Climate/Change/Sustainability/ESG
Global insured nat cat losses for H1 2024 well above average – Gallagher Re
Costs 25% higher than the decadal average
Gallagher Re has reported that the first half of 2024 saw active global natural catastrophes resulting in nearly average financial costs for governments and the insurance industry. The economic loss from all natural perils reached a minimum of $128 billion, slightly lower than the most recent 10-year H1 average of $133 billion.
The private insurance market and public insurance entities covered at least $61 billion of this loss, which is 25% higher than the decadal average of $49 billion. The above-average insured losses were attributed to a higher frequency of small- to mid-sized severe convective storm (SCS) events with robust insurance coverage in the United States.
In its latest report, Gallagher Re notes that as claims filings and processing continue, H1 loss totals are expected to show further development throughout the year.
Can California's FAIR Plan handle the heat?
Last week, evacuations were ordered as high temperatures during the Fourth of July weekend ignited a new wave of wildfires across California.
As part of its 2024 Budget, the US Department of the Interior has devoted $1.7 billion to wildfire management. The total economic impact of climate change-fueled wildfires, however, far exceeds this, costing the US between $394 billion to $893 billion annually.
According to Jonathan Naranjo (pictured left), national real estate practice leader, SVP at Newfront Insurance, wildfires are not only an environmental and economic issue but also a significant challenge for the insurance sector.
“Wildfire and high-brush fire exposure has now surpassed earthquake in terms of severity and premium increases. Especially with insurers retracting out of the marketplace completely,” he said.
FAIR plan grapples with lack of capital
As insurers like Tokio Marine America Insurance Co. and Transpacific Insurance Co. join a string of insurers exiting California’s high-risk home insurance market, the availability of wildfire insurance is diminishing.
The imbalance of supply and demand isn’t just driving up consumer premiums; it’s also straining government programs like the California FAIR Plan (Fair Access to Insurance Requirements).
The program provides property insurance to individuals who are unable to obtain it through the regular insurance market due to high-risk factors, such as living in wildfire-prone areas. “It serves as an insurer of last resort,” added Naranjo, ensuring that property owners can obtain basic insurance coverage despite being in fire risk zones.
News
State Farm cements position as top US P&C insurer - Reinsurance News
Ranked by 2023 total net premiums written (NPW), State Farm retains the top position in AM Best’s rankings of the top US Property and Casualty (P&C) underwriters, with its total NPW rising by a significant 19.1% to reach $92.6 billion in the year.
State Farm’s total US P&C NPW is $15.4 billion ahead of second-place Berkshire Hathaway, which saw total NPW of $77.2 billion, maintaining its position from the 2022 rankings.
Progressive Insurance Group also maintained its third ranking and saw the biggest percentage increase in its total P&C NPW within the top 20, jumping 20.4% to roughly $61.5 billion.
Progressive Insurance® Celebrates the 'Summer of Dr. Rick' - Releasing New Campaigns for Handling Social Norms and Traveling Faux Pas
[Ed. Note: Dr. Rick is a fictional character appearing in advertisements for Progressive Corporation insurance. The character, portrayed by Bill Glass, is a self-help coach who helps new homeowners keep from "turning into" their parents]
Progressive Insurance® is thrilled to unveil new creative work featuring one of the brand's most beloved and relatable figures, Parenta-Life Coach, Dr. Rick.
As young homeowners gear up for summer BBQs and travel adventures, many find themselves facing "Parentamorphosis," a condition coined by Progressive to describe the moment individuals start mirroring their parents' outdated behaviors. Fortunately, Dr. Rick is on a mission to rescue young homeowners from these tendencies with simple and practical advice. From avoiding aprons with puns to in-flight etiquette like refraining from clapping when the plane lands in France, Dr. Rick is prepared to take control of the season.
"Social norms and traveling often bring out our most parent-like behaviors, and with summer being a peak season for both activities, we felt now is a timely moment for Dr. Rick to present valuable advice on how young homeowners can un-become their parents," said Remi Kent, Chief Marketing Officer at Progressive.
"While Dr. Rick has been a Parenta-lifesaver for many, we wanted to extend his helpful advice to those hosting guests or traveling overseas. Our campaigns not only humorously address the 'hostess with the mostess' and 'tourist' behaviors, but also provide genuinely useful tips, especially for those traveling abroad."
