Climate/Resilience/Sustainability
What you need to know about the wildfire risk model market
The Wall Street Journal recently published an article that examined the role of risk models in property & casualty (P&C) insurance; in combating growing losses from climate, natural catastrophe, and extreme-weather risks.
Catastrophe and risk models serve as the bedrock for evaluating and quantifying potential risks of a property or portfolio of properties. When it comes to the growing threat of natural catastrophes, risk models offer invaluable insights into the likelihood of losses resulting from these catastrophic events.
Risk models vs. catastrophe models
People, even within the insurance industry, may confuse the difference between risk models and catastrophe models.
Risk models primarily compare risk levels between individual properties, aiding insurers in underwriting and pricing. They may examine risk for any number of different perils, including wind, hail, flood, fire, wildfire, hurricanes and more.
However, they are not designed to predict losses.
Conversely, catastrophe models are designed to estimate the potential financial impact of catastrophic events on portfolios and insureds. These models provide insights into the potential for large-scale losses that could jeopardize an insurer's solvency or capacity to settle claims due to the sheer volume of losses. Catastrophe models offer estimates of Probable Maximum Loss (PML) and Expected Average Annual Loss (AAL), informing decisions regarding reinsurance purchases and setting coverage thresholds.
While both risk and catastrophe models are pivotal to the insurance industry, they serve distinct purposes and are employed separately by different departments within insurance organizations.
Research
Sedgwick examines liability claims litigation trends
Claims management giant Sedgwick has released a new report examining the prevailing trends and practices in liability claims litigation. The “Liability litigation observations and trends 2024” report highlights that, while the legal landscape continues to change, many complexities from previous years persist as concerns for 2024.
Key findings from the liability litigation report include: Key Findings
Litigation conditions: The rate of attorney representation has risen over the past five years, along with a steady increase in liability litigation. Notably, the average cost of new litigated auto bodily injury claims has surged by 64% since 2019, far exceeding inflation rates.
Third-party litigation funding (TPLF): A US Government Accountability Office report indicates that TPLF, which gained momentum in 2010, has expanded rapidly due to a lack of regulation. However, increasing scrutiny from the judicial system and state legislatures could bring changes, driven by concerns over national security and ethical issues.
Data science and artificial intelligence: The plaintiff’s bar heavily relies on data to evaluate lawsuits, jurisdictional tendencies, and outcomes. Sedgwick leverages its own AI-powered algorithm to analyze litigation histories and assess the performance of external counsel managing litigation for the company and its clients.
“From a litigation management perspective, the best avoidance and mitigation strategies start on day one of a claim assignment with the completion of a high-quality investigation,” Steve Ellis, vice president of liability practice at Sedgwick, said.
“The first two weeks after a claim is initiated represent a window of opportunity to impact the outcome by making timely contacts, taking detailed statements, and assessing damage and injuries as quickly as possible.”
Sedgwick chief claims officer Max Koonce (pictured), meanwhile, stated: “To stay ahead in the fast-changing world of litigation, sophisticated defendants need to leverage data and predictive analytics. Attorney scorecards are particularly useful for providing insight into performance within a jurisdiction and head-to-head matchups of plaintiff versus defense attorneys.
News
CoreLogic reports 32.7 million homes at risk ahead of active hurricane season
Ahead of the 2024 Atlantic Hurricane Season, CoreLogic, a provider of property information and analytics, has released its 2024 Hurricane Risk Report to help insurers and risk managers prepare for the upcoming season.
The report reveals that over 32.7 million homes from Texas to Maine are at risk of moderate to severe damage due to hurricane-force winds, with a total reconstruction cost of $10.8 trillion. It’s crucial to note that not all affected homes will experience complete destruction in a hurricane.
“Insurance remains one of the most important tools for a resilient society, given the role it plays in recovery. Being able to quantify risk helps insurance companies make informed risk decisions, which is critical in the evolving hurricane landscape,” commented Maiclaire Bolton Smith, CoreLogic’s Vice President, Hazard and Risk Management.
After raising insurance rates, USAA back in the black in 2023
Despite being buffeted by the same headwinds it faced in 2022 — inflation, high interest rates and an “above average” number of severe weather events — San Antonio-based USAA turned a profit in 2023, a year after posting the first loss in its now 102-year history.
The company made a “difficult decision” to raise auto and homeowners insurance rates last year, and according to President and CEO Wayne Peacock, the increases were “necessary to ensure the association remains financially strong.”
The company also listed global conflicts in Ukraine and the Middle East and the threat of government shutdowns as pressures influencing the decision to raise rates in its 2023 annual report, released Friday.
