Climate/Change/Sustainability/ESG
Well-above-average hurricane season may not mean higher insured losses
Forecasters predict the Atlantic hurricane season, which officially starts June 1, will see well-above-normal activity, but whether that will equate to higher insured losses depends on multiple factors, with landfall location being a top indicator.
National Oceanic and Atmospheric Administration forecasters last week said up to seven major hurricanes – Category 3, 4 or 5, with winds of 111 miles per hour or greater – could form in what is expected to be an “extraordinary” Atlantic hurricane season.
NOAA expects up to 25 named storms (winds of 39 miles per hour or greater), of which eight to 13 could become hurricanes (winds of 74 mph or greater).
Colorado State University forecasters said April 4 they expect “an extremely active” season, with 23 named storms predicted, including 11 hurricanes and five major hurricanes. This is the highest prediction for hurricanes that CSU has ever issued with its annual April outlook.
“We anticipate a well-above-average probability for major hurricanes making landfall along the continental U.S. coastline and in the Caribbean,” forecasters said.
All indicators at this point suggest this will be a “well above-average” Atlantic hurricane season, said Steve Bowen, Chicago-based chief science officer at Gallagher Re.
Record-setting sea surface temperatures, an upcoming transition from El Niño to La Niña weather conditions and a likely reduction in wind shear and trade winds should allow storms to develop and intensify quickly, Mr. Bowen said. read on
Texas Braces for Violent Weather in Wake of Recent Deadly Storms
Nearly 11 million people in the heart of Texas, including Austin, Fort Worth and Dallas, face an enhanced threat of severe thunderstorms on Tuesday, the US Storm Prediction Center said. The systems bring the “potential for significant damaging wind and area of very large hail,” according to forecasters Andy Dean and Andrew Moore.
The threat comes after violent storms ripped through the Midwest and South during the Memorial Day holiday weekend, killing at least 22, according to the Associated Press. Across the US, 186,077 customers are without power from West Virginia to Texas, according to PowerOutage.us, with the most in Kentucky.
'The perfect storm' – how hurricane chaos wreaked havoc on Florida insurers
Property insurers have had a tough time lately – but is that set to change?
In Florida, recent legislation could be game-changer for stressed out commercial property insurers – after a near decade of natural disasters has wreaked havoc on the reinsurance sector. The Florida Senate Bill 2-A, passed in 2022, is supposed to help stabilize the state’s property insurance sector and help stimulate competition.
“That legislation was critically important to our state’s future,” said Matthew Harrell (pictured), president of insurance at Franklin Street. “And our ability to be able to provide affordable property insurance coverage to not only homeowners but also to commercial property owners as well. It really was a capacity crisis. If you look at the numbers, property insurance carriers in the state of Florida have lost money every year on an increasing basis since 2017. That’s not sustainable.”
This situation placed insurance carriers in a precarious position, considering an exit from the Florida market as losses mounted over an eight-year span without profitability. The unsustainable nature of operating without profit underscored the urgency for legislative intervention
UC Berkeley, IBHS and CSAA Announce Winning Landscape Designs that can Reduce Wildfire Risk
In recognition of Wildfire Awareness Month, the winning designs have been announced for a wildfire-resilient landscaping contest conducted at the University of California, Berkeley. A partnership with CSAA Insurance Group88 and the 88Insurance Institute for Business & Home Safety (IBHS), the contest was designed to produce innovative, affordable ideas for homeowners that emphasize wildfire defense while preserving attractiveness.
The winning designs have been announced for a wildfire-resilient landscaping contest conducted at the University of California, Berkeley. The contest was designed to produce innovative, affordable ideas for homeowners that emphasize wildfire defense while preserving attractiveness.
The winning designs have been announced for a wildfire-resilient landscaping contest conducted at the University of California, Berkeley. The contest was designed to produce innovative, affordable ideas for homeowners that emphasize wildfire defense while preserving attractiveness. See list of winners and designs here
The contest was administered by UC Berkeley's Director of the Institute for Urban and Regional Development Kristina Hill, PhD, and contest judges included experts in landscape design and wildfire science and defense:
News
CNBC: Auto premium increases could start to slow soon
New and used vehicle prices trending down and a flat month for maintenance service costs could mean insurers will slow down their premium increases, according to a CNBC article.
U.S. Bureau of Labor Statistics (BLS) recently reported the motor vehicle insurance index rose 1.8% in April after rising 2.6% in March. Auto insurance is mentioned as an item that had a notable increase of 22.6% over the past year.
Multiple media agencies have reported that it is the largest annual increase for auto insurance since 1979.
Bank of America Economist Stephen Juneau told CNBC that insurance premiums are unlikely to lower but the increases should start to slow.
“The turbocharged increases in motor vehicle insurance premiums are a response to underwriting losses in the industry. Insurers saw losses,” Juneau says in the article. “There are signs that many insurers are getting back to profitability.”