Commentary/Opinion
The three-headed monster threatening insurance
Extreme weather, hyperinflation and social inflation are forcing carriers to make difficult adjustments.
Insurance carriers and their customers have been hit with a trifecta that's impacting claims costs and the price of premiums.
In an interview with PropertyCasualty360.com, Peter McMurtrie, a partner in West Monroe's Insurance vertical, called the combination a "three-headed monster," with extreme weather inflating claims severity and loss costs, hyperinflation driving up labor and material costs, and social inflation bloating claim costs.
"Together, these three mighty factors are causing carriers to adjust their pricing strategies, reduce or non-renew parts of their portfolios, and in extreme cases, exit certain markets," he said. "Insurance carriers set prices based on the anticipated cost of future claims. To determine these costs, they analyze a range of factors to predict both the likelihood of a loss and its potential expense."
Joe Toppe serves as managing editor of PropertyCasualty360.com. Joe is also a father of three, an author, and longtime lover of baseball.
InsurTech/M&A/Finance💰/Collaboration
OPTIS: Insurance Agency M&A Reaches 4-Year, First-Half Low
The total of insurance agency mergers and acquisitions during the first six months of 2024 was the lowest over the first half since 2020, according to investment banking and financial firm OPTIS Partners.
OPTIS Partners’ M&A database counted 300 announced insurance agency mergers and acquisitions for the first half 2024, down 20% from 385 during the first half 2023.
The second quarter marked eight straight quarters of a drop in deal count, with 146 deals compared to 154 deals announced during the first quarter 2024. First-quarter M&A was down 18%.
Transactions are down 21% over the last 12 months to 739 from 941.
“While some formerly very active buyers became relatively inactive, it appears that a few are picking up the pace slightly. Others that didn’t slow down in the recent economic downturn indeed have increased their buying pace,.” said Timothy J. Cunningham, OPTIS managing partner.
Priceline and Cover Genius Announce Global Partnership, Launch Technology-Driven Travel Protection for Flights, Hotels, Rental Cars and Packages
Millions of customers to benefit from tailored travel protection powered by award-winning global distribution platform, XCover.
Priceline, the iconic innovator of online travel, and Cover Genius, the insurtech for embedded protection, have announced a new North American partnership to introduce enhanced travel protection for flights, hotels, rental cars and packages booked with Priceline.
By integrating with Cover Genius’ award-winning global distribution platform, XCover, Priceline’s customers enjoy several customer-centric features that elevate the travel protection experience. After purchasing protection, users can easily review policy details, access support, file claims and receive instant payments for approved claims through their XCover Account. Cover Genius’ hassle-free digital claims are backed by policies in 40+ languages, instant payments for approved claims in 90+ currencies and an industry-leading post-claims Net Promoter Score.
“We’re excited to collaborate with Priceline to bring our customer-centric protection to their travelers,” said Angus McDonald, CEO and Co-founder of Cover Genius. “We avoid ‘off-the-shelf’ offerings and build technology-driven solutions that we constantly test and iterate for the best possible insurance experience. This helps develop meaningful touchpoints with customers and drives additional revenue for our partners – in fact, after launching with us, Priceline saw an increase in insurance attach rates.”
Legal System Abuse/Social Inflation
6 ways claims industry can mitigate social inflation | EY - US
[Ed. Note: See also our related article Social Inflation: Decades of Litigation Abuse
Verdicts and settlement amounts are becoming more unpredictable and difficult to evaluate, requiring new approaches.
In brief
Litigation trends and tactics, nuclear verdicts and societal views are impacting the insurance claims industry.
'Some aspects of social inflation are controllable for organizations.
Summary
Claims organizations need to assess whether they have the right strategies to survive this evolving era of social inflation.
Michael A Curcio Senior Manager, Insurance Risk Consulting, Ernst & Young LLP; Advisor to C-suite leaders, board members and boards. Next-gen insurance claims advocate. Huge Chicago Bears and White Sox fan. Little League baseball coach. Dale Carnegie fan.
