to a smaller extent in the United States, showed muted price increases or flat renewals, and even some decreases.
Legal challenges pause SEC climate disclosure rule
The SEC said it will resume implementing the rule depending on the resolution of the legal challenges.
The United States Securities and Exchange Commission (SEC) has paused the adoption of its new climate disclosure rule after a barrage of legal challenges have questioned whether the agency possesses statutory authority. These challenges have been consolidated in the U.S. Court of Appeals for the Eighth Circuit in St. Louis, Missouri.
The SEC said it will resume implementing the rule depending on the resolution of the challenges.
“In issuing a stay, the Commission is not departing from its view that the Final Rules are consistent with applicable law and within the Commission’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions,” the SEC stated. “Thus, the Commission will continue vigorously defending the Final Rules’ validity in court and looks forward to expeditious resolution of the litigation.”
The commission added that the pause “avoids potential regulatory uncertainty if registrants were to become subject to the Final Rules’ requirements during the pendency of the challenges to their validity.”
A sharply divided SEC finalized its climate disclosure rule last month, requiring certain publicly traded companies to disclose information on their direct or indirect greenhouse gas emissions. Within hours of the commission’s 3-2 vote, industry groups and Republican-led states sued, saying the SEC, as a regulator of the investment community, lacks statutory authority to regulate on environmental matters.
The lawsuits have been consolidated in the St. Louis-based Eight Circuit.
AI in Insurance
$50 billion opportunity emerges for insurers worldwide from generative AI's potential to boost revenues and take out costs -
AI technology offers insurance businesses large-scale financial potential from productivity gains, optimizing sales channels and digital advice, and delivering enhanced, personalized customer experience
Insurance businesses worldwide have a $50 billion financial opportunity from generative AI to harness the technology in ways that could boost their revenues by as much as 20% and cut their costs by up to 15%, according to new research from Bain & Company.
Bain’s report, It’s for Real: Generative AI Takes Hold in Insurance Distribution, concludes that leveraging generative AI in insurance distribution has the potential to yield more than $50 billion in annual economic benefits for companies in the sector.
“For insurers, benefits due to generative AI will come through three routes,” said Bhavi Mehta, global lead of AI in Financial Services at Bain. “This includes raising productivity, lifting sales through more effective agents and digital advice, and better risk identification and targeting that will help both customers, agents and the enterprise. At Bain, we remain committed to helping our clients not only within insurance ‒ but across industries ‒ identify and realize AI’s full business potential.”
As insurance turns to AI, Trudeau unveils $1.8-billion package | Insurance Business Canada
Canada is launching a fund to boost its artificial intelligence sector and creating a new AI safety institute as Prime Minister Justin Trudeau continues to roll out spending announcements in advance of a new budget.
The government unveiled a C$2.4 billion ($1.8 billion) package of measures related to artificial intelligence on Sunday. The centerpiece is C$2 billion for “computing capabilities and technological infrastructure” that can accelerate the work of AI researchers, startups and other firms, according to a statement.
Other money will be allocated to speed the adoption of AI in sectors such as agriculture and health care, the statement said. The funds “will help harness the full potential of AI so Canadians, and especially young Canadians, can get good-paying jobs while raising our productivity, and growing our economy,” Trudeau said.
Clearcover Launches Generative AI Insurance Tool To Expedite Claims Processing And Improve Customer Experience
Clearcover, a next-generation car insurance company, announces the launch of its revolutionary generative AI solution that further digitizes statement collection, significantly streamlining the insurance claims process and customer experience.
The AI-driven solution utilizes large language models (LLMs) to guide a conversational experience immediately following First Notice of Loss (FNOL). The claims intake tool collects the required information about the incident, which is typically collected in adjuster follow-up calls, to process and pay a claim.
"Our underlying foundation was built with best-in-class technology for digitally native customers, which has enabled us to get ahead of the curve," said Clearcover CEO and Co-founder Kyle Nakatsuji. "I am incredibly proud of our Product, Claims and CX departments for leaning into this industry challenge and raising the bar for AI insurance solutions."
As one of the first-to-market insurtechs to include this capability, Clearcover is rolling out a series of AI products to enhance its end-to-end insurance experience. Earlier this year, Clearcover's custom-built claims assistant began supporting claims adjusters in analyzing files and drafting communications to claimants and their representatives. The company also plans to integrate conversational AI into its mobile app to answer customer questions 24/7 in real-time. The feature will later be included within the company's agent portal and website.
