News
US P/C Insurance Poised For 2024 Profit Recovery Post Strong 1Q Results
The U.S. property casualty (P/C) market is positioned for a return to underwriting profitability and significant return on capital improvements for the full year, though results may not match first quarter levels due to uncertainty regarding natural catastrophe exposures and loss reserve experience, Fitch Ratings says. U.S. P/C insurers shifted to a strong statutory underwriting profit YoY at 1Q24 driven by lower winter storm losses and a recovery in personal auto results.
The market faces considerable challenges regarding sustainability of commercial lines pricing to meet ongoing loss-cost inflation and heightened litigation related risk in several segments. Favorable pricing conditions in 1Q24 supported ongoing strong net written and earned premium growth of 10% and 11%, respectively. The industry underwriting combined ratio (CR) improved by over eight points YoY to 94% in 1Q24, representing the best first quarter underwriting result since 2007.
Favorable prior period reserve development was higher in 1Q24, representing 3.3% of earned premiums versus 1.9% in the prior year quarter. Fitch’s sector outlook for U.S. personal lines insurance recently moved to Improving. The sector outlook for U.S. commercial lines insurance remains Neutral.
Sharp price increases will continue to support personal lines underwriting improvement through 2024, as reflected in direct written premiums (DWP) growth of 16% in personal auto and 13% in homeowners relative to 1Q23. Commercial lines DWP growth slowed to 4% for the quarter. Workers’ compensation growth turned negative in the quarter, and segments with greater claims challenges, including commercial auto and other liability, reported higher YoY premium growth.
Zurich Insurance buys AIG travel business in $600 mln deal | Reuters
Zurich Insurance (ZURN.S), opens new tab on Wednesday announced a $600 million deal to buy AIG's (AIG.N), opens new tab global personal travel insurance and assistance business.
The business will be combined with Zurich's travel insurance provider Cover-More Group (Cover-More) and will expand its footprint in the United States, Zurich said. The acquisition, which is expected to close before the end of 2024, will result in combined annual gross written premiums of approximately $2 billion for the enlarged Cover-More Group.
"Travel insurance is a priority for us," said Cara Morton, CEO Zurich Global Ventures. "This transaction is a great strategic fit, which enhances Zurich's existing capabilities and makes us a leading travel insurance provider across all regions," she added.
Lockton Reports Fiscal Year 2024 Consolidated Global Revenue of More Than $3.5 Billion and Organic Revenue Growth of 14%
Lockton, Inc., the world's largest independent and privately held insurance brokerage, reported global revenue of $3.55 billion for its fiscal year ended April 30, 2024, compared to $3.09 billion in its previous fiscal year. As highlighted below, Lockton's revenue growth was driven by continued strength across all business segments and geographies. Lockton's track record of delivering consistent growth is underpinned by a solid and recurring 96% client retention rate.
Key Highlights:
Fiscal 2024 consolidated global revenue increased 15% to $3.55 billion driven by 14% organic revenue growth. Fiscal 2024 marked the fourth consecutive year of double-digit organic global revenue growth and a five-year organic revenue CAGR of 15%.
U.S. operations reported revenue of $2.43 billion and 11% growth over the prior year, its sixth consecutive year of double-digit revenue growth and an impressive five-year organic revenue CAGR of 13%.
Lockton's International operations delivered revenue of $926 million and 24% growth over the prior year, exceeding its five-year organic revenue CAGR of 16%.
Lockton Re's global operations continued its impressive growth and delivered 35% revenue growth over the prior year.
"Our differentiated business model and continued investment in service, innovation and industry-leading talent continues to deliver best-in-class organic revenue growth and opportunities for our people," said Ron Lockton, Chairman and CEO. "Our private ownership model allows us to prioritize what is truly important: our clients and our people, making Lockton the best place to work and serve clients."
Lockton's generational view of the business allows for a longer investment cycle that fosters lasting client relationships and propels sustainable global growth.
"Our goal has never been to be the largest broker, just the best. However, when great people passionately and consistently serve clients and exceed expectations, organic growth and significant global scale is inevitable," Lockton continued.
FloodFlash expands nationwide flood coverage with reinsurer backing
New programs introduced amid rising hurricane forecasts
In response to predictions of an active hurricane season, FloodFlash has announced its nationwide expansion across the mainland United States – with some significant reinsurer backing.
The company is known for offering flood coverage beyond the limits of the National Flood Insurance Program (NFIP), and now extends its services to industries such as real estate, sports and entertainment, manufacturing, energy, and healthcare, where private markets often fail to provide quotes.
Initially launched in states including Florida, Texas, California, Virginia, and Louisiana, FloodFlash expanded to an additional 10 states in January. Following a binder expansion with Munich Re Specialty - Global Markets, the company now offers quotes nationwide, meeting increased broker demand. States such as North Carolina and Georgia, along with others, now have the same access to FloodFlash services as the East and Gulf coast states.
Research
Billion Dollar Lawsuits: When Litigation Finance Met Mass Torts
Mass tort litigation has become a booming industry, with billions of dollars at stake for plaintiffs, lawyers, and investors.
