News
Allstate seeks to raise homeowners' rates by 34%, sparking controversy
Allstate, one of California’s largest insurers, wants to raise its homeowners’ rates by an average of 34%, which could be the largest increase this year.
The rate hike would impact more than 350,000 policyholders if approved by the Department of Insurance, according to the San Francisco Chronicle.
Allstate is the state’s fourth-largest property and casualty insurance provider, representing about 5.5% of the overall market as of last year, according to the Department of Insurance.
State Farm to non-renew 72,000 policies in California: These zip codes will be impacted the most Last year, Allstate filed for a 39.6% rate increase and, in January, amended its request to 34.1%, according to the insurance department.
The latest rate increase request is being challenged by the Los Angeles consumer advocacy group Consumer Watchdog, demanding the insurer provide more data.
Commissioner attempts to address Calif. insurance crisis ‘head on’
Recent efforts to overhaul California’s crisis-ridden insurance system have been blasted by consumer groups, tepidly embraced by trade organizations, and slapped by at least one insurer by asking for sky-high rate increases.
Burdened with the near impossible task of increasing access and affordability of insurance for consumers while providing adequate rates and reasons to stay in business in the state for companies, Insurance Commissioner Ricardo Lara has forged ambitious proposals to solve the crisis and calm the market.
In June, Lara released another in a series of his “Sustainable Insurance Strategy” for the state’s troubled homeowners insurance market, which has seen a number of insurers stop writing polices and even abandon the state altogether. In what he said was part of the most significant insurance reform in 30 years, Lara floated plans to allow companies to use forward-looking catastrophe models for ratemaking – something that has never been allowed – in return for the commitments from insurers to write of policies in probable wildfire distressed areas.
Elon Musk's Tesla gets a breather in insurance class action
Tesla has been granted additional time to prepare its defense in a class action lawsuit alleging overcharging for insurance. The case, which claims Tesla inflated insurance premiums based on inaccurate crash warnings, is set to be reviewed for class-action status in October 2025, Judge Michael Markman of Alameda Superior Court in Oakland has decided.
A Tesla customer initiated the lawsuit last year, representing drivers from 11 states, asserting that the company’s insurance premiums were unjustly raised due to "false" crash alerts rather than actual driving behaviors. The complaint states that Tesla's insurance policies, directly sold to customers, breached California’s unfair competition law and violated driver contracts.
At a recent hearing, Tesla's attorney, Min Kang, explained the delays in gathering necessary information to build a defense, citing the involvement of multiple states and the departure of a key employee. Kang mentioned, “Just last week we lost our main contact at the company,” highlighting the complexities involved in the process.
Despite Tesla's denial of any wrongdoing, the company faced setbacks last year and in June when it failed to dismiss several claims in the case. The lawsuit points to Tesla's use of real-time driving data to determine insurance premiums, which are based on a "safety score" incorporating metrics like hard braking, aggressive turning, and forward collision warnings. Many drivers reported receiving unwarranted collision warnings, adversely impacting their safety scores and, consequently, their insurance rates.
Research
GEICO Tops Progressive With Higher J.D. Power Scores
Although Berkshire Hathaway’s Warren Buffett and Ajit Jain told investors last month that GEICO is playing catch-up with Progressive to improve technology and connect rate to risk, Berkshire’s personal auto insurer still surpasses Progressive on customer satisfaction.
According to the J.D. Power 2024 U.S. Auto Insurance Study GEICO’s customer satisfaction scores top Progressive’s in nine of 11 regions for which J.D. Power publishes the customer-based ratings.
IIHS-HLDI research finds little evidence that partial automation prevents crashes
A new study by the Insurance Institute for Highway Safety (IIHS) Highway Loss Data Institute (HLDI) found little evidence that partial automation systems prevent collisions.
The study was first done in 2021 on BMW and Nissan vehicles. The vehicles had been on the road for several years, according to HLDI.
The studied vehicles range from five to 11 years old, and newer partial automation systems may be more effective from a safety perspective; however, the many years of data for these vehicles make the findings more compelling, IIHS said.
“Everything we’re seeing tells us that partial automation is a convenience feature like power windows or heated seats rather than a safety technology,” said IIHS President David Harkey, in an IIHS news release.
The new study confirms that partial automation in the vehicles that were studied “doesn’t confer additional safety benefits beyond those of crash avoidance features like front automatic emergency braking (AEB),” IIHS said.
P/C Premium Growth Shows Promise, But Profitability at Least a Year Away, Triple-I/Milliman Report Shows
Supply Chain Issues Linger Due to Geopolitics
Favorable first-quarter economic and underwriting results for property/casualty insurance are in line with projections that the industry will see a small underwriting loss in 2024 and achieve profitability in 2025, according to the latest forecasting report – Insurance Economics and Underwriting Projections: A Forward View – from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner.
“The ongoing performance gap between personal and commercial lines #insurance remains, but that gap is closing." -- iiorg Chief Insurance Officer Dale Porfilio, MillimanInsight
Some highlights of the report include:
Homeowners insurance underwriting losses expected to continue for 2024-2025, but the line is expected to become profitable in 2026, with continued double-digit net written premium growth for 2024-2025.
Personal auto net combined ratio improved slightly from prior estimates and is on track to achieve profitability in 2025.
Commercial lines 2024 net combined ratio remained unchanged despite shifts in commercial property (-1 point), workers’ compensation (-1 point), and general liability (+1 point).
Net written premium growth rate for personal lines is expected to continue to surpass commercial lines by over 8 percentage points in 2024.
