Commentary/Opinion
Preparedness is Key for Homeowners as the 2024 Hurricane Season Begins
In advance of the official start of 2024 hurricane season in June, Mercury Insurance (NYSE: MCY) is offering consumers tips on how to prepare for hurricane season. This guidance will help prepare and safeguard your home and coincides with National Hurricane Preparedness Week from May 5-11.
In conjunction with Insurance Institute for Business and Home Safety (IBHS), the following are key tasks a homeowner should complete to ensure you and your family are prepared for any eventuality:
Create a plan for your family and home and choose someone outside of the danger zone as a central point of contact.
Stay informed – set up reliable weather information and alerts, and purchase a NOAA Weather Radio.
Review your insurance, document your belongings and create a home inventory video.
*Have a licensed professional inspect and prepare your roof, vents, skylights and chimneys; conduct preventative maintenance, where necessary.
The next time you replace your roof, consider materials and an installation that meets IBHS Fortified Roof requirements.
Trim trees and tidy your yard. Keep all trees trimmed and away from your house and make sure loose yard furniture and other equipment is secure.
Regularly service your generator and store it in a safe, dry location. And if you don't have a generator, consider purchasing one.
A complete checklist is available at Insurance Institute for Business and Home Safety Hurricane Ready Guidance.
"These tips from IBHS are best practices for all homeowners, but especially for those who live in hurricane zones like the Southeast," said Mike Dawdy, director, state product management, at Mercury Insurance. "By preparing your home for the upcoming storm season ahead of time, you can provide a safer environment for your family and save money if you sustain weather-related damage."
Research
2024 Global InsurTech Report: Gallagher Re
2024: The Role of AI in the (re)insurance industry
The 2024 series of reports will examine the role of Artificial Intelligence (AI) in our industry, breaking down the function and processes of AI into their relevant parts within the reinsurance value chain. The first report of this series will focus on distribution and sales.
In keeping with prior reports, we spotlight InsurTech companies that are pertinent to this sector, interview thought leaders in this space and detail the latest InsurTech investment data.
Survey: Many Employees Who Jumped Ship During COVID Regret It
The Great Resignation during the pandemic saw workers quit their jobs in droves, but a new survey finds that many regret jumping ship.
The survey of U.S. workers by the member think tank The Conference Board revealed that those who changed jobs were significantly less satisfied with their new positions than their colleagues who stayed.
The survey found issues with leadership and culture created the greatest gaps in job satisfaction between the switchers and stayers.
Money also factored in.
Higher wages enticed many to take new jobs in the COVID-era, but those who switched jobs now report less satisfaction with wages. This may be due, in part, to inflation.
While overall job satisfaction remained virtually unchanged—ticking up 0.4 points to 62.7 percent—sentiment declined across all 26 components of job satisfaction compared to 2022.
The least satisfied group were those who worked fully on-site at 60.2 percent, while satisfaction for fully remote workers was 64.1 percent.
Overall job satisfaction for hybrid workers was 65.5 percent.
The survey found women are far less satisfied than men. For the sixth year, women reported being significantly less satisfied across nearly all 26 job satisfaction components surveyed.
The largest gaps between men and women related to wages, bonuses, potential for growth, health benefits (including mental health policies) and retirement plans.
The largest declines were in financial benefits such as bonuses, hard base benefits, wages and promotions.
“After more than a decade trending upwards, overall U.S. worker job satisfaction may have finally plateaued,” said Allan Schweyer, principal researcher, Human Capital, The Conference Board. “To avoid declining job satisfaction, leaders should maintain or improve key drivers such as flexible work arrangements and career development opportunities while ensuring that wages and core benefits remain competitive.”
News
Travelers Insurance is raising California home insurance rates by 15%
One of California’s largest home insurers is raising rates for hundreds of thousands of state policyholders by an average of 15.3%, the latest move by a major insurer to boost homeowners’ premiums in the face of growing wildfire risk.
Travelers Insurance, the state’s sixth-largest home insurer as of 2022, plans to update rates for roughly 320,320 homeowners, with some seeing hikes of more than 25% on an annual basis, according to filings with the California Department of Insurance.
It was not immediately clear where in the state homeowners will see the largest increases, which could take effect as soon as June 24. On average, California homeowners pay $1,452 a year for coverage, according to Bankrate.com, a personal finance website. The rate hikes could raise annual premiums by hundreds of dollars.
California’s insurance rates are tightly regulated and, as a result, far lower than in many other states. The insurance industry, citing a series of destructive wildfire seasons and rising building costs, has for years argued the rate regulations are untenable.
