Climate/Change/Sustainability/ESG
Directors and Officers Who Fail to Respond to Climate Change May Face Claims
In early March of this year, the Securities and Exchange Commission adopted rules targeted at enhancing and standardizing climate-related disclosures by public companies and in public offerings.
The new rules mandate the inclusion of climate risk disclosures in a company’s SEC filings, including annual reports and registration statements, to increase transparency for investors concerned about climate-related impacts.FULL ARTICLE
News
June 2024: Labor Market PULSE
In May, the overall U.S. economy hit its highest unemployment rate since January 2022. Conversely, unemployment for the insurance carriers and related activities sector dropped 0.6 percentage points, to 1.8%.
U.S. job openings hit a three-year low in April*, while job openings within finance and insurance slightly increased. The industry is also experiencing a voluntary quits rate of 0.9% - the lowest since April 2020, according to the BLS.
In the past couple months, we’ve noted an increasing reluctance among professionals when it comes to changing roles. This makes it even more important to focus on engagement to avoid “quiet quitting” and maintain productivity. For more on avoiding burnout within your team, view our recent blog post.
AT-A-GLANCE NUMBERS
The insurance carriers and related activities sector gained 4,800 jobs in May.
At more than 3 million jobs, industry employment increased by approximately 37,800 jobs compared to May 2023.
The U.S. unemployment rate slightly increased to 4% in May and the overall economy added 257,000 jobs.
INDUSTRY HIGHLIGHTS
On a year-to-year basis, April* insurance industry employment saw job increases in agents/brokers (up 2.5%), reinsurance (up 2.3%), TPAs (up 1.5%), life/health (up 1%), and property and casualty (up 0.6%). Meanwhile, jobs decreased in title (down 3.2%) and claims (down 1.4%).
The Jacobson Group
Global insurance outlook 'neutral' amid economic uncertainty
The 2024 global insurance outlook remains neutral amid inflation and uncertain economy, Fitch Ratings reports.
Weakened U.S. dollar projected to hold insurance industry in place.
Ongoing inflationary pressure and elevated interest rates will keep the insurance industry right where it is for the rest of 2024, according to a recent Fitch Ratings report.
With competition and limited price increases leading to the projection, the sector outlook worldwide remains neutral, Fitch Ratings Global Head of Insurance Cynthia Chan said in a recent statement.
Despite the economic woes, insurers currently benefit from higher premiums and improved margins as lapse risk decreases, the data showed. Meanwhile, growth opportunities are popping up in some markets with the U.S. and Continental Europe remaining near the top in sales for the sector.
"Our U.S. Personal outlook moves to improving reflecting continued results improvement," Chan said in the Fitch report.
According to the report, the cumulative effects of large rate increases and claims severity trends moved sales for U.S. personal lines higher. While personal lines premiums will continue to rise, other types of insurance in the U.S. such as mortgage insurance and title insurance will remain neutral as claim trends stabilize and carriers adapt to declines in market activity.
For the rest of the year, personal lines experts will keep an eye on market volatility, paying close attention to whether financial conditions tighten and depress asset values, market access, and refinancing costs. Experts will also watch for an "even-higher-for-even-longer" rate environment that increases risk to commercial real estate and alternative assets.
III: Insurance rates soar on investment strategy and 'legal system abuse'
Between 2019 and 2022, homeowners watched the cost of insurance spike 55% and auto insurance rates swelled 46%.
Data compiled by the Swiss Re Institute showed the $17 billion brought in from global litigation funding in 2022 is projected to balloon to $30 billion by 2028.
Rising investment into third-party litigation funding (TPLF) has policyholders paying more to keep their homes and autos insured, according to a study from the Insurance Information Institute (III).
Between 2019 and 2022, homeowners watched the cost of insurance spike 55% while personal auto insurance rates swelled 46% over the same time period.
While TPLF uses third-party dollars to fund unrelated lawsuits and turn a profit from the winnings, the mounting litigation has led to overall increases in costs and time to settle insurance claims.
Dale Porfilio, chief insurance officer at III, said, "We have been educating and informing consumers about our growing concern with third party litigation funding within the broader umbrella of what we refer to as legal system abuse."
"Our growing concern with third-party litigation funding is based on the change in the motivation of the investors," he continued. "TPLF can be an effective tool for judicial good. Yet, in recent years, TPLF has devolved in unfortunate ways. Without any direct ties to litigated cases and minimal transparency, institutional investors and even sovereign nations are contributing significant amounts of capital toward litigation for the sole intent of making a profit."
"Without transparency, we are not able to provide deep data-driven insights about TPLF's impacts on consumers and the insurance industry," Porfilio said.
Research
Data reveals distracted driving increases by 7.5% on Father’s Day
As families fire up the grill and gather to celebrate Dad, distracted driving ignites road risk on Father’s Day, making it the fifth most distracted day of the year, according to Cambridge Mobile Telematics (CMT).
CMT has found that distraction increases on Father’s Day by 7.5% when drivers spend 2 minutes and 24 seconds per hour interacting with their phone screens while driving which is a 10-second per hour increase in distraction from the surrounding days. CMT defines screen interaction as a driver tapping, scrolling, or typing on their phone screen while traveling over 9 mph.
“The effects of increased distracted driving on Father’s Day are serious,” a CMT news release states. “CMT estimates the 7.5% increase in distracted driving has contributed to around 1,000 additional crashes, 570 injuries, five fatalities, and $40.3 million in economic damage.
“Understanding the holidays with elevated road risk helps us all be more vigilant so we can all travel safer. Whether heading to the golf course or a family BBQ, let’s prioritize road safety to ensure a safe and enjoyable holiday for everyone.”
