Commentary/Opinion
How AI can mitigate roof-related insurance losses
Incorrect roof age data is a significant concern for P&C insurers, costing $1.3 billion per year in premium leakage, according to CBIZ.
More than half of insurance claims involve roof damage, according to Lending Tree, and these losses are often caused by wind, hail and weather-related water damage. The Insurance Information Institute (Triple-I) reports that 39.4% of homeowners insurance losses in 2021 involved wind and hail, while 23.5% were due to water damage and freezing. It’s fair to say roof repairs cost property and casualty insurers a pretty penny annually, but companies such as Nearmap and ZestyAI are working to mitigate these losses with more accurate data on roof age for carriers.
“The predominant way that carriers get that [roof age] information is a homeowner-supplied roof age,” said Kumar Dhuvur, co-founder and head of product at ZestyAI, makers of Digital Roof™. “We polled a random sample of homeowners across the country, and we found that more than two-thirds of them did not know what the age of their roof was, especially if they were not the owner when the roof was replaced.”
Roof age accuracy
Carriers may restrict coverage on properties with roofs that haven’t been replaced for 20 years or longer or may deny coverage altogether. Incorrect roof age data is a significant concern for P&C insurers, costing $1.3 billion per year in premium leakage, according to CBIZ. Homeowners knowingly or unknowingly providing false roof age information may initially benefit from lower insurance premiums but ultimately have a roof-related claim denied due to the deception. Insurers need a more accurate way to determine roof age.
P&C carriers may also acquire roof age data by accessing building permits. Still, not all towns require homeowners to have a building permit for their roof, especially after a severe weather storm, says Dhuvur. Other traditional methods involve in-person inspections, but aerial imagery can help narrow down the precise year the roof was replaced.
InsurTech/M&A/Finance💰/Collaboration
BNP Paribas to Buy Fosun’s Stake in Belgian Insurer Ageas - Bloomberg
BNP Paribas SA agreed to buy Fosun International Ltd.’s 9% stake in insurer Ageas for about €730 million ($777 million), tightening the French lender’s relationship with its partner in a Belgian business.
BNP Paribas’ insurance unit will buy a 4.8% stake in Ageas in the coming days, with the rest of the acquisition to be done after regulatory approvals are received, the bank said in a statement Sunday. Bloomberg News reported last month that BNP Paribas was considering the deal.
BNP Paribas and Brussels-based Ageas already have a joint venture, AG Insurance, that sells life, auto and other forms of coverage in Belgium. The bank’s Belgian unit distributes Ageas products in the country..
News
Car Insurance Rates Climb For 26 Months In A Row; Repair Costs, Weather And Crime To Blame
The cost of insuring your car is skyrocketing, even as the overall inflation rate is easing. Auto insurance rates climbed for the 26th consecutive month in February—spiking 20.6% from just a year earlier, according to the latest report from the Bureau of Labor Statistics.
In comparison, the overall annual inflation rate was 3.2% last month. Food prices were up 2.2%. Energy prices fell 1.9% year over year.
“Housing insurance, but also automobile insurance…that’s been a significant source of inflation over the last few years,” said Federal Reserve Chairman Jerome Powell at a March 7 Senate Banking Committee hearing.
The average U.S. driver now pays $2,150 a year for full-coverage car insurance, Forbes Advisor’s latest analysis found.
In fact, 11% of drivers report paying more for insurance than for their car loan payments each month and 7% shell out more for auto insurance than for utilities.
Progressive sees surge in Q1 net income
The Progressive Corporation, which last October converted its monthly accounting closing calendar to align with the Gregorian calendar, has announced its financial results for March and the first quarter of 2024.
The company, based in Ohio, saw a 421% surge in net income in the quarter.
In terms of policies in force, Progressive posted increases across the board. Broken down, below are the figures for policies in force as of the end of March.
Meanwhile, Progressive noted: “In October 2023, we converted our monthly accounting closing calendar to align with the Gregorian calendar.
“We do not expect that this change will have a material impact on our reported quarterly and annual underwriting results, but it may impact our year-over-year comparisons on monthly results from October 2023 through September 2024.
