America's Car Insurance Crisis Is Getting Worse  May 1st 2024

America's Car Insurance Crisis Is Getting Worse

Drivers across the U.S. are struggling with the growing cost of car insurance, which rose 2.6 percent in March from February and 22.2 percent from a year earlier, according to the latest data on inflation shared by the Labor Department.

In the same month, consumer prices climbed 0.4 percent compared to February, with inflation rising by a stronger-than-expected 3.5 percent. Shannon Martin, a licensed insurance agent and Bankrate analyst, told Newsweek that skyrocketing car insurance premiums might have something to do with rising inflation.

"Car insurance inflation is sticky, which can create a 'chicken-and-egg' scenario," where the rising cost of living is bringing up the cost of coverage for vehicles and car insurance is, in turn, fanning the flames of inflation, Martin said.

"Insurance pays for medical costs, vehicle parts, labor and legal fees, all things that are impacted by inflation," Martin said. "But then these expenses drive car insurance premiums up, adding more stress to an already precarious financial situation."

The cost of car insurance has surged by more than 50 percent since the beginning of 2021, before inflation started the vertiginous climb that led to the peaks reached in summer 2022. In the last year alone, according to a recent study by Bankrate, it shot up by 26 percent, with U.S. car owners now paying a national average annual premium of $2,543 for full coverage. That's the equivalent of 3.4 percent of their income.

OFFICIAL: NHTSA Makes Automatic Emergency Braking Compulsory From 2029

KEY TAKEAWAYS

• Mandatory AEB for cars and light trucks in the US from Sept. 2029 to prevent crashes and save lives. (113 characters)

• AEB systems must meet strict requirements, including stopping vehicle contact and detecting pedestrians up to 62 mph. (116 characters)

• AEB to brake automatically up to 90 mph ahead of crash and 45 mph when detecting pedestrians, improving road safety.

The National Highway Traffic Safety Administration (NHTSA) has announced that starting in September 2029, all manufacturers that sell their vehicles in the United States will be required to make automatic emergency braking a standard feature in cars and light trucks. This includes automatic emergency braking for pedestrians as well. The NHTSA says the new Federal Motor Vehicle Safety Standard (FMVSS) is "expected to significantly reduce rear-end and pedestrian crashes."

Once a luxury feature fitted exclusively to vehicles like the BMW 7 Series, the technology has trickled down to mainstream vehicles such as the Toyota Corolla. But it is still not a mandatory feature, and the NHTSA believes making it compulsory will save at least 360 lives and prevent 24,000 injuries per year.

CCC Intelligent Solutions Holdings Inc. Announces First Quarter 2024 Financial Results

CCC Intelligent Solutions Holdings Inc. (“CCC” or the “Company”) (NASDAQ: CCCS), a leading cloud platform for the P&C insurance economy, today announced its financial results for the three months ended March 31, 2024.

“CCC delivered strong first quarter results, highlighted by 11% year-over-year revenue growth and 41% adjusted EBITDA margin –both above our guidance ranges. We believe our solid start to 2024 reflects our durable business model and ongoing innovation that is helping our clients rapidly transform their businesses,” said Githesh Ramamurthy, Chairman & CEO of CCC.

“The CCC Intelligent Experience (IX) Cloud™ platform, powered by our new event-based architecture, is well-positioned to drive the next evolution of the P&C insurance economy,” continued Ramamurthy. “We are excited about the accelerated AI-enabled innovation the CCC IX Cloud will unlock for customers as well as CCC’s large and growing partner ecosystem.”

Berkshire's P&C units lead the way as insurers up short-term investments

Property and casualty units of Berkshire Hathaway Inc. have led the charge into short-term investments seen across the US insurance industry over the past two years, according to an S&P Global Market Intelligence analysis.

As of Dec. 31, 2023, Berkshire's property and casualty (P&C) units grew their short-term investments by approximately $41 billion from the end of 2021 as interest rates moved higher.

Berkshire's life insurance subsidiaries were the next most active group, increasing their short-term investments by more than $4 billion — a rise of over 200%.

In its latest filing, Berkshire attributed its high investment performance to higher short-term interest rates and added that it plans to maintain ample liquidity and ensure safety over yield in terms of its short-term investments.

