Climate Change/Sustainability/ESG
Tokio Marine Kiln partners with Kita to provide political risk cover for developers of carbon credit projects
Tokio Marine Kiln partners with Kita to provide political risk cover for developers of carbon credit projects
Tokio Marine Kiln (TMK), a leading international insurer, today announces it has partnered with Kita, a pioneer in carbon credit insurance, to provide Political Risk insurance for developers of, and investors in, carbon credits projects.
TMK is among the first to implement this type of policy in the Lloyd’s market, and the new cover will enable these projects to mitigate the financial risk of political instability to their ability to sell and export credits.
Led by Ed Parker, Head of Special Risks at TMK, the product will insure project developers and their investors against risks such as confiscation, nationalisation, forced abandonment, license cancellation and political violence. It will cover losses for both parties should a project’s host country revoke agreements that enable the credits to count towards external offsetting strategies.
With rising political volatility in many regions, carbon credit projects are at increasing risk from geopolitical developments that impact their ability to sell credits. This new product is intended to mitigate these evolving risks, providing much needed certainty for investors and engender confidence in the voluntary carbon market. The availability of cover will also increase the viability of new projects and enable new, high-quality projects to proceed, with the rigorous assessment provided by Kita and TMK, affording an added layer of reassurance to investors.
News
![Study: CDK cyberattack to cost dealerships over $1 billion in losses](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968861/original_ratio_extra_large_df40d390-3a8b-47e2-854a-015dbf82bf4c.jpg)
Study: CDK cyberattack to cost dealerships over $1 billion in losses
The three-week cyberattack affecting half of the nation's car dealerships should be "wake-up call for the auto industry and a warning to others."
The nation's car dealerships experienced total losses of more than $1 billion as the result of a nationwide hacking and ransomware attack on their software and systems last month, according to a new estimate from East Lansing-based consulting firm Anderson Economic Group.
A cyberattack on Chicago-based dealership software provider CDK Global that began June 19 forced CDK to shut down most of its systems across the country for its dealership customers until July 5. It left about half of the nation's car dealerships struggling to operate, forcing some to return to the days of pen-and-paper. According to Bloomberg, the group that orchestrated the attack demanded tens of millions of dollars in ransom to end it.
Allstate, Nationwide Post Dramatic First Quarter Homeowners Loss Ratio Drops
In the topsy-turvy world of homeowners insurance, first-quarter loss ratios have been bouncing around for the last five years—from below 50 in 2020 to over 70 in 2021 and 2023, a new analysis shows.
The S&P Global Market Intelligence analysis published earlier this week reveals a 14.7-point improvement to 56.5 for the industry overall—and improvements more than twice as large for insurers Allstate and Nationwide. In the topsy-turvy world of homeowners insurance, first-quarter loss ratios have been bouncing around for the last five years—from below 50 in 2020 to over 70 in 2021 and 2023, a new analysis shows.
Research
![Profitable future for P&C –report](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968359/original_ratio_extra_large_a8057564-d55b-4299-b3c2-5d52e3fb2313.jpg)
Profitable future for P&C –report
Favorable first-quarter economic and underwriting results for property/casualty insurance align with projections that the industry will see a small underwriting loss in 2024 and achieve profitability in 2025, according to the latest forecasting report from the Insurance Information Institute (Triple-I) and Milliman.
The report, Insurance Economics and Underwriting Projections: A Forward View, highlighted several key findings. Homeowners insurance is expected to continue experiencing underwriting losses through 2024-2025 but is projected to become profitable in 2026. This line will see continued double-digit net written premium growth over the next two years. Meanwhile, the personal auto net combined ratio has improved slightly from prior estimates, with profitability anticipated in 2025.
Outlook and projections
Dale Porfilio, Triple-I’s chief insurance officer, commented on the ongoing performance gap between personal and commercial lines.
“That gap is closing,” he said. “This quarter, we are projecting commercial lines underwriting results to outperform personal lines premium growth by over five points in 2024. The difference in large part illustrates how regulatory scrutiny on personal lines has curbed the ability for insurers to increase prices to reflect the significant amount of inflation that impacted replacement costs through and coming out of COVID.”
Jason B. Kurtz,a principal and consulting actuary at Milliman, pointed out the long-term challenges facing commercial multi-peril insurance.
“While the expected net combined ratio of 106.2 is one point better than 2023, matching the eight-year average, the line has not been profitable since 2015,” Kurtz said. “And with a Q1 direct incurred loss ratio of 52% and premium growth rates continuing to slow, we see some improvement but continuing unprofitability through 2026.”
