News
GEICO STD-from-car claim rolls on in court
Remember the case involving GEICO and a claimant seeking to be compensated after allegedly contracting a sexually transmitted disease in a policyholder’s car? Well, you will be mistaken if you think that claim is already done and dusted. On further contest, the case is being heard by a three-judge panel on the Eighth Circuit Court of Appeals.
Previous decisions on the unusual case, which began in 2021, include rulings in favor of both sides. GEICO, which was formerly ordered to compensate the woman (identified only as M.O.), was successful in getting that judgment overturned.
M.O., who had initially sought $1 million but was awarded $5.2 million by a Missouri arbitrator, now wants US Circuit Judges Steven Colloton, Michael Melloy, and Raymond Gruenderto rule back in her favor, arguing against the supposed ambiguity of the GEICO policy and insisting that her claim falls under the bodily injury cover provided by the car insurance.
For GEICO’s camp, however, the automobile insurance policy only applies when the vehicle is used for “vehicular purposes,” suggesting that a car romp isn’t one of them.
As such, during a recent hearing, one argument was on whether “normal use of an auto” is ambiguous enough to get M.O. paid.
A judge asked: “It’s foreseeable that people are going to have sex in the car – I mean, that’s clearly foreseeable, right?”
Second USAA policyholder lawsuit over fees moves forward
After the United Services Automobile Association and its subsidiaries agreed to reimburse thousands of policyholders more than $8 million for inappropriately assessed late fees, a federal judge in Maryland is now allowing a separate matter to proceed, in which policyholders seek more than $7 million worth of interest on those improperly retained charges.
U.S. District Judge Peter J. Messitte of the District of Maryland denied USAA's motion to dismiss plaintiff Walter Black III's claims for money had and received and unjust enrichment, ruling the plaintiff pleaded facts clearly to suggest USAA "knew full well that they had the use of the late fees," and "they understood the time-value of the fees" and their interest-bearing potential, according to a June 11 opinion.
Messitte also denied most of USAA's motion to dismiss regarding its statute of limitations and failure to state a claim argument, and said that the court is prepared to entertain a motion to certify an appropriate class or classes.
Black filed suit against USAA and its subsidiaries, Garrison Property and Casualty Insurance Co., USAA General Indemnity Co., and USAA Casualty Insurance Co., after USAA improperly charged him three $10 late charge fees for untimely payment on his monthly premiums between 2013 and 2014.
USAA lacked authority to charge the late fees because it failed to receive approval from the Maryland Insurance Administration (MIA) and the Maryland Insurance Commissioner (MIC), as is required by state insurance administration regulations, the opinion said.
A 2020 investigation by the MIC resulted in USAA entering into a consent order agreeing to reimburse 130,000 policyholders in excess of $8.1 million for inappropriately charging customers late fees. Black received a credit to his account for $30 for the late charges. However, he did not receive interest the defendants earned over the years on the charges, leading him to file the current putative class action, seeking the interest on the improperly retained late charges — in excess of $7 million.
Nationwide drops pet insurance for 100,000 policyholders
Nationwide Insurance said it will not renew about 100,000 pet insurance policies because of a rise in inflation in veterinary care and other factors.
Christie Keith has been paying $600 a month in pet insurance premiums to insure her dogs for years and bumped that up to more than $700 recently to add coverage for her 4-year-old Silkan Windhound, Pip.
But a few weeks ago, the protection plan for her pets came unraveled when Nationwide Insurance announced it would cancel coverage for about 100,000 pets across the country, blaming the rising costs of veterinary care and other factors that are cutting into the profits of its pet insurance business, the company said in a statement on June 14.
The move is leaving tens of thousands of pet owners in a predicament, because – even though Nationwide says age and prior claims history aren't a factor – many of those policies are for older pets with pre-existing conditions that may not be insurable elsewhere.
For Keith, a 65-year-old freelance writer who lives in Davisburg, Michigan, the dilemma is especially troubling because her older dogs have both needed medical treatment recently. Ros, a 10-year-old Silken Windhound, has been hospitalized twice and continues to suffer from an undiagnosed illness, while Harper, an 8-year-old Scottish Deerhound, has been treated for a back injury.
Ros, a 10-year-old Silken Windhound, which has been hospitalized twice and continues to suffer from an undiagnosed illness, may not have insurance coverage after April 2025, when a current policy expires. Nationwide won't renew the coverage, pet owner Christie Keith of Davisburg, Mich., said.
She began paying Nationwide for coverage for Harper in November 2017 and Ros in April 2021. Keith insured Pip, a 4-year-old Silken Windhound, in December 2023. Nationwide told Keith the policies for her dogs would expire as the renewal dates hit and that she couldn't get lesser policies from them for her dogs.
InsurTech/M&A/Finance💰/Collaboration
Mubadala Proposal to Sell Insurtech Startup Wefox Opposed by Founders
Mubadala Investment Co. has proposed selling troubled insurance tech startup Wefox Holding AG to UK insurance broker Ardonagh Group Ltd. in a deal opposed by the German firm’s founders.