The litigation finance industry has taken notice, pouring money into these lawsuits attracted by the potential of high returns. In 2023, for example, litigation funders funneled nearly $17 billion into lawsuits like the Camp Lejuene and 3M earplug cases. These suits are driven by extensive digital advertising campaigns to identify potential claimants.
For the law firms bringing these cases, this can lead to massive paydays. Lawyers typically taking 20-40% if they’re successful, and that can amount to billions of dollars in high-profile cases.
Commentary/Opinion
Agents urged to prepare clients for increased liability claims amid ‘wave’ of social inflation
With a dramatic increase in social inflation – the rising costs of insurance claims when those costs can’t be accounted for by overall inflation rates – industry experts are encouraging agents and advisors to educate their clients about the risks.
“Social inflation is a very big thing that is impacting multiple industries and…driving up insurance costs,” Diane Delaney, executive director of Private Risk Management Association (PRMA) said. “Litigation, higher jury awards, especially in favor of the plaintiff, is now causing a lot of the struggle in our spaces…and many clients don’t understand that.”
. “Frankly, it’s naive to think social inflation isn’t significantly impacting the industry. We’re absolutely seeing a perfect storm of social inflation factors colliding with traditional insurance realities,” Dori Einhorn, owner of San Diego-based Einhorn Insurance Agency and a 16-year veteran in the industry added.
Both Delaney and Einhorn said advisors must help make clients aware of these trends and how they can protect themselves against it.
Social inflation ‘save’ of liability claims
Research from Swiss Re Institute found that general liability claims in the U.S. have risen by an annual average of 16% for the last five to six years.
I
New Trends Report Highlights Vehicles with Higher Claim Frequencies
LexisNexis Risk Solutions has released its 2024 U.S. Auto Insurance Trends Report, which aggregates annual market data about consumer driving patterns, auto insurance shopping trends, claim frequency and severity, and consumer responses to rate increases to help insurance carriers better understand the evolving trends impacting the U.S. auto insurance industry.
Key takeaways include:
Risky driving behavior rises among younger demographics as distracted driving violations by Gen Z increased 24% from 2022 and a staggering 66% in comparison to 2019.
High claim severities persist due to parts and labor shortages along with rising attorney involvement, with 93% of claimants who sought legal counsel likely to retain services in the future.
Consumer dissatisfaction around total loss remains high, as roughly half (46%) of auto insurance consumers note frustration with a lengthy claims process.
Auto insurers are taking an aggressive approach to profitability challenges with an unprecedented 14% year-over-year rate increase in 2023, improving the combined loss ratio to 105%, a seven-point improvement over 112% in 2022.
Consumers are responding in a big way as elevated rate increases have led to record auto insurance policy shopping and switching levels, with new policies increasing by 6.2% in 2023. Consumer retention rates dropped from 83% to 80%, indicating there may be a need for insurers to focus on their existing portfolios and take steps to update their underwriting practices over the course of 2024.
Differing driving experiences in electric vehicles (EVs) have contributed to higher and more severe claims than internal combustion engine (ICE) vehicles. In 2023, claim frequency and severity for EVs were 17% and 34% higher, respectively, than traditional segments.
“Auto insurers are navigating a dynamic and challenging market environment in 2024,” said Adam Pichon, senior vice president of global analytics, insurance, LexisNexis Risk Solutions. “For their part, consumers are displaying more unpredictable driving and policy shopping behavior, and increasingly switching carriers to find better rates. It is crucial for insurers to balance market acquisition and retention with rate adequacy and utilize data-driven insights to help manage risk and maintain profitability to be set up for continued success as the market begins to soften.”
AI in Insurance
Rely on AI? There’s now insurance for that
Legaltech firm Orbital Witness has introduced an insurance-backed accuracy guarantee called “AI Reliance” in partnership with First Title Insurance.
Based in London, Orbital Witness develops legal due diligence and client reporting software powered by artificial intelligence (AI). Its technology is currently used by more than 4,000 professionals for over 60,000 property transactions annually, leveraging generative AI for routine and time-consuming tasks.
Under the tie-up, First Title will underwrite Orbital Witness’s generative AI product output, covering errors that result in compensation claims.
Initially, AI Reliance policies will be available to law firm customers of Orbital Witness’s Orbital Residential, without requiring them to claim on their professional indemnity (PI) insurance. First Title will offer significant insurance coverage, matching the PI insurance levels mandated for law firms.
Ed Boulle, co-founder and chief strategy officer of Orbital Witness, stated: “Law is a highly regulated sector. Law firms are ultimately responsible for the services they provide to their clients.
Innovation
Way.com Aims to Curb Millions in Catastrophic Hurricane Damage with Insurance Partner CURE and New Parking Solution
In an innovative new partnership, Car Super App Way.com and CURE Auto Insurance are teaming up to protect customers' cars from damage due to hurricanes and tropical storms. In 2022, damage from Hurricane Sandy resulted in $36.8 billion in New Jersey alone.