Juneau said higher vehicle prices, increased costs for repairs, and more accidents are some factors that led to higher premiums.
The BLS reported that new and used vehicle sales have dropped 0.4% and 6.9% in the past 12 months. Repair and maintenance costs were flat in April but still increased 7.6% from the same time last year.
The lowering of these prices should impact future insurance premiums, Juneau said.
Insurers also tend to point to rising labor costs and used car values as causing the hiked rates in recent years. However, the hikes continually receive criticism from consumer advocacy groups who’ve claimed insurers are overstating needs and overburdening the consumer.
As insurers raise premiums, collision repair shops have simultaneously noted an increase in consumer responsibility for out-of-pocket expenses due to short payments.
Federal Reserve Chair Jerome Powell mentioned the cost of insurance on inflation during testimony to the Senate Banking, Housing and Urban Affairs Committee earlier this year.
“It is clear that insurance of various different kinds, housing insurance but also automobile insurance and things like that, that’s been a significant source of inflation over the last few years, and it’s to do with a million different factors,” Powell said during the hearing held March 7.
Research
Workplace mental health requests are skyrocketing, but can employers keep up?
Though it may seem like the pandemic is in our rearview mirror, many employers are still witnessing the ripple effect the upheaval of normal life and isolation of remote work had on many. Currently, these effects are manifesting in the form of increased mental health accommodation requests.
Three-quarters of the 400 in-house lawyers, executives and HR people surveyed by Littler Mendelson reported an increase in requests for leaves of absence or other accommodations for mental health.
And at the largest companies, those with more than 10,000 employees, 86% of respondents reported increases in such requests involving mental health.
Yet Littler's 12th Annual Employer Survey found that only 22% of companies had modified their policies in response to these rising accommodation requests.
Although policy changes often lag a year or two behind trends, the gap suggests that there's a need for employers to address lingering effects of the pandemic and other issues affecting workers' mental well-being.
For a lot of workers, the pandemic "severely" disrupted their professional and personal support networks, Littler shareholder Devjani Mishra said.
Seventy-four percent of employers surveyed said requests for mental health accommodations increased in the last year. The next big category of accommodation requests was pregnancy-related leave (53%) and hybrid or flexible work not related to health or family issue (50%). Full article
1 in 5 Americans admit to lying on insurance applications
Twenty-one percent of Americans admit to intentionally providing incorrect information on an insurance application, according to a new survey by the personal finance website NerdWallet.
The youngest U.S. adults, Gen Zers (ages 18-27), are most likely to admit to fibbing: 42% of them say they’ve lied on an insurance application for better rates, compared with 28% of millennials (ages 28-43), 17% of Gen Xers (ages 44-59) and 6% of baby boomers (60-78), according to the company’s Insurance Dishonesty Report released this month.
According to the site, the survey of more than 2,000 U.S. adults, conducted online by The Harris Poll, asked Americans about the acceptability of lying about certain personal information on insurance applications. We also asked these Americans why they think these lies are OK.
Just 19% of Americans say it’s acceptable to lie about the number of miles a person drives each year to receive lower auto insurance rates, and 14% say it’s acceptable to lie about health data to receive lower life insurance rates.
The No. 1 reason some Americans think it’s acceptable to lie about certain personal information to get lower insurance rates is because they want to save money (45%), and 38% say it’s because rates have increased too much.
Commentary/Opinion
If Data Is the New Oil, Why Do We Insure So Little of It? | Insurance Thought Leadership
Organizations only insure about 19% of their information assets, vs. 60% of physical assets -- even though losses are far more likely on information assets.
We've all seen the claim that "data is the new oil," and a recent global survey by Aon found that, in fact, information assets are 14% greater than property, plant and equipment assets (PP&E) at major organizations. But Aon also reports that organizations only insure about 19% of their information assets, vs. 60% of their physical assets -- despite believing that they have at least 2 1/2 times the likelihood of a loss on their information assets.
That sounds to me like a need for customers and an opportunity for insurers.
So let's have a look at that report, along with some other items of interest that caught my eye over the holiday weekend:
A pretty thorough argument that climate change is NOT increasing the number of Atlantic hurricanes (even though it appears to be raising their intensity and causing other sorts of storms).
A move by Google that may radically change search and, thus, render obsolete many of the social marketing tactics used by agents and insurers.
A really bad sign for commercial real estate, which insurers not only provide coverage for but invest in.
And, for fun, the latest high-profile glitches by generative AI. (Hint: Don't use Elmer's glue to keep the cheese from sliding off your pizza.) The Aon report says a major reason for the discrepancy between tangible and intangible assets is that intangible assets are too new and too volatile for insurers to be comfortable with them.