Many of California’s biggest insurers, including State Farm and Allstate, have ended coverage for tens of thousands of homeowners in fire-risk areas, including the Santa Cruz Mountains and Wine Country, and last year paused writing new policies anywhere in the state, even as companies have won approval from regulators for double-digit rate hikes.
“Nobody wants prices to go up, but anybody who’s not a climate change denier knows that the risks are going up,” said Edan Cassidy, an insurance broker in Scotts Valley in Santa Cruz County.
In a filing with the state insurance department explaining the need for a rate increase, New York-based Travelers cited “inflationary pressures” on construction costs and argued that current pricing models don’t account for the damage expected from “changing climate conditions.”
“The approved adjustments to our California homeowners insurance rates are necessary to align pricing to the risks that our customers are facing,” the company said in a statement.
In a similar move, PG&E has repeatedly raised electric and gas rates in recent years as part of a bid to modernize equipment and reduce wildfire risk. Last November, the state Public Utilities Commission that oversees the utility authorized a 13% increase in customers’ monthly bills.
To calm California’s imploding home insurance market, state regulators have embarked on a yearlong overhaul of home insurance rules and pricing. The goal is to give insurers additional latitude to raise premiums to account for more frequent catastrophic fires while extracting commitments to extend coverage in fire-risk areas.
“Under outdated rules, the growth of climate-driven mega fires has supercharged insurance costs for many Californians while making insurance harder to find,” Insurance Commissioner Ricardo Lara said in a statement announcing some of the planned reforms in March.
Allstate’s auto premiums earned increased by nearly $1 billion in past year
Allstate reported nearly a $1 billion increase in premiums earned from auto insurance during the first quarter compared to Q1 2023, according to financials released by the company.
The company reported $8.8 billion in auto premiums earned in the first quarter, while it earned $7.9 billion in premiums in the first quarter of 2023.
“The profit improvement was broad-based,” said Tom Wilson, Allstate chair, president and chief executive, in the company’s Q1 earnings call. “It reflects successful execution of the auto insurance profit improvement plan, attractive homeowners’ insurance margins, and they also benefited from lower catastrophe losses in this quarter.”
Rate increases exceeded 16% in both 2022 and 2023, Wilson said. Those increases continued at about 2.4% during the first quarter. He said the increases are to keep up with cost trends and improve margins in states not achieving target margins.
GEICO Reports Premiums Written Up 7.3% in First Quarter
Collision claim frequency was down in range of 4-5% in the quarter, but severity was up 4-6%
Berkshire Hathaway reported its earnings for the first quarter of 2024 on May 4, including details about its GEICO subsidiary, the third largest private passenger auto insurer in the U.S.
GEICO’s premiums written were $10.796 billion in the first quarter, up $736 million or 7.3% from $10.060 billion in the first quarter of 2023. The improved premiums written result reflects higher average premiums per auto policy, up 9.8%, due to rate increases, partially offset by a 6.6% decrease in policies-in-force over the past year. However, the rate of decline in policies-in-force slowed in the first quarter of 2024, driven by increased new business and higher retention rates. Premiums earned increased $608 million, or 6.3%, in the first quarter of 2024 compared to 2023.
InsurTech/M&A/Finance💰/Collaboration
Broker M&A valuations continue to rise in 2023: MarshBerry
Valuations in the brokerage mergers and acquisitions market continued to rise in 2023 even amid macroeconomic headwinds, according to a report Monday from MarshBerry Inc.
Valuations in the brokerage mergers and acquisitions market continued to rise in 2023 even amid macroeconomic headwinds, according to a report Monday from MarshBerry Inc.
The average total purchase price potential for maximum earnout for all firms was up 7.8% to 14.85 times earnings before interest, taxes, depreciation and amortization, compared with 13.78 times earnings in 2022.
Valuations for “platform” firms, which involve a high-level transaction for a buyer, typically due to new geography niche, expertise, size, or talent, are even higher. So-called “platform” deals traded at 18.68 times earnings before interest, taxes, depreciation, and amortization, up 14.3% from 2022’s 16.35.
“Despite this nearly two-year stretch of less-than-optimal economic conditions — valuations for average insurance brokers and platform firms are at all-time highs,” the report said.
While the deal count fell slightly last year to 807, off 10.6% from 2022, 2023 was the third most active year on record and a “solid” year for insurance brokerage M&A, according to the report.
Organic growth, though off slightly, remains robust, the report notes, as brokers continue to benefit from rising premium rates.
Average organic growth for brokers was 8.9% in the last 12-month period ended Sept. 30, 2023, down slightly from 9.3% for full-year 2022, MarshBerry said.