“We know these factors put a strain on household budgets and continued to drive up the cost to fix and replace cars and homes,” Peacock wrote. The company also reduced operating expenses.
USAA took in $32.2 billion in insurance premiums last year, up from $28 billion in 2022, and returned “almost $1.9 billion to member customers through distributions, dividends and bank rebates and rewards.”
USAA reported a net income of $1.2 billion in 2023, after posting a $1.3 billion net loss for 2022. The year prior to that, the financial services and insurance giant reported a $3.3 billion profit.
Revenue increased to $42.5 billion in 2023, up 17% from $36.3 billion the year before. The annual report stated that favorable investment returns, which jumped 67% over 2022, boosted revenue.
USAA was hardly alone in raising insurance rates last year.
American National Exiting Homeowners Insurance Market
Following its announcement several months ago to leave the homeowners insurance business in nine states including California and Louisiana, American National appears to be exiting the line in all states.
According to a letter sent to employees and other stakeholders last week, American National has “made the additional decision to exit the homeowners line of business in all remaining states.” ARTICLE
Neptune Flood Secures Over $300 Million of Premium Capacity for 2024 Hurricane Season
Neptune Flood, the largest private flood insurance company in the US, has secured over $300 million of premium capacity for the 2024 hurricane season. This significant milestone reinforces Neptune's commitment to providing a robust and reliable alternative to the government's National Flood Insurance Program.
With this increased capacity, Neptune Flood is now positioned to write over $100 billion in insurance, ensuring comprehensive coverage for its growing customer base. Neptune's risk-taking panel has expanded to include 25 insurance and reinsurance partners, all of whom subscribe to Neptune's proprietary AI underwriting system, Triton, for precise and efficient risk assessment.
Many homeowners are unaware that their homeowner's insurance does not cover damage caused by flooding, necessitating a separate flood insurance policy. Currently, less than 3% of homes in the US have flood insurance. However, Neptune's available capacity allows for tens of thousands more homes to be protected ahead of what is predicted to be a record-breaking hurricane season.
"Securing this level of premium capacity is a strong endorsement of our innovative approach to flood insurance," said Trevor Burgess, CEO of Neptune Flood. "With Triton, we have set a new benchmark for underwriting efficiency and accuracy, and our 25 partners are integral to our ability to deliver exceptional service and coverage to our customers at a fair and accurate price. We thank our 2024-2025 panel of capacity providers for their unwavering support."
InsurTech/M&A/Finance💰/Collaboration
InsurTech Mylo Announces Insurance Coverage for Pet Owners
To purchase pet insurance, available through Mylo’s partnership with Safeco, customers only need to answer a few questions on a digital application to get a quote in minutes.
Mylo (Kansas City, Mo.), an InsurTech platform for individuals and businesses compare and purchase insurance, has today announced that it will now offer pet insurance in its suite of insurance products as a natural extension of its mission to provide the right coverage at the best value for every stage of business and life.
Known for delivering coverage from leading carriers for business, auto, home, life and more, Mylo partnered with Safeco (Seattle) to provide a reliable, affordable pet insurance solution. Safeco is a subsidiary of Liberty Mutual (Boston), a Fortune 500 company and the sixth-largest personal lines insurer in the country. Safeco has 90+ years of experience and offers 24/7 customer care.
“Pet owners very much consider their dogs and cats members of the family,” comments David Embry, Mylo CEO. “We’re excited to expand on our solutions for safeguarding the financial health of families by providing a convenient digital way to ensure that pets have access to great care when they need it.”
From R&D to Reality: Our Journey to the U.S. Automotive Market
Since announcing Click-Ins' launch in the U.S. a few weeks ago, I've received plenty of questions about our timing, our company, and what sets us apart in the AI-driven vehicle inspection market. I thought I’d take a moment to answer some commonly asked questions here.
Why now, and why the U.S.?
The decision to expand into the U.S. was a decade-in-the-making decision. While we were heavily investing our time and experience into the research and development of our platform, we were also closely monitoring other AI vehicle inspection companies launching in the states. What we noticed was the ongoing need for innovation. Still today, the U.S. market is ripe for solutions that are accurate, streamlined, and easy to use, which is exactly what Click-Ins offers. After more than 10 years of refining our tech in markets like Israel and Europe, it was the perfect time to bring it state-side and introduce our mature and tested platform to U.S. customers.
[COMPLETE POST HERE](https://www.linkedin.com/pulse/from-rd-reality-our-journey-us-automotive-market-charles-lukens-3oric/}
Charles Lukens, CEO. Click-Ins
Claims
Perspectives: Reimagining the claims ecosystem through digital transformation
The latest tools and technology have opened a whole new world of possibility and progress for the insurance industry, facilitating its transformation to one that is tech-enabled, groundbreaking, more efficient and attractive to a new generation of talent. One of the most exciting things about creating a sustainable and future-forward insurance industry is that it impels us to examine and reimagine not just our processes but the entire claims ecosystem.
