News
UBI Adoption Grows as Drivers Seek Relief from Post-Pandemic Rate Increases
Look for high premiums to move the UBI adoption needle but with cautious optimism in the short run and more emphasis on choice in the longer term.
The headlines are filled with a variety of 2023 predictions for the P&C Insurance industry with differing opinions about which might prove to be the most reliable. The when, how and how much are always elusive for forecasters. But one unarguable trend is ongoing increases in auto insurance premiums.
Alan Demers and Stephen Applebaum
US housing market is overvalued billions ignored flood risk
US homes in areas prone to floods may be currently overvalued in the range of $121 billion to $237 billion, according to a report published Thursday in the journal Nature Climate Change.
Roughly, that number is derived by looking at how much homes are selling for now and subtracting the estimated average annual losses that they will incur from flooding over the next 30 years (the average length of a mortgage in the US), as determined by the First Street Foundation, a nonprofit that seeks to improve awareness of climate change-related risks like increased flooding. The report was authored by researchers from First Street, the Environmental Defense Fund and Resources for the Future, among others.
2023 P&C Outlook: Assessing the impact of higher rates & greater underwriter scrutiny
Businesses seeking renewals or new property and casualty insurance (P&C) coverage over the coming year will continue to encounter rate increases and greater underwriter scrutiny as insurers remain guarded due to ongoing economic uncertainty and the major impact of catastrophic weather events on property coverage. Inflation and court-related claims are also contributing to reduced market capacity, leading to increased emphasis on layered insurance coverage and clients assuming more risks going forward, Alera Group’s 2023 Property and Casualty Market Outlook reports.
Rate increases, access and capacity will vary significantly from industry to industry and region to region. Specifically, pricing will be influenced by the client’s industry, location relative to catastrophe-prone (CAT) areas, loss history and the effectiveness of its risk management strategy. Overall, pricing is expected to increase 9.3% in 2023, down from 11.1% the prior year.
Root Granted Restraining Order Against Former CMO it Says Stole About $10M
A U.S. district judge has granted a motion for a temporary restraining order requested by Root Inc. against its former chief marketing officer to prevent him, his companies or associates from selling or transferring any properties or possessions Root has alleged its former executive bought with ill-gotten gains.
Root alleged in an amended lawsuit filed last week in U.S. District Court for the Southern District of Ohio that former CMO Brinson Caleb “BC” Silver and others defrauded the InsurTech of at least $9.9 million. The amount was adjusted from an initial tally of $9.4 million in the original lawsuit.
According to documents filed with the court to support its motion for a restraining order, Root said Silver “misused his position as CMO to steal breathtaking sums from Root through a three-step plan” that included payments to William Campbell, CEO of advertising agency Quantasy. Root alleged Quantasy transferred a majority of more than $13 million paid to the firm for marketing services back to Silver via Collateral Damage, a company owned by Silver and/or Silver’s sister Paige McDaniel. That firm then sent funds to others, including Eclipse, another company allegedly owned by Silver, who used the money to allegedly purchase luxury real estate in Venice, Calif., and Miami, Fla.
Claims cost mitigation and 'cheap solutions' contributing to crash-detection fix challenges, diagnostics companies say
A recent Insurance Institute for Highway Safety (IIHS) study that found crash-detection features complicate repairs, but failed to take into account insurer pushback and failure to prioritize adherence to OEM procedures as a contributing factor, some diagnostics specialists say.
Greg Peeters, chief executive of Car ADAS Solutions, said the issues he’s observed in calibration centers involve the mounting, positioning, and aiming of sensors. He said it’s important to follow all OEM procedures and document each step, as ensuring an accurate calibration takes time and the right environment.
However, he said part of the problem is that some insurers and repair shops don’t always facilitate the need to do things the right way.
Global insurers shift from delivering risk coverage to reducing and preventing risk
Today's consumers want more from their insurance companies. Following several years of turbulence, including extreme weather, the COVID-19 pandemic and disease, significant disruption is radically changing the risk landscape for consumers with more and different risks. With this reality, consumers want their insurance companies to more than just help them when there is disruption, but help them reduce and prevent risk too.
Bain & Company's new report, launched today, Customer Behavior and Loyalty in Insurance: Global Edition 2023, gives insight into the changing approaches of insurers and needs of consumers.
• Bain & Company's 2023 Global Insurance Report looks at the role of customer behavior, loyalty and impact of purpose on insurance companies.
• Consumers from across the globe show strong interest in risk prevention including 97% of survey respondents from Brazil and 81% from Japan.
• Consumers want to be rewarded for choices, including 59% globally want life insurers to reward them for healthy living.
InsurTech/M&A/Finance💰/Collaboration
InsurTech Profile: AgentSync Co-Founders on the Cost of Resisting Change
Niji Sabharwal, CEO and co-founder of insurance compliance software provider AgentSync, has a message for insurers who worry InsurTech is causing too much disruption in the industry.
