Climate Change/Sustainability/ESG
Could this year's hyperactive tornado season turn out to be the worst on record?
The United States is way ahead of normal this year for tornadoes, but could the year end up being the worst ever?
Severe weather has been a frequent occurrence across the United States this year, with an unusually high number of tornadoes, which has propelled 2024 toward the top of the list of the most active tornado years on record.
“This has been an incredibly active year for tornadoes in the United States,” said AccuWeather Lead Long-Range Expert Paul Pastelok.
As of July 17, there had been 1,421 tornado reports in the United States, well ahead of the 2010-2024 historical average of 1,001, according to the Storm Prediction Center. In fact, 2024 has already had more tornadoes than the average annual total of 1,402.
Tornado outbreaks at the end of April and the month of May quickly raised 2024 above the historical average. Since then, a steady stream of tornadoes, including dozens during Hurricane Beryl, has increased that number even more.
Q2 storm losses could portend 'bad year' for US P&C insurers
Heavy weather losses stand to be the focal point for investors and analysts when US property and casualty insurers release second-quarter financial results
After enjoying a respite from severe weather in the two previous three-month periods, the second quarter was dominated by a series of severe convective storms and tornado outbreaks that stuck large swaths of the country from Texas to the Northeast. Large losses from those storms, coupled with the historic early appearance of powerful Hurricane Beryl have raised some red flags for insurers, Keefe Bruyette and Woods analyst Meyer Shields said.
"I think fear is the predominant emotion in [the property and casualty segment] of the industry," Shields said in an interview. "[Beryl] certainly reinforces people's concerns that this could be a bad year. We don't know if it will be a bad year in terms of insured losses, but there's reason to be nervous."
An S&P Global Market Intelligence analysis found that sell-side analysts expect combined ratios to rise year over year at 10 of 19 of the largest publicly traded US property and casualty (P&C) and multiline insurers. Nearly all of them are expected to see their combined ratios climb sequentially.
There were nine weather events in the second quarter that generated at least $1 billion in inflation-adjusted economic losses, according to NOAA's National Centers for Environmental Information. Those events were responsible for 39 deaths and cost a total of $23 billion. Added to the six such events in the January–March period, there were 15 billion-dollar events in the first half of 2024 that led to 106 deaths and $37.9 billion in costs.
Six insurers are projected to record combed ratios in excess of 100% in the quarter, signifying underwriting losses. Horace Mann Educators Corp. is expected to have the highest at 114.7%, followed by The Allstate Corp. at 108.1%, The Hanover Insurance Group Inc. and Cincinnati Financial Corp. at 101.1%, and The Travelers Cos. Inc. and Assurant Inc. at 100.7% each.
Monthly reports from Allstate and The Progressive Corp. show how the weather has affected their bottom line. Allstate reported catastrophe losses of $494 million and $1.48 billion in April and May, respectively. BMO Capital Markets estimated the company's catastrophe losses for the quarter at $2.65 billion, compared to nearly $2.70 billion in the same period in 2023.
![Verisk estimates US insured losses from Beryl to range between $2-3bn](https://dxj7eshgz03ln.cloudfront.net/production/link/image/969885/twenty_by_nine_extra_large_402a5e2a-09f7-4356-8ee2-7be288a8d2ec.jpg)
Verisk estimates US insured losses from Beryl to range between $2-3bn
Verisk’s Extreme Event Solutions group has estimated that industry insured losses to onshore property from wind in the US for Hurricane Beryl will range between $2 billion and $3 billion.
For those who need refreshing, Beryl began as a tropical depression over the central tropical Atlantic on June 28, organising into a tropical storm just a few hours later and rapidly intensifying over the next two days.
On July 1, Beryl passed through the Windward Islands as a Category 4 hurricane and would go on to become a Category 5 hurricane later that day, the earliest on record in the Atlantic.
The storm made three separate landfalls: Carriacou Island, Grenada on July 1; Tulum, Mexico on July 5; and finally Matagorda, Texas on July 8.
As Verisk notes, Beryl’s imperfect structure played a role in the storm, only strengthening to a fledgling Category 1 hurricane before making landfall near Matagorda Bay, Texas.