"The insurance industry typically builds actuarial loss models based on decades of data," the report says. "However, due to the dynamic and fluid nature of intangible assets, we will never have decades worth of static intangible assets and risks data. Therefore, 'retain risk' versus 'transfer risk' decisions require fresh thinking."
How do we achieve that fresh thinking? The short answer in the report is: "Risk management typically considers frequency and severity of perils. With respect to intangible assets (especially artificial intelligence and cyber), we should add velocity of evolving risk profiles."
Editor in Chief, Paul Carroll, Insurance Thought Leadership
InsurTech/M&A/Finance💰/Collaboration
Authentic raises $11 million
Authentic Insurance, a NYC-based insurance startup, has closed an $11 million Series A round led by FirstMark Capital with participation from Slow Ventures, Altai Ventures, MGV, Upper90, and Commerce Ventures.
Founded in 2022, Authentic enables SaaS platforms, associations, and other communities to create their own captive insurance programs for offering small business insurance. With “one line of code” partners can offer their own insurance product and Authentic takes a fee for underwriting, claims handling, and managing capital markets & reinsurance.
Authentic launched last September and it has 10+ customers including Mindbody, Restaurant365, and theCut that serve ~1 million small businesses. So far, Authentic sold more than 100 policies through its partners and expects to sell 1,000+ by the end of the summer.
The startup plans to add new offerings to its product suite such as workers compensation, health insurance products, and benefits.
Wefox Warns Investors of Potential Insolvency by Summer
Wefox Warns Investors of Potential Insolvency by Summer
European insurer Wefox, valued at $4.5 billion just two years ago, has alerted shareholders to a potential insolvency risk by the summer, according to information obtained by Sky News.
According to the Sky News report, in a memo circulated to shareholders earlier this month, Wefox’s new executive chairman and chief executive, Mark Hartigan, outlined the dire financial situation. The company, which boasts nearly 3 million customers, faces severe regulatory and financial challenges that could lead to its collapse unless significant measures are taken.
Launched in 2015, Wefox, whose investors include Barclays and JP Morgan, has been grappling with losses in several of its operations. Hartigan, formerly the CEO of UK-based insurance mutual LV=, reportedly warned that the holding company could become insolvent by August or even earlier if the current trajectory continues.
Hartigan has been implementing job cuts in central functions, having already reduced the workforce by 60 roles recently, with more layoffs anticipated.
CCC Intelligent Solutions Announces Pricing of Secondary Offering of 50 Million Shares of Common Stock
CCC Intelligent Solutions Holdings Inc. (the “Company”) (NASDAQ: CCCS) today announced the pricing of the previously announced secondary offering of the Company’s common stock (the “Offering”) by affiliates of Advent International, L.P. and Oak Hill Capital Partners (collectively, the “Selling Stockholders”) at a price to the public of $11.50 per share. The Offering consists of 50 million shares of the Company’s common stock. The Offering is expected to close on or about May 30, 2024, subject to the satisfaction of customary closing conditions. The Offering consists entirely of shares of the Company’s common stock to be sold by the Selling Stockholders, and the Company will not receive any proceeds from the sale of the shares being offered by the Selling Stockholders.
Innovation
VIU by HUB Launches Real-Time Quotes for Motorcycle Insurance
Motorcyclists now have access to multiple quotes and expert advice to help them find the right coverage for their unique needs.
VIU by HUB (VIU), Chicago), an omnichannel insurance brokerage platform, has announced the launch of motorcycle insurance. Customers can now receive digital quotes within minutes alongside expert guidance and advice from a VIU agent to tailor coverage to the specific needs of their ride.
A statement from VIU notes that, given a thriving culture of motorcycle customization prevails among riders, it’s important to work closely with an insurance agent to make sure a policy is in place to recover the cost of not only the bike but aftermarket parts and upgrades, such as performance modifications and technology, in the case of damage or theft.
Motorcycle insurance can also help protect against personal liability and help cover unexpected medical bills in the case of bodily injury, the statement adds. Mopeds, scooters, golf carts, trikes, dirt bikes, ATVs and snowmobiles may also be covered, depending on state requirements.
“With this launch, we are building on our promise to become a one-stop-shop for all personal insurance needs,” comments Bryan Davis, EVP and Head of VIU. “Regardless of the type of protection needed, VIU delivers personalized options and neutral advice to help guide customers through the process with ease.”
Events
ITC Vegas | State Farm Startup Pitch Competition
Startup companies pitch live at the ITC Vegas State Farm Startup Pitch Competition. Apply now to pitch at Insurtech Connect, where insurtech meets.
ITC Vegas is pleased to announce the third annual State Farm Startup Pitch Competition.
Tuesday, October 15 | 3-5pm
Launched in 2022, the competition highlights groundbreaking innovation in insurtech and gives an elevated edge to the fierce startup competition across the insurance industry.
Podcast Sponsor
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