Insurance rate increases accelerate in Q1
Commercial insurance rate hikes accelerated across most major lines of coverage during the first quarter, according to a report Monday from Ivans Insurance Services, a unit of Applied Systems Inc.
Property rates again increased the most, with an average annual renewal rate hike of 10.5%, compared with 10.3% in the fourth quarter of 2023.
Business owners policy rates rose 9.3% in the first quarter, compared with 9.1% in the fourth quarter; commercial auto was up 9.1%, compared with 8.8%; umbrella rates increased 6.8%, up from 6.4%; and general liability rates rose 5.9%, up slightly from 5.8%.
The only major line to see rate decreases was again workers compensation, where rates slipped 0.9% in the first quarter, compared with a 0.6% decline in the fourth quarter.
Insurance Economic Drivers Outperforming Overall US GDP; Likely to Gain Further Momentum on Federal Reserve Cuts : Triple-I
The economic drivers of the U.S. property/casualty (P/C) insurance industry are now growing faster than the nation's Gross Domestic Product (GDP) and are expected to gain further momentum in the event of Federal Reserve monetary rate cuts, according to the Insurance Information Institute's (Triple-I) latest Insurance Economics Outlook.
"We've been forecasting that P/C underwriting growth would catch up on overall GDP and it has," said Michel Leonard, Ph.D., CBE, chief economist and data scientist, Triple-I, in the organization's April 2024 Outlook.
"Triple-I forecasts P&C underlying growth to increase to 3.4% in 2024, 1.2% above the Fed's GDP forecast of 2.2%. It will likely take at least another year for this economic rising tide to lift the P/C industry's overall growth and performance."
"Triple-I expects P&C underlying growth to continue outperforming overall GDP growth into 2025 and 2026." Leonard said. Using the Fed's GDP forecast as a basis for comparison, underlying insurance growth is expected to outperform overall U.S. growth by an average of 2.0% over the next three years, the report explains.
"Different economic stress scenarios may reduce or widen the spread between P&C underlying growth and overall GDP growth, or even reverse the overall trend of P&C underlying growth outperforming overall GDP growth," said Leonard. "The top two risks to underlying insurance growth and overall GDP growth is the Fed slowing or reversing course on monetary easing and renewed geopolitical risk including global supply chain disruptions."
OnStar Insurance is now General Motors Insurance
In January, GM Financial announced that its OnStar Insurance brand will undergo a transformation to General Motors Insurance beginning January 2024.
The change was delayed by a few months but now OnStar Insurance is officially General Motors Insurance. Below are before and after screenshots.
Insurtech Hartford Symposium Brings Industry's Tech Innovators Together to Look Ahead — Connecticut by the Numbers
The annual InsurTech Hartford Symposium, taking place on April 17 and 18 at the Mohegan Sun casino, is described by organizers as “so much more than your traditional industry gathering.”
It is the culmination of insurance innovation, organizers explain, “bringing the best of the best in executive leadership, insight, and technology for the advancement of insurance innovation.” The conference is about “coming together leveraging the bridges we've built throughout the insurance ecosystem to drive insurance innovation.” The stated mission is to provide knowledge, insights, and opportunities to build the future of insurance.
Topics to be discussed include AI in Underwriting Today, Simplified Claims for Complex Times, CHatGPT AI and Other Large Language Models, The growing Role of Geospatial Data and Aerial Imagery in Insurance, Building Trust in a Digital Age, and IoT: The Silent Medley Reshaping Risk Assessment.
There will be a total of 101 speakers at various points during the two-day symposium, including leaders from the Hartford region and Connecticut, as well as from well beyond the state’s borders.
Keynote speakers are Mojgan Lefebvre, EVP and Chief Technology and Operations Officer at Travelers, and Heidi Sirota, Pet Industry and Leadership Consultant. Locally-based speakers include Bhamini Patel, Project Manager, Innovation Lab, The Hartford; Donna Regan, Senior Marketing Partner at Hartford Steam Boiler; Chance Foster, Director, Enterprise Innovation at The Travelers; Ewelina Mroczek, AVP, Product & Market Research at Lincoln Financial; Ojala Naeem, Head of XD Operation, Enterprise Customer Experience at The Travelers; Angie Wyszynski, VP, Global Customer Experience at HSB; and Laura Dinan Haber, Innovation
Climate/Resilience/Sustainability
P&C claims – "There is hope that this will be rectified"
Industry leaders address challenges amid rising frequency of catastrophes
The Insurance Bureau of Canada (IBC) has spoken out about claims challenges amid the rising frequency of extreme weather events in the country, saying the industry is working to adapt its claims capacity to a “new normal.”