“People often think change is expensive,” he said. “But what about the cost of staying the same? In this industry, we sometimes forget that there could be another way.”
Sabharwal, who got his start in sales strategy and operations at Zenefits before launching AgentSync alongside Co-Founder and Chief Technology Officer Jenn Knight, said those insurers that adapt and embrace tech-forward, automated compliance will be better poised to capture market share, even in a hard market cycle.
Economic factors that could impact buying or selling an MGA
Determining the right time to buy or sell a managing general agency (MGA) is a matter of great debate, particularly in the current economic climate.
On one hand, merger and acquisition (M&A) activity remains robust, with 627 agency deals occurring in the first three quarters of 2022, according to OPTIS Partners, an investment banking and consulting firm. In fact, deal volume in Q3 2022 was the second-highest recorded total for the period and 8% higher than the prior five-year average.
On the other hand, choppy waters lie ahead. When looking at deals exclusively involving property and casualty, M&A activity declined 14% year-over-year from Q3 2021 to Q3 2022. OPTIS Partners predicts a return to a normal deal environment by year’s end, which means M&A volume won’t match 2021’s record-breaking numbers.
At the same time, the global economy faces a pending storm. Inflation concerns, a looming recession and the increasing costs of capital all point to a slowdown in M&A activity.
Private equity continues involvement in acquisition of P&C insurers: ALIRT
“Recent news that Argo Group had finally found a buyer in Brookfield Reinsurance reminds us very much of the sale of Aspen to Apollo in early 2019, the parallels are interesting,” say analysts at insurance research firm ALIRT.
The analysts note that in both instances, the buyers are large private equity groups involved on both the life and P&C sides of the US insurance market.
Further, both are acting as “white knights” for mid-sized specialty commercial insurance groups that are/were facing financial difficulties.
David Paul, Principal, ALIRT Insurance Research, commented, “Private equity continues to become more involved in the acquisition of P&C insurers after taking a lead role in the purchase of P&C agencies/brokers over the past decade.
“We have watched this development on the life insurer side of our business since the watershed acquisition of Athene by Apollo Global in 2013. We now appear to be witnessing a similar trend unfolding within the P&C market as well.”
Brush Claims Unveils New Brand Identity to Support Strategic Transformation and Advanced Executive Growth
Brush Claims (Brush), an insurtech claims solution firm using innovative proprietary technology, has unveiled a new visual identity, website, and refreshed positioning in support of its growing worldwide presence in the insurtech space. The firm elevates their carrier partners and their policyholders by delivering impactful, exciting results through its claim process, strategy development and implementation. Brush’s new look and feel represents a commitment to innovation and the company’s role and purpose of powering substantial value to clients and increased innovation to the industry. In addition, the firm has added four new executive team members and announced three promotions to position the company for its continued expansion.
“The rebranding marks a new Brush Claims, with a strategy focused on growth, adaptability and sustained profitability we’ve experienced while delivering a full claims solution,” said Kevin Myers, Chief Executive Officer at Brush Claims. “It’s an exciting time at Brush Claims and it’s more important than ever for us to have the right leaders at the helm. It serves as a major milestone in our evolution, as we continue to reinvent ourselves by taking a fresh and forward looking approach to the market.”
People
Ken Frazier to Chair Transcarent Board of Directors
Ken Frazier recently served as the Executive Chairman of the board of directors of Merck, where he was President and Chief Executive Officer for a decade, from 2011 to 2021. He is currently the chairman of General Catalyst’s Health Assurance Initiatives, focused on creating a more proactive, affordable, and equitable system of care.
Transcarent, a health and care experience company that makes it easy for people to access high-quality, affordable care announced today that industry leader Ken Frazier has been appointed to chair the company’s board of directors. This addition to the Board is a formative milestone for Transcarent. As one of the most influential Chief Executive Officers in healthcare, Frazier brings unmatched experience and business acumen to help shape Transcarent’s long-term growth strategy.
“Ken’s experience in healthcare and business is unparalleled. He’s a seasoned executive and has been a member of some of the most prestigious industry boards including Merck and ExxonMobil”
Glen Tullman, CEO of Transcarent
Events
The Future of Insurance USA 2023, June 27–28, Chicago
Streamline Processes | Reimagine Products | Empower People
Insurance is at a critical inflection point. Inflation is causing a profitability crunch, customers are demanding digital perfection, and a scarcity of talent leaves the industry in crisis mode. Headwinds of change are ripping through an inherently risk-averse industry – but inaction is a strategic risk in itself. Never has it been more critical to invest in the future. The most successful players will:
• Challenge the outdated perception of insurance by creating innovative products that meet the needs of underserved markets
• Thrive in the changing industry ecosystem with effective partnerships, a flexible business strategy and a culture of innovation
• Combine the power of next generation technologies with diverse talent to create frictionless customer experiences