Because claims are where we really touch the policyholder, they have a significant role in driving the reputation of the insurance industry. As a result, claims transformation is something that should be a priority for the entire sector. When used thoughtfully, technology gives us the unique capability to streamline our industry’s processes without compromising the empathy component of what we do. As we embrace all of the possibilities of digital transformation, this is our time to shine.
Rohit Verma, president and CEO of Crawford & Co. in Atlanta
Recommended Events
Women's Leadership Congress to Take Center Stage at Insurtech Insights USA 2024 | Markets Insider
Insurtech Insights USA, the world's premier conference for the insurance technology industry, is thrilled to announce the inaugural Women's Leadership Congress as a highlight of its upcoming event on June 5th and 6th at the iconic Javits Center in New York.
With over 5,000 delegates expected to attend, including more than 400 industry leaders who will be taking to the stage to discuss key issues and challenges in the space, the conference promises to be a dynamic platform for networking, collaboration and thought leadership.
Sponsored by Google and Irys, the Women's Leadership Congress, scheduled for Thursday, June 6th from 1:20 pm to 1:50 pm, will feature a distinguished panel of accomplished female leaders discussing the theme "Charting the Path to the C-Suite." This engaging session aims to explore the challenges, triumphs, and opportunities for women in leadership roles within the insurance industry.
The panelists include:
Casey Kempton, President, Personal Lines, Nationwide
Sabrina Hart, President and CEO, Munich Re Specialty
Margeaux Giles, CEO, IRYS
The discussion will be moderated by Megan Kuczynski, President of Insurtech Insights USA, providing valuable insights and perspectives on navigating the path to executive leadership.
Special Discount to 'Connected' followers: Use discount code INSURTECHCON30 and receive 30% off your conference pass Register here
Innovation
New ‘Protected Intersection’ Design Looks Awful, But Actually Makes Sense
Before the invention of the wheel and sliced bread, we got around by walking, crawling, galloping via an animal with more legs than we had — whatever it took. Venturing out for food and shelter is necessary for survival, man. That won't change. What has changed is how we travel.
Legs and wheels are still a mode of transport, of course, but today's combo of getting around involves many shapes, sizes, and speeds. Which is good! And bad. Because one-size-fits-all doesn't apply to every road and byway. "But, dammit, we're going to try!" said the Dutch.
The who? The Dutch. Who did what? Develop the protected intersection. The what? An innovative road design that completely separates pedestrians and cyclists from vehicular traffic. The layout also adds corner islands, which force drivers to slow down.
This element of infrastructure design has been permeating worldwide for some time now, but it's been starting to show up more Stateside in recent years. Amsterdam has nearly 250 miles of bike paths, and the Netherlands as a whole has more bikes than people. But crashes between cars and cyclists (and everything, really) happen everywhere, sometimes with fatal results. The Dutch-style junction isn't a European exclusive. Some U.S cities have already given the unconventional layout a try, and the hits don't lie because there are fewer of them. FULL ARTICLE
Podcast
Predict & Prevent™ Podcast Episode 9: AI Slashing Commercial Fleet Collisions
How technology is improving the transportation safety landscape, reducing collision rates and providing invaluable data for insurers and vehicle manufacturers is the focus of “Keep your AIs on the Road: Tech Reduces Distracted Driving,” the ninth and newest episode of the Predict & Prevent™ podcast from The Institutes.
In this episode, Pete Miller, the CEO of The Institutes, talks with Stefan Heck, the CEO and Founder of Nauto, to delve into the future of transportation safety, the role of AI in preventing collisions, and the impact of Nauto’s technology on the insurance market and its customers.
Conventional wisdom holds that speeding is the leading cause of vehicle collisions. However, the reality is that distracted driving is responsible for nearly 70% of crash-related damages, according to data from Nauto, a transportation technology company.
In response, the industry is shifting from reactive dash cams that merely record collisions to AI-powered systems that actively prevent them, Heck says. Nauto’s platform continuously monitors road conditions, driver behavior, vehicle movement, and location history to identify risk factors. When a potential hazard is detected, the system provides real-time audio and haptic feedback, giving drivers crucial seconds to self-correct and avoid a crash. Importantly, Nauto only shares incidents with fleet managers after first alerting the driver and providing an opportunity for correction.
“By providing timely warnings, we help drivers become aware of unconscious risks, enabling them to take corrective action,” he said.