Honeycomb Insurance grabs $36M Series B from solo VC-led Zeev Ventures
When Itai Ben-Zaken’s first startup failed in 2018, the former BCG consultant and Wharton MBA spent months trying to understand what he could have done differently during the five years he ran the company.
After analyzing most of his major decisions, he concluded that while Comprendi, a digital ad recommendation business, was an interesting offering, its biggest mistake was trying to operate in a market with two dominant players: Google and Facebook.
So when Ben-Zaken started exploring founding his second startup, he vowed not to repeat the same mistake. He looked to start a business in a market divided among many competitors, eventually settling on building a company that offers property and casualty insurance for landlords and condo associations.
The largest carrier in landlord insurance — Travelers — represented only about 7% of the market, and the rest of the competitive landscape was distributed among 100 smaller providers, Ben-Zaken told TechCrunch.
Ben-Zaken wasn’t a stranger to insurance. Before starting Comprendi, he spent four years running Insurance.com at QuinStreet, an operator of white-labeled financial services marketplaces.
He launched Honeycomb Insurance in 2019, and after spending two years building the company’s computer vision and AI-driven property “inspection” technology, the company sold its first policy in 2021. Ben-Zaken says that Honeycomb’s AI relies on aerial photographs of building roofs, often eliminating the need for costly physical inspections.
Innovation and the insurtech journey - are we there yet?
We should be thinking about what happens after we’ve made that sale and we’ve gone through procurement. We’re not just in a round of monthly servicing meetings, but we’re actually collaborating on that workflow. We’re helping that champion embed it in other areas of their business.
Rosina Smith, Chief Product Officer at MIS
Introduction
McKenzie Intelligence Services (MIS) helps accelerate disaster relief and economic recovery for insurers.
Matthew Grant spoke to Rosina, Chief Product Officer for MIS, who shares insights from her MBA dissertation’s findings on the adoption of technology in insurance, highlighting the necessity of collaboration between insurtechs, insurance companies, and other stakeholders to drive innovation and effectively address the insurance protection gap.
Key Talking Points
- Transitioning from working for a large organization to the world of startup and scale up
- MBA Dissertation – the process of writing and publishing
- Managing biases – reconsidering the issue with the protection gap
- Collaboration and disruption – where do you stand as an insurtech?
- Evolving approaches for insurtechs
- What you should avoid in partnerships
Top insurtech funding rounds, April 2024 | Digital Insurance
There were about 39 funding events in the insurtech sector between April 1 and April 30, 2024, according to a review by Digital Insurance. What follows is a selection of these, focusing on those in the insurtech and property & casualty sectors that are part of the venture-capital financing model. (Other funding events, such as private-equity infusions, are included in the overall count.)
A portion of the data was sourced from Crunchbase. Other information, including quotes from investing VCs, comes from company announcements.
- Arbol $60,000,000.00, Series B, April 30 Type of company: Insurance marketplace for climate risk
Investors: Giant Ventures, Opera Tech Ventures, Launch NY, Mubadala Capital Ventures, Space Capital, Ascend Venture Capital
"While climate change is more and more tangible, the need for hedging solutions that are scalable and economically sustainable is becoming key," said Thibaut Schlaeppi, managing director of Opera Tech Ventures. "Leveraging insurance and capital markets offers Arbol's clients a pivotal solution to build the financial resilience they need."
Events
USA'S LEADING INSURTECH CONFERENCE Javits Center | New York | 5-6 June 2024
The insurance industry, no stranger to gauging risk, is facing its most profound disruptions in decades. Artificial intelligence, machine learning, Internet of Things, blockchain, data analytics and other emerging technologies are rising to prominence. Are you ready to transform your business?
Special Discount to 'Connected' followers: Use discount code INSURTECHCON25and receive 25% off your conference pass Register here
Webinar: Ignore the Doom and Gloom: Insurtech is Thriving | March 27, 2024 | 1:00 pm EDT
With stock market valuations for some big-name insurtechs taking such a hit, the public perception seems to be that innovation in insurance has paused. In this webinar, we'll note that the opportunities for innovation are still massive and that the work is continuing apace, both among a new wave of insurtechs that is taking shape and, in particular, among incumbents that have taken some important lessons from the past few years.
ITL Editor-in-Chief Paul Carroll, along with David Atkinson (VP Data and Transformation Strategy, SunLife), Rob Bauer (Chief Managing General Agent Officer, bolt) and Jason Ralph (Partner, McKinsey & Company), will lay out where the big Insurtech opportunities are and discuss how to pursue them.
Date: March 27, 2024
Time: 1:00 pm EDT