In a statement, IBC leaders acknowledged that the industry is coping with a massive increase in the number of claims. Between 2004 and 2013, there were roughly 694,000 claims related to extreme weather events; in the last 10 years, the number has risen to well over 1.3 million, according to the IBC.
IBC strategy vice president Liam McGuinty and communications manager Mark Cripps wrote: “The claims capacity of the P&C (property and casualty) insurance industry will be tested for years to come, as it adapts to the ‘new normal’ of more frequent and severe weather events.
“This is where government regulators can help. When claims capacity is at its limits, such as in the aftermath of a large catastrophic weather event, insurers will often turn to independent adjusters and external adjusting capacity to boost their claims response."
Announcements
LexisNexis Risk Solutions Enhances Claims Datafill with New Insights to Expedite U.S. Auto Insurance Claims Processing | LexisNexis Risk Solutions
Claims Datafill can now proactively deliver key insights directly to carriers to help adjusters expedite claims for consumers and identify liability and claims fraud.
LexisNexis® Risk Solutions, a leading data, analytics and technology provider, today announced LexisNexis® Claims Datafill now offers the capability to proactively inform insurance carriers about the availability of a police report or violation data to help expedite insurance claims and improve the experience for consumers experiencing a loss event. Gathering information is one of the most time-consuming and costly steps in the claims process. According to 2023 LexisNexis Risk Solutions claims satisfaction research, 33% of consumers cited the length of time to settle claims as a primary reason for switching carriers.
Increased claims severities, which are well above historical averages, have continued to challenge the U.S. auto insurance market, registering six consecutive quarters of at least 5% growth. Fueled by labor and part shortages, the cost to repair – or replace – vehicles is increasing. More than a quarter of collision events from 2022 (27%) were total losses, which has added more expense pressure on American consumers as auto insurance rates are up almost 21% for the 12 months ended in February.
Innovation
Captive insurance technology news | Aon introduces blockchain technology for insurance placement
The initiative also involves Nayms, a crypto-compatible insurance marketplace, and Copper.co, a digital asset custodian. The global professional services firm Aon has completed a pilot for insurance placement using blockchain and smart contract technology.
The pilot showcases blockchain's capacity for increasing capital sources, improving transparency and reducing costs in insurance processes.
Nayms' platform supports the tokenisation of risk-bearing capital, offering liquidity to investors through secondary trading.
Jillian Slyfield, chief innovation officer at Aon, states: “Aon is committed to investing in new solutions to better serve our financial institution and commercial clients, who are testing and developing innovative products underpinned by blockchain technology.
“The potential benefits of blockchain are compelling, including lower transaction costs, which can lead to greater access and participation in financial services.”
In the trial, Aon used a Copper Web3 custodial wallet to sign transactions and transfer funds on Nayms’ platform.
People
WTW appoints Neil Harrison as new Global Head of Claims
WTW, a global insurance and reinsurance broker, has announced the appointment of Neil Harrison as the new Global Head of Claims.
In his new role, Harrison will report directly to Adam Garrard, WTW’s Global Head of Risk & Broking. He will oversee all aspects of WTW’s claims operations, including aligning claims teams with WTW’s specialised industry practices and enhancing claims services through data and analytics.
Garrard explains, “Claims are not only a key component of our service offering to clients but also play an integral part in our Smarter Ways to Risk proposition, delivering specialisation, exceptional client service, data, and analytics – directly aligned with core WTW market strengths and growth priorities.”
He adds, “Today’s announcement reinforces the strength of our Risk & Broking strategy and our commitment to investing and attracting talent for the long-term future of our business.
“Bringing a distinguished track record in leading the delivery of global claims services, Neil will be a valuable addition to our leadership team,” Garrard concludes.