Report: Insurers Keen on Replacing Legacy Systems Seek More Agility
Insurance companies are replacing or augmenting legacy systems in search of product innovation and technology integration, according to a new Information Services Group (ISG) Provider Lens Insurance Platform Solutions report.
Upgrading systems and adopting advanced technologies to overcome the limitations of decades-old IT platforms are a high priority for insurance companies across the nation, the research report from the global technology research and advisory firm indicated.
The report for North America finds that evolving policyholder demands and rapid changes in practices and methodologies are forcing insurers to replace legacy technologies with new core systems and software-as-a-service (SaaS) platforms.
![Rising reinsurance costs propelling homeowners insurance to new heights](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968835/original_ratio_extra_large_ce8a3e22-3434-4e5f-b939-25951c15fcc9.png)
Rising reinsurance costs propelling homeowners insurance to new heights
A recent study, which analyzed data from tens of millions of mortgage escrow payments, offers new insights into the challenges of access and affordability in the homeowners markets, as climate change-driven disasters are putting significant pressure on the industry across the West and the broader United States.
The study, which examined a 10-year dataset, revealed that insurance premiums rose by an average of 33% between 2020 and 2023, outpacing inflation. The increases vary significantly by region and are now more closely aligned with the risk of disasters such as hurricanes and wildfires.
“Wildfire risk is front and center when we're thinking about the drivers of increased insurance premiums out West,” lead author Ben Khys said. Khys is also a real estate professor at the University of Pennsylvania's Wharton School.
He referenced research by the First Street Foundation, which projects that wildfire risk, closely linked to climate change, will increase substantially over the next 30 years. A 2023 report by the foundation estimated that the average number of homes and other structures destroyed by wildfires annually will nearly double to 34,000 by 2053.
One factor contributing to the rise in premiums is the increasing cost of reinsurance, which insurers purchase to protect against large claims. These costs are passed on to homeowners through higher insurance premiums.
“If the conditions for the reinsurance shock continue, we estimate that the top 5% of climate risk-exposed homeowners would see increased premiums by 2053 of $700 per policyholder under a conservative climate change estimate,” the study said.
J.D. Power Reports that EV Demand Stalls Even Though Availability and Affordability Improve
J.D. Power’s June E-Vision Intelligence Report found that while the number of electric vehicle models available and total cost of ownership have improved, EV adoption rates have been flat.
Among the key findings of the report:
EVs More Widely Available and Affordable Than Ever: The majority of premium (70.1%) and mainstream (55.7%) vehicle buyers now have a suitable electric vehicle (EV) option available in the marketplace and the prices for these vehicles has never been lower. The average total cost of ownership (TCO) for a premium EV fell to $62,600 in May and the average TCO for a mainstream EV is now $58,100. In many cases, EVs are now more affordable than their gasoline-powered counterparts.
EV Consideration and Adoption Stalled: Overall, 59.5% of new-vehicle shoppers say they are either “very likely” or “somewhat likely” to consider buying an EV in the next 12 months, a slight increase from April (58.2%), but down from the highest levels observed in the fourth quarter of 2023. Real-world EV adoption rates have been flat at 8.4% since March 2024.
Next Several Months Pose Critical Test for Mainstream Consumer Demand: Two major impediments to widespread mass market EV adoption have been a significant price premium vs. comparable gas-powered vehicles and a notable lack of vehicle options in the mainstream market. During the past two months, both of those trends have shifted sharply, with major mainstream launches and trim expansions planned during the next several quarters. Consumer response to these changing market dynamics during the next several months will be a key indicator of future EV demand.
InsurTech/M&A/Finance💰/Collaboration
![Conditions are coalescing for an uptick in carrier M&A after many subdued years.. new M&A cycle may be on the horizon](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968868/original_ratio_extra_large_17272c77-8e1b-4548-9082-ea6652f25897.jpeg)
Conditions are coalescing for an uptick in carrier M&A after many subdued years.. new M&A cycle may be on the horizon
Insider in Full: A new M&A cycle may be on the horizon. Conditions are coalescing for the kick-off of a new M&A cycle
Earlier this week, this publication reported that Sompo and Generali are circling London-listed carrier Hiscox.
The development has underscored that there are a range of demand-side and sell-side factors that could spur a pick-up in carrier M&A that has been in the doldrums since 2018.
There is too much randomness in dealmaking to predict with certainty that a string of transactions will make it to the line in any given period. The last-minute whim of a CEO who decides he doesn’t want to retire could torpedo a deal. Or an external shock like a sharp drop in equity markets, or a seizing up of debt markets, could put talks on ice.
But conditions are starting to be more fruitful for carrier M&A, and the chances are it will pick up meaningfully in the second half of 2024, or in 2025.