Claims
Insurance Industry $500 Billion Digital Shift Driven by Gen Z
As the second half of 2024 unfolds, the insurance sector finds itself in the midst of a profound shift. How profound? According to at least one industry insider, the digital transformation of the insurance business is happening on the scale that swept through retail in the late 1990s and the video industry with the advent of Netflix.
This digital revolution is primarily driven by changing demographics and consumer expectations. As One Inc CEO Ian Drysdale told Karen Webster for the latest installment of the “What’s Next In Payments” series, while baby boomers retire and millennials become the largest segment of society, insurance companies are grappling with how to serve a new generation of customers who expect seamless digital experiences.
“We’re seeing the digitalization of insurance with a Gen Z and millennial focus. Everything being online — not only premiums, which might be a little bit more obvious, but also claims where we can close a claim completely over text message,” Drysdale said.
One Inc helps carriers transform their operations through reducing costs, increasing security and optimizing customer experience by digitizing their processes, payments and disbursements. The push toward digitization isn’t merely about meeting consumer preferences; it’s also a response to economic pressures. Drysdale said that the insurance industry is grappling with inflation rates far exceeding the general economy, with costs rising between 20% to 30% in some areas.
“A lot of insurers are losing a lot of money because they’re paying out more in claims than they’re getting in premiums,” Drysdale said. “As a result, they’re under huge economic pressure and are looking for efficiencies.”
Data Privacy/Cyber Security
The missing piece in the connected car era — consent management
Automotive innovations add imminent value to the consumer experience when they’re intuitive, personalized, and built to solve tangible user problems.
For example, usage-based insurance solutions became more prevalent during the pandemic. Americans drove 14% less in 2020 than the year prior but only saved about 6% on their car insurance. Access to accurate mileage data through vehicle telematics expedited the roll-out of pay-per-mile policies that can save drivers up to 9% in insurance costs.
The same can be said with the accelerated emphasis on EVs as a distributed energy resource, especially after millions of residents were forced to deal with power outages during extreme weather events because of heightened grid dependency.
From using vehicle data to reduce the cost of unnecessary repairs to unlocking more shared mobility options for those who can’t opt for personal vehicle ownership, the possibilities for more safe and accessible mobility are endless when consumer needs come first.
JD Supra: Social media posts could be used against car crash claimants
A recent article published by JD Supra outlines how a claimant’s social media posts could negatively impact car crash settlements.
“Over the years, social media has developed and contributed a significant role in both the settlement and trial of personal injury cases,” the article says.
It says claimants could feel compelled to share facts and circumstances about their accidents and injuries online.
“That’s perfectly natural but be advised that the sharing of any information regarding the ordeal that you’re currently enduring can be of pivotal importance to the defense and be misconstrued or misinterpreted,” the article says. “An otherwise perfectly viable personal injury case can be turned sideways, and your own words or evidence can be used against you.”
The article advises that those involved in the crash not publish anything online about their accident or injuries until after a claim or lawsuit is resolved.
Both insurance company adjusters and defense attorneys will seek out social media of claimants after a crash, the article says.
“Contradictory or prior inconsistent statements might be used against you as exceptions to the hearsay evidence rule,” according to the article. “A good insurance defense attorney is going to call your credibility into question. Even your location and disabilities might come to issue with photographic evidence that you provide against yourself when you’re legitimately recovering from your injuries, all in an attempt to show that you really weren’t injured to the extent that you claim.”
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation
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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
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EMEA
Lemonade expands Aviva partnership with UK buildings & contents cover launch - Reinsurance News
Lemonade, the digital insurance organisation, has expanded its UK homeowners offering with the launch of buildings and contents insurance, in a continuation of the firm’s ongoing partnership with Aviva.
According to the announcement, homeowners throughout the UK will now be able to purchase extensive coverage for their home and belongings.
It has been confirmed that Lemonade’s Buildings & Contents insurance provides a variety of add-ons to provide full-scope coverage and flexibility.
This includes: emergency assistance, which is provided in case of events such as a broken boiler, burst pipes, broken locks or electrical failures, as well as providing coverage for unexpected accidental events that damages a customers content or home.
As well as this, it also covers any theft and accidental loss in and outside of a customer’s home, with bikes, laptops, and phones all being included.