Guidewire Named a Leader in Independent Research Firm’s Evaluation of P&C Claims Management Systems
Guidewire (NYSE: GWRE) announced that Forrester Research has named Guidewire ClaimCenter as a Leader in The Forrester Wave™:
P&C Claims Management Systems, Q2 2024. The report evaluated 15 vendor solutions in the market against 22 criteria to help insurance claims and application professionals select the right claims management system for their needs. Read the report here.
“Guidewire’s big thinking and execution continues to pay off. …It stands out for its overall R&D investments and the scale of its partner network, as evidenced by its expansive public API marketplace,” wrote Ellen Carney, Principal Analyst, Forrester in the report.
“ClaimCenter provides best-in-class performance across the majority of its current offering capabilities, delivering capabilities such as its Explore tool as well as automated detection for catastrophes (CATs), fraud, litigation, and subrogation. …Reference customers mentioned better-than-expected returns on their ClaimCenter investments and praised its adjuster workbench. …For insurers committed to meeting the escalating demands of a growing claim ecosystem, Guidewire ClaimCenter is an obvious choice.”
“We are pleased to be acknowledged by Forrester as a leader in P&C claims management systems,” said Michael Howe, Chief Product Officer, Guidewire. “We are grateful for the trust that the ClaimCenter customer community places in Guidewire to help them run and grow their businesses each day, especially those that participated in the research. Their feedback and partnership fuels the product innovation that’s defining excellence in P&C insurance.”
Climate/Resilience/Sustainability
[Ed. Note: This is a first; watch for more like this] Socotra and Oka form partnership to enhance carbon market insurance solutions
US carbon-credit insurance carrier Oka and Socotra, a provider of modern policy administration systems, have formed a strategic partnership aimed at the carbon markets and scaling climate solutions.
This partnership combines Oka’s team and artificial intelligence (AI) with Socotra’s technology to reduce the risks associated with carbon credits.
Within 12 months, Oka has launched two pioneering insurance solutions to meet urgent market demands.
Corresponding Adjustment Protect is the first insurance solution globally for voluntary credits traded into compliance markets under Article 6 of the Paris Agreement.
Carbon Protect offers financial compensation for unforeseeable and unavoidable post-issuance risks, such as project failure.
InsurTech/M&A/Finance💰/Collaboration
New Collector Car Insurer OpenRoad Announces Official Launch
The summer driving season may provide auto enthusiasts more opportunities than just getting back behind the wheel. New classic and modern collector vehicle insurer,
OpenRoad, has announced it will begin offering coverage across select U.S. states this Monday, July 15, 2024, promising better prices, superior coverage, and some much-needed relief from skyrocketing insurance costs for many collector vehicle owners.
OpenRoad's launch comes at a time when U.S. drivers have experienced a multi-year trend of record-breaking cost increases, causing 49% of auto insurance customers to be actively shopping for rate relief. According to the Bureau of Labor Statistics, today many drivers are paying 22% more than they did just a year ago. On average, auto insurance costs have grown 6 times faster than inflation since March of 2023.
"It's shocking to see what U.S. drivers have experienced in terms of rate increases," said Justin Moreno, OpenRoad's Chief Marketing and Communications Officer. "We know that the auto enthusiast community has been affected given most U.S. collector vehicles that are eligible for our program are currently covered by standard auto insurance carriers. Our objective is to show these vehicle owners what the right coverage looks like and provide rates that reflect the special care they give their rides."
Parametrix secures $50m parametric cloud outage coverage for US retail chain
Earlier this week, Parametrix, a provider of cloud monitoring, modeling, and insurance services, successfully secured a $50 million parametric cloud
As announced by Parametrix’s Chief Commercial Officer, Sharon Haran, this innovative coverage provides the client with protection against Amazon Web Services (AWS) outages during its sale season.
The $50 million placement was designed by re/insurance broker Aon*, and supported by re/insurers Hannover Re, HDI Global Specialty, Munich Re Syndicate, Chaucer, Tokio Marine Kiln, Apollo ibott 1971, Aspen Insurance, and Ki Insurance**.
Fraud
Small state big on fraud: study
Living up to its nickname, Delaware is the first state on the list for residents most likely to commit fraud, according to an analysis by the Santa Ana, California-based litigation law firm Callahan & Blaine.
With an average of 713 fraud offenses per 100,000 people in 2022, identity theft was the most common type of fraud In Delaware, accounting for 261 offenses.
Virginia fell into the second slot with 464 fraudulent crimes per 100,000 employees, and New Mexico was in third place, with 457 offenses. Kentucky is the state the least likely to commit fraud, with 138 offenses per 100,000 people.
The firm obtained data from the National Incident-Based Reporting System to determine the states with the highest rates of fraud offenses in 2022. The study then calculated the total average fraud crimes recorded by the NIBRS per 100,000 people, which determined the final ranking.
Recommended Events
Global Insurance Forum 2024, November 17-19, Miami, Florida
Global Insurance Forum 2024, presented by the International Insurance Society (IIS)
Celebrate excellence and explore the impact of insurance innovation at the Hyatt Regency Miami on Nov. 17-19. The Global Insurance Forum comprises a diverse audience of c-suite leaders, offering you a unique opportunity to connect with your international colleagues and discuss the issues facing insurers and the world at large.
Features Global Innovation Awards on November 18
Register by July 16 at 11:59 p.m. EDT to secure the early bird rate.
Awards
Aon announces 2024 P&C Ward's Top 50
Aon recently announced the property and casualty insurers who made it to the 2024 Ward's Top 50.
This annual recognition honors companies that have demonstrated superior performance over the last five years.
This is the 34th year for the Ward's 50, which analyzes the performance of nearly 3,000 P&C insurance companies that are domiciled in the United States. The analysis is based on publicly available data which is used to determine the companies' financial performance over a five-year period. This serves as a benchmark to compare the performance of the Top 50 as a group with the rest of the industry. FULL LIST