![InsurTech Evolution: Digital Platforms, AI, and Funding Insights | InsurTech Magazine](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968878/original_ratio_extra_large_a138c1a6-408f-4762-ac5d-b6c73d2f859d.jpg)
InsurTech Evolution: Digital Platforms, AI, and Funding Insights | InsurTech Magazine
[Ed. Note: Highly Recommended]
Insurtech funding experienced a second consecutive year of decline from the peak in 2021, but this isn't necessarily a bad thing...
The initial wave of insurtech focused on making insurance more appealing and accessible to customers. This phase was marked by the digitalisation of traditional insurance processes, transitioning from paper-based systems to online services. The widespread adoption of smartphones played a crucial role in accelerating this shift towards digital platforms. Despite facing challenges such as overcoming legacy systems and ensuring data security, the results were significant.
![DigniFi Secures $175 Million in New Funding to Expand Auto Repair Financing Solutions](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968865/original_ratio_extra_large_7a48a2fa-f588-4843-b38e-26c0a1ae143c.jpg)
DigniFi Secures $175 Million in New Funding to Expand Auto Repair Financing Solutions
Encina Lender Finance and Brigade Capital Management Partner with DigniFi to Enhance Financial Access for Vehicle Repairs.
DigniFi, a leading FinTech company specializing in automobile repair financing, is thrilled to announce the addition of two new strategic funding partners on May 14, 2024. Encina Lender Finance provides up to a $150 million credit facility while Brigade Capital Management contributes an additional $25 million in debt financing.
“Brigade is pleased to build on our existing relationship with DigniFi and support the Company’s efforts to expand inclusive financing to consumers”
“DigniFi is grateful for the increased commitment from Brigade Capital and the recently closed warehouse facility with Encina Lender Finance. We look forward to both organizations being strategic partners to DigniFi,” said Neeraj Mehta, CEO of DigniFi.
DigniFi has built its reputation by offering access to innovative financing solutions for vehicle repair and maintenance services. Through its proprietary platform, DigniFi empowers customers with convenient finance options, funded by WebBank, for their vehicle repairs, ensuring that unexpected expenses do not hinder their mobility.
Events
![ITC Vegas 2024 - The world’s largest gathering of insurance innovation](https://dxj7eshgz03ln.cloudfront.net/production/textual/image/968840/original_ratio_extra_large_b23c4da1-b5d4-4f7c-bd4a-3ff6112247a6.png)
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
Claims
AI Chatbots, Gen AI Set to Revolutionize Insurance Claims Processing: Survey
A majority of global insurers are actively endorsing the application of AI chatbots and generative AI in claims resolution processes, underwriting and customer fulfilment, according to a survey conducted by Gallagher Bassett, the claims-services provider and subsidiary of Arthur J. Gallagher & Co.
The survey found that insurers in 2024 are placing an emphasis on the utilization of artificial intelligence (AI) technologies, appropriately assessing underwriting risks to inform pricing decisions, and employee retention strategies, said the survey report titled “The Carrier Perspective: 2024 Claims Insights.” READ ON
AI in Insurance
![Insurance Brain Drain: Tackling The Talent And Knowledge Crisis With AI](https://dxj7eshgz03ln.cloudfront.net/production/link/image/968839/original_ratio_extra_large_2cfc7efc-3c4a-4ebd-99eb-182d7b4c22b6.jpg)
Insurance Brain Drain: Tackling The Talent And Knowledge Crisis With AI
The insurance industry is on the edge of a double dilemma: Demographic and digital forces are requiring firms to navigate the dual challenges of an aging workforce and rapid digital transformation. Yet after almost 10 years working alongside partners from century-old insurance firms, I've found it increasingly apparent that this sector demands extensive domain knowledge—a trait not easily replicated by young graduates.
In an era of profound change, how can we confront the knowledge gap head-on, developing strategies for effective knowledge transfer while embracing the transformative potential of AI?
Replacing The Retiring Cohort
Despite recent slowing in economic activity worldwide, the "war for talent" remains fierce in the insurance sector and beyond. With customer expectations evolving at an unprecedented pace and every business seeking ways to reshape the competitive landscape through digital technologies, insurers are vying for top talent to drive that innovation and maintain relevance.
However, the insurance industry faces a unique challenge: A significant portion of its workforce is nearing retirement age, taking with them decades of experience and expertise. In the U.S., nearly 400,000 employees are expected to retire from the industry by 2026. This impending exodus threatens to create a knowledge vacuum, putting insurers at risk of losing critical skills and insights.
Meeri Savolainen Forbes Councils Member