The Abu Dhabi sovereign wealth fund has told Wefox shareholders it expects an offer from Ardonagh that would give the German firm an enterprise value of as much as €550 million ($595 million), according to a presentation from Mubadala that was seen by Bloomberg. Wefox was valued at $4.5 billion in a Mubadala-led funding round two years ago.
The Berlin-based company lost more than €100 million last year and is now facing as much as €70 million in fresh capital needs through the end of the current year, according to the Mubadala presentation, which was addressed to the company’s key shareholders including Chrysalis Investments and Target Global.
Mubadala, which has $300 billion in assets under management, has become increasingly assertive in some of the startups it funded when low rates helped fuel a boom in venture capital investments. At Turkish grocery delivery business Getir, where it is also the biggest investor, Mubadala pushed for changes to the board and a revamp of its strategy earlier this year.
After 20 months of trying to raise funds, insurance startup Loop cuts staff | TechCrunch
Loop, the car insurance company co-founded by Harlem Capital co-founder John Henry, has laid off staff as the company struggles with fundraising.
After 20 months of trying to raise funds, insurance startup Loop cuts staff
Loop, the car insurance company co-founded by Harlem Capital co-founder John Henry, has laid off staff as the company struggles with fundraising.
Henry took to Instagram to post the email his co-founder Carey Nadeau sent to impacted staff on June 16th. Nadeu also posted the letter to LinkedIn.
It stated that this was the “absolute last resort” for the company after it had been unsuccessful in raising additional capital after 20 months of trying. “Our last opportunity,” Nadeau wrote, “had an investor pull out at the very final hour, and we just fell short.”
Carey Anne Nadeau and John Henry, the co-founders of Loop.
Climate/Change/Sustainability/ESG
Tropical Storm Warning Issued For Texas
At a Glance
Tropical storm warnings have been issued for parts of the Texas and Mexico coasts. This system will move west toward Mexico.
Flooding rain, coastal flooding, gusty winds, high surf and rip currents will affect the western Gulf Coast of the U.S., especially Texas.
Flooding rain is also likely in parts of Mexico and Central America.
Just 32% of Hazard Prone Areas Have Adopted Resistant Building Codes: FEMA
Wicked summer storms, tornadoes and hurricanes each year highlight the importance of up-to-date building codes.
The Federal Emergency Management Agency (FEMA) tracks building code adoption status for state, local, tribal and territorial governments across the nation to evaluate a community’s natural hazard risks and building code adoption.
The effort is often referred to simply by its acronym, BCAT.
The nationwide percentage looks at all jurisdictions that have adopted the current or next most recent editions of the International Building Code and the International Residential Code without weakening any natural hazard-resistant provisions, the agency said in it’s most recent update.
Natural hazard-resistant provisions have been part of the International Building Code and International Residential Code since their first editions in 2000.
New editions of the codes are released every three years, improving and expanding on the hazard-resistant provisions.
FEMA considers communities “hazard-resistant” if they’ve adopted the latest or second most recent codes without weakening the hazard-resistant provisions through amendments.
The Building Codes Save Study noted that adopting current codes “increases safety and reduces financial losses, supporting more rapid recovery after disasters.”
Hazard resistance means different things depending on the hazard, the agency added. The most significant example of this is seismic code provisions. The other hazard-resistant provisions address life safety as well as reducing damage to structures.
The agency noted that seismic codes primarily focus on saving lives. After all, “earthquakes don’t kill people, buildings do.”
The table below displays the percent of tracked jurisdictions that are resistant to the hazards identified, along with the annual and quarterly change.
California ranks No. 1 as the most disaster-prone state in the U.S - The Watchers
California ranks as number one on the list of the most disaster-prone states in the U.S., according to the latest rankings by ClaimGuide.
California, with the most disaster declarations of any state by a wide margin, is the worst state for natural disasters, followed by Florida, Texas, North Carolina, and Washington.
Four of the five most at-risk counties in America are in the state of California. Elsewhere, the Houston, Texas area (Harris County) ranks second on the list. In a report published by ClaimGuide, a Florida-based non-profit organization, California was declared the most disaster-prone state in the U.S. The list ranked over 3 200 counties in the United States by analyzing data from the Federal Emergency Management Agency( FEMA).
“What is surprising is how many more natural disasters California has declared than any other state,” the report states.
“Between 2014 and 2024, the state of California declared 155 disasters; the next closest state is Washington, with 88 disasters declared in that same timespan. It’s a costly legacy – expected annual losses due to climate disasters in California is calculated to be $16,334,271,892.”
The report analyzed data from FEMA to determine which counties are most and least prepared for natural disasters based on three metrics: community resilience, social vulnerability, and the inherent risk of disaster events in each area.