"By leveraging the power of generative AI, we're ushering in a transformational way for our customers to share information and self-serve throughout their insurance journeys," said Clearcover's Chief Product and Innovation Officer Adam Fischer.
Can AI improve the predict and prevent paradigm?
AI risk assessments may offer more advantages because they give insureds the tools and information necessary to monitor and improve their properties.
“We want to provide the best information that one can put together by combining the cutting-edge AI, cutting-edge science, with leveraging data analytics… We want to put the right data at everybody’s fingertips so that the right decisions are being made,” said Kumar Dhuvur, co-founder and head of product at ZestyAI.
Most insurers have switched from the traditional adage of “detect and repair” to a “predict and prevent” mindset, with a focus on home maintenance, such as checking the roof for broken shingles, and disaster preparedness efforts like creating defensible space around the home. Some insurers are turning to artificial intelligence (AI) to improve their predict and prevent models. This switch may increase access to coverage for insureds in hard markets, lower premiums and prevent insurers from having to withdraw coverage in high-risk states.
“The majority of insureds want to be proactive about risk management or maintenance of their home or commercial building,” said David Tobias, general manager of insurance at Nearmap, which specializes in 3D datasets, geospatial tools and aerial imagery. “There [are] so many tools now available through the industry. How we monitor risk, look at the brush fire defensible space, things of that nature, roof quality – they haven’t made it through to insurance yet.”
Ashley Hattle-Cleminshaw
InsurTech/M&A/Finance💰/Collaboration
Lemonade Launches Homeowners Insurance in France
Expanding on Lemonade’s existing partnership with BNP Paribas Cardif, fully digital, AI-powered Homeowners insurance is now available
Lemonade, the digital insurance company powered by AI and social impact, today announced the launch of Homeowners insurance in France in partnership with BNP Paribas Cardif. Millions of occupying homeowners can now purchase extensive coverage for their home and belongings, featuring the same seamless Lemonade experience customers have come to know and love.
Today’s launch builds on Lemonade’s entrance into France in December 2020, offering AI-powered renters insurance to protect residents’ belongings. With Lemonade’s European business making significant strides in 2023, the launch of Homeowners insurance throughout France will support the company’s continued growth as it expands globally.
"The European market was our fastest growing business last year," said Daniel Schreiber, Lemonade CEO and co-founder. "We're now graduating from being a monoline to a multi-line insurer in Europe. Combined with our thriving partnership with a trusted, prestigious brand like BNP Paribas Cardif, we're excited for this next chapter for our European business."
Novidea raises additional $30m from HarbourVest Partners
Global insurtech Novidea has raised an additional $30 million from HarbourVest Partners, bringing its total Series C round to $80 million, joining existing investors Battery Ventures, Cross Creek, Israel Growth Partners (IGP), KT Squared, and JAL Ventures.
Throughout the past few years, the insurtech has witnessed major growth, selling to insurance companies around the world.
It has been revealed that Novidea will use the funds for continued organic expansion to additional territories to meet growing demand, as well as to accelerate product innovation and support the execution of Novidea’s inorganic growth strategy.
Corentin du Roy, Managing Director, HarbourVest Partners, commented: “We are delighted to partner with Novidea to support the company’s next phase of growth. We have invested in the insurance brokerage sector for years and have been impressed by the operational efficiencies that Novidea’s software solution delivers for brokers. We look forward to supporting the Novidea team as they continue to scale their activities internationally.”
Guesty Raises $130M to Expand Rental, Hospitality Platform
Guesty raised $130 million in a Series F funding round to expand the capabilities and global footprint of its property management software platform for the short-term rental (STR) and hospitality industry.
The funding round comes as the growth in demand for STRs has been outpacing that for hotels since 2022, the company said in a Wednesday (April 10) press release.
“The surge in those seeking short-term rentals continues, and our platform remains at the vanguard of the industry,” Guesty Co-founder and CEO Amiad Soto said in the release. “As we embark on creating the industry’s first intelligent property management platform, we’ll continue to develop its functionality and AI capabilities to deliver first-to-market features and best-in-class support for our customers.”