The initiative, called the Catastrophe Loss Mitigation program, is a white glove service from start to finish where customers in projected impact zones of severe hurricane and flooding events will be notified via phone alert, in advance of the storm, of a prepaid local parking garage reservation and credits for Uber transportation to and from dropping off their vehicle. CURE's signing makes it the first to market, amongst auto insurers, for this type of hurricane and flood loss prevention. Three additional carriers have recently signed on to partner with Way for the program, and the team is hoping to add any other carriers wanting to help customers protect their vehicles against this avoidable loss.
CURE's Chief Operating Officer, Sean Albert, emphasized that there's never been a more critical time than now to recognize that we can do better as an industry than solely focusing on a well-oiled disaster recovery plan. The headlines and empirical data point toward the increasing frequency of extreme weather events and disasters. "We are in the business of risk management, and every day, you'd take a loss avoided over a loss incurred. Unlike the homeowner's insurance market, as an auto insurer, the property we insure can be moved out of harm's way. This initiative is a no-brainer for the customer and all sides involved – everyone wins."
Patent Issued for Systems and methods for generating improved vehicle usage analytics based upon vehicle sensor and telematics data: State Farm Mutual Automobile Insurance Company
The assignee for this patent, patent number 12002305, is State Farm Mutual Automobile Insurance Company (Bloomington, Illinois, United States).
Reporters obtained the following quote from the background information supplied by the inventors: “Connected vehicles are vehicles equipped with communications abilities (e.g., vehicle-to-infrastructure (V2I), vehicle-to-vehicle (V2V), and/or vehicle-to-network (V2N) communication). Such vehicles are increasingly common. Connected vehicles are often equipped with a variety of sensors that are potential sources of data (e.g., telematics data) regarding drivers of the connected vehicle and trips taken by the connected vehicle and/or an environment around the connected vehicle.
“Individuals use mobile devices (e.g., mobile telephones) for a variety of purposes and often carry mobile devices while traveling. Such usage may be an additional source of data. For example, mobile devices may be equipped to generate data (e.g., telematics data) using instruments built into the mobile device, such as an accelerometer or global positioning system (GPS) device. This data obtained from connected cars and/or mobile devices may be useful for a variety of applications.
“However, there are currently limitations in the ability of computing devices to utilize such data in automated processes. For example, known computing devices do not use sensor data obtained from connected vehicles, for example, to identify a driver or number of passengers of the vehicle, which may be useful in applications such as usage-based insurance, where an insurance premium is based upon an individual driver’s actual driving behavior. Accordingly, in order to implement these applications, these different forms of information may need to be reconciled by human beings, which may result in lack of timeliness, inaccuracies, inconvenience, or other drawbacks.”
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation
Insurtech Consulting and our ‘Connected’ newsletter are proud media partners of ITC Vegas 2024
Event Date: Tuesday, October 15 – Thursday, October 17, 2024
Event Location:
Mandalay Bay Convention Center 3950 Las Vegas Blvd S Las Vegas, NV 89119
ITC Vegas combines unbeatable networking with what’s new and next, ensuring your time will be spent meeting more people, sourcing more solutions, and creating valuable partnerships.
Discover solutions to your biggest challenges, gain access to unique and meaningful education, and meet the insurance industry’s best and brightest. Join the insurance event that doesn’t just bring the industry together – it moves the entire industry forward.
The future of insurance is here – at ITC Vegas. If you aren’t here, you are missing out on the conversations that are propelling the industry forward
Predict & Prevent
Moen Signs Strategic Agreement with Amica Insurance to Boost Usage of Leak Detection Technology
Moen Signs Strategic Agreement with Amica Insurance to Boost Usage of Leak Detection Technology
Smart Leak Detection From Moen Can Help Homeowners Avoid Expensive and Preventable Flooding
Moen, the leader in water experiences in the home, today announced an initiative with Amica Insurance aimed to encourage policyholders to adopt Flo Smart Water Monitor and Shutoff devices through special savings and installation programs. Use of smart technology can significantly reduce the incidence of catastrophic water damage due to residential leaks. Flo Smart Water Monitor and Shutoff devices offer a digitally driven and proactive approach to leak detection. They have the ability to help reduce water damage claim frequency events by as much as 96%,1 as well as household water wasted through preventable leaks by up to 90%.2 Increasing the number of homes utilizing smart leak detection can help homeowners avoid the expense and disruption caused by preventable flooding.
“Water damage accounts for 24% of all homeowner insurance claims and can create financial and emotional hardships for homeowners.3 Nationally, we estimate that insurers pay out over $15 billion in water claim damages annually, of which a significant portion are tied to leaks4. By encouraging the use of Flo smart leak detection, Moen can help reduce water damage claims caused by water leaks and alleviate costs associated with those claims,” said Jeff Barnes, vice president, business development, Moen. “Working together with the insurance industry, we can also help to reduce wasted water, which is especially important in areas where water is scarce. Across the country, an estimated one trillion gallons of water are wasted due to leaks each year.5”
Moen will be working with Amica to provide Smart Water Monitor and Shutoff devices to policyholders across the United States.