Other insurers have also increased their short-term investments by a significant margin since the end of 2021, with six experiencing growth of $1 billion or more as of year-end 2023.

Life insurers The Northwestern Mutual Life Insurance Co. and Brookfield Reinsurance Ltd. had the highest percentage change from 2021 to year-end 2023, raising their short-term investments by 1,782.8% and 2,003.5%, respectively. Northwestern's short-term investments increased from just over $155 million in 2021 to nearly $3 billion as of Dec. 31, 2023, while Brookfield increased its holdings to $2.32 billion from approximately $110 million.

Ten of the 11 top insurers by change in total short-term investments were classified as life insurance filers. This includes the statutory life groups such as Jackson Financial Inc., Allianz SE and Symetra Life Insurance Co., which held marginal short-term investments in 2021 but then increased these assets to $1.12 billion, $612.7 million and $600.5 million, respectively.

S&P Global Market Intelligence

Homeowners choose minimal insurance due to rising rates. How risky is it?

In an economic climate where a staggering 20 percent of aspiring homeowners doubt their ability to ever afford a home, those who have navigated the complex path to homeownership are now facing a new financial hurdle: soaring homeowners insurance rates. The increased expense has sparked a critical dilemma for some. Should homeowners opt for minimal coverage to ease financial strain even though this approach exposes them to greater risk?

Bankrate delves into this pressing issue, offering a comprehensive analysis of the underinsurance trend. Learn about the driving forces behind the rise in home insurance premiums and measures being taken to address these challenges, plus actionable steps to help mitigate costs without compromising on coverage.

Why are homeowners choosing minimal coverage?

In the face of rising home insurance rates and economic uncertainty, a significant portion of homeowners are gravitating toward minimal coverage options. Compounding the issue, Bankrate’s Annual Emergency Savings Report found more than half of Americans (56 percent) wouldn’t pay for a sudden $1,000 bill from their emergency savings — 35 percent would borrow money, including 21 percent who would finance the expense with a credit card and pay it off over time. This reality is particularly poignant for homeowners, as typical insurance deductibles range from $500 to $2,500 in the event of a covered claim.

For some, the allure of securing lower premiums by forgoing adequate coverage and electing higher deductibles could be a product of financial anxiety, with inflation, rising interest rates and job security concerns exacerbating these pressures. In fact, Bankrate’s Financial Wellness Survey found 52 percent of Americans say money has a negative impact on their mental health, up from 42 percent in 2022.

Email is where most cyber insurance claims originate

Overall cyber claims frequency increased 13% in 2023, while claims severity increased 10%, according to Coalition, Inc.

This past year saw cyber insurance claims frequency up 13% year-on-year and claims severity increased 10%, according to Coalition's 2024 Cyber Claims Report.

Funds transfer frauds (FTF) and business email compromises each accounted for 28% of cyber insurance claims in 2023, according to Coalition, Inc. Ransomware accounted for 19% of claims, while other events such as errors and misuse resulted in 25% of claims during the year.

These findings, which were drawn from Coalition policyholder claims, underscore the importance of robust email cybersecurity measures, particularly as digital inboxes remain vulnerable targets for hackers.

Diving into FTF data further reveals a 15% increase in frequency, a 24% year-on-year increase in claims severity and an average loss of more than $278,000. Business email compromises saw frequency increase 5% and severity decrease by 15%. The average loss resulting from a business email comprise was $26,000.

According to Coalition's 2024 Cyber Claims Report, this past year saw cyber insurance claims frequency up 13% year-on-year and claims severity increased 10%. Businesses with revenue between $25 million and $100 million saw the biggest increase in cyber claims frequency, which increased 32% in 2023.

Risky boundaries The report also found that firewalls, virtual private networks and other network boundary devices are becoming increasingly risky. Although designed to protect networks, boundary devices can carry vulnerabilities that become known and exploited by malicious actors.

Coalition reported that businesses with internet-exposed Cisco ASA devices were almost five times more prone to claims, while those with internet-exposed Fortinet devices were twice as susceptible.

"We also found that policyholders using internet-exposed remote desktop protocol (RDP) were 2.5 times more likely to experience a claim," Shelley Ma, incident response lead at Coalition Incident Response, said in a release.

Further, there was a 59% increase in unique IP addresses scanning for open RDP to exploit during 2023, according to Coalition.