Telematics, Driving & Insurance
It’s Time to Revitalize Auto Insurance | Insurance Thought Leadership
Telematics is the key, but four obstacles have to be overcome for it to achieve its full potential.
Carriers are admitting that this has been the hardest market some have ever worked through, and there’s been a lot of volatility over the last three to four years. Between drivers’ behaviors shifting in a post-COVID world, to higher spikes in frequency, elevated loss cost severity and a sustained increase of inflation, there’s extreme pressure on the sector’s technical sustainability even with a net combined ratio improvement to 105% in the third quarter of 2023 from 112.1% a year earlier.
Cars connected with an insurer
Telematics has grown significantly over the past three years, and there is broad consensus among U.S. insurance carriers that the use of telematics is a necessary capability for auto insurers to succeed. However, telematics hasn't made a dent in mitigating these sector issues because it has not yet been used in the right ways.
See also: Have We Turned the Corner on Distracted Driving?
There are at least four major issues to solve to unlock the full potential of telematics:
Agents aren’t UBI promoters. Their income is a commission on premium: Would you be excited as an agent to sell a product where the only communicated benefit is the potential to reduce insurance premium - and also agent income - by 30% or even more? At the same time, there are many friction points around “selling” a telematics program to new policyholders.
Accurate match between risks and rates only happens at policy renewal after a monitoring period.
Data is mostly used to evaluate risks instead of also helping to reduce them.
Telematics has been used only for new policyholders, versus also offered to a carrier’s existing book of business (limiting by design the number of risks that can be addressed with this innovation). In relation to the first point, mastering the usage of telematics data allows the opportunity to unlock a significant amount of value. Carriers should optimize the sharing of this value with both customers and their agents.
Moreover, carriers need to do a better job at articulating the benefits of telematics to their agents. Insurers should design and execute a structured approach for sharing their vision with their agents about the adoption of telematics and benefits to the agent’s business. Those include the ability to satisfy and retain more policyholders, the ability to offer competitive rates and close more deals for the agency portfolio and the possibility of up-selling many policyholders receiving a discount.
Henry Kowal and Matteo Carbone
Commentary/Opinion
Advocate concerned that NAIC accelerated underwriting effort lacks teeth
After putting accelerated underwriting aside for a year, state insurance regulators are out with tentative guidance on the topic.
But one longtime consumer advocate wonders what took so long. Birny Birnbaum, executive director of the Center for Economic Justice, noted that regulators have studied accelerated underwriting for at least eight years.
“That seems like a long time to get to a point where it’s just a ‘first step,’” he said, echoing how regulators described the guidance.
Birnbaum, a longtime former consumer liaison for the National Association of Insurance Commissioners, made his comments Thursday during a call by the Accelerated Underwriting Working Group.
He asked several questions about how the guidance treats the “proper use of data elements” to avoid proxy discrimination.
“I think what's been made clear in this regulatory guidance, and then also in the other, corresponding NAIC work, is that current insurance law, as it relates to things that result in rates or underwriting that's been fairly discriminatory, that would still be applicable,” said Sarah Gillaspey, senior associate counsel for the Minnesota Department of Commerce.
Birnbaum agreed to put his questions in writing so the entire working group can respond. The working group exposed the guidance for comments through June 30.
Three areas of underwriting focus
Regulators are exposing a 42-page guidance document that includes background on how the accelerated underwriting issue evolved. It refrains from specific regulation and is divided into three areas of focus: A) regulatory considerations; B) strategies for review; and C) requests for information.
People
Hi Marley Welcomes Kim Gallagher Johnson as Senior Vice President, Customer
Former Liberty Mutual, Allstate Leader Brings 20 Years of Carrier Customer Experience Expertise
Hi Marley, creators of the only intelligent conversational platform built for the P&C insurance industry, today announced the appointment of Kim Johnson as Senior Vice President of Customer, focusing on delivery and experience. In this role, Johnson will join Hi Marley's leadership team to further sharpen the company's carrier perspective and champion the customer voice.
Johnson is a seasoned insurance industry executive with a 20-year history in customer experience, technology, and strategic transformation. She most recently held senior leadership positions at Liberty Mutual Insurance, where she spearheaded CX strategy and software product management for servicing and claims. Johnson is known for her collaborative leadership style, passion for customer-centricity, and deep understanding of the customer journey.
Podcast Sponsor
Audio Version - 'Connected: The Podcast' --- Sponsored by Pulse Podcasts
Co-curated by Alan Demers and Stephen Applebaum, The Connected Podcast is a condensed audio version of the day's ‘Connected' newsletter, a daily scan of all the happenings in the world of Insurance & InsurTech News.
Pulse Podcasts: Introduce a new way for your audience to hear your voice! We are a podcast creation service that helps businesses turn their written content, like blog posts and news articles, into beautiful podcasts. Our platform writes the script, records the voices, and mixes the audio to create engaging content for your audience. It's affordable and has super-fast turnaround!
LISTEN AND SUBSCRIBE BELOW