Screen interaction is highest during the morning of the holiday, according to CMT.
Last year, distracted driving escalated throughout the morning from 7-9 on Father’s Day compared to other Sundays in June and July. The rise in screen interaction started early, with a 5.9% difference at 7 a.m., climbed to 9.6% at 8 a.m., and peaked at 9 a.m., reaching 10%.
This marks an 18-second-per-hour increase in screen interactions compared to the average Sunday.
While screen time behind the wheel surges in the early morning on Father’s Day, it remains high until 8 pm.
Commentary/Opinion
Lara faces flak as he tries to fix California's insurance woes
Insurance industry bête noire Consumer Watchdog is back in the news after it has ‘voiced strong concerns’ over newly proposed regulations from California Insurance Commissioner Ricardo Lara, claiming they will make home insurance even more unaffordable and difficult to obtain for many residents. The advocacy group argues that the proposals let insurance companies avoid their commitments by merely taking "reasonable actions" towards compliance, and by allowing them to replace their commitments with alternatives.
According to Consumer Watchdog, the regulations, which purport to require insurance companies to increase sales to homeowners in distressed areas, do not mandate ‘affordable pricing’ – something that might well force careers to stay away from the crippled California market. Furthermore, the watchdog claims that the regulations would permit double-digit price hikes through the use of what it calls ‘unverifiable algorithms’ (computer modelling), pushing premiums out of reach for many Californians, and allowing companies to continue "redlining" distressed locations.
“Insurance Commissioner Lara’s plan gives insurance companies two years to comply, but they can start to charge more immediately,” said Carmen Balber, executive director of Consumer Watchdog. Balber criticized the plan for its potential to allow companies to move the goalposts if they fail to meet their commitments, ultimately making the promise of expanded coverage meaningless if premiums remain unaffordable.
AI in Insurance
InsurTech Insights Conference: AI Meets IAs InsurTech Insights Conference: AI Meets IAs
At last week's 2024 Insurtech Insights conference in New York City, more than 5,000 attendees representing every facet of the insurance industry came together to present, demonstrate and discuss the most recent innovations. This year's conference focused on generative artificial intelligence (AI) and the industry's accelerated acceptance of AI to extract data to deliver better outcomes in underwriting, claims, service and sales.
The arrival of ChatGPT in late 2022 meant that generative AI could be harnessed by companies to automate administrative tasks, assist with creative ideas and code software. At Insurtech Insights, it was evident from the panels and presenters that the insurance industry is indeed embracing AI.
In the opening general session, Casey Kempton, president of personal lines for Nationwide, discussed how technology is being applied to better adjudicate claims and to provide agents with tools to serve clients.
However, Kempton noted that consumers can be distrustful, pointing out the use of drones to inspect roofs and telematics to illustrate how some people feel this technology is an intrusion on their privacy. “Agents can help in dispelling those notions by educating their customers to the benefits gained ... speed, accuracy and lowering the cost of insurance," she added.
Another session, “Brokers and Carriers in the Digital Age," highlighted the potential uses of technology within existing realities. An overriding theme that both carriers and managing general agents (MGAs) face is “whether to build or buy" stated Eric Ayala, managing director of the Americas at Novidea. This issue dovetails with the challenge carriers face with consolidating legacy systems, an issue that independent agents are well aware of as carriers grapple to upgrade their systems seamlessly.
Predict & Prevent
WINT and AXA XL extend partnership to mitigate water damage in real estate
WINT Water Intelligence, a leader in cutting-edge water management and leak-prevention solutions, announces that it is extending its partnership with AXA XL, the property & casualty (P&C) and specialty risk division of AXA, to offer an innovative, comprehensive solution that goes beyond traditional insurance and technology offerings and addresses critical issues in the construction insurance landscape.
As part of the AXA XL Ecosystem of curated technology solutions, WINT's AI-based solution mitigates the risk of water damage on construction sites and in commercial and residential buildings to protect general contractors, developers and owners from the rapidly rising costs and impact of water damage.
Water damage from leaks is one of the most common claims on both property and casualty and builder's risk policies, with over 30% of builders' risk payouts resulting from water escaping from pipes. A recent study shows that sites protected by WINT dramatically reduce the number and impact of water damage incidents. Sites with WINT installed were found to submit 73% fewer claims and resulted in 90% fewer payouts relative to sites without this protection.
"Leaks and water damage are a major source of pain and stress across the built environment and are significantly impacting insurance carriers," said WINT CEO Alon Geva. "We are excited to extend this partnership from its original focus on construction to the full lifecycle of the building to leverage WINT's proven water management technology with AXA XL's unparalleled expertise in risk management. We're proud to work together with AXA XL to deliver the best solution for a chronic issue confronting buildings."
Podcast
Claims technology: How is the industry adapting? | Digital Insurance
Welcome to this edition of the Dig In podcast. I'm your host Patti Harman, editor-in-chief of Digital Insurance, and today we're discussing how the insurance industry is adapting to different types of claims technology. The claims process is where insurers have the opportunity to make good on the promises in a customer's policy and handling them quickly and efficiently plays an important role in customer satisfaction. While technology usage permeates every aspect of the insurance industry, claims was one of the first areas to implement technology for filing the first notice of loss. To assess property damage in the wake of a disaster and to help expedite the settlement and payment processes, adoption and usage by both policy holders and insurance professionals is crucial to creating a positive claims experience.
Joining me today to discuss the development and implementation of digital capabilities across the claims ecosystem is Lee Elliston Aspen Group claims Chief Operating Officer. Lee is responsible for the global operating strategy for claims for Aspen, including claims service and the extremely important customer experience, and he has over 20 years of involvement in claims leadership and operations. Thank you so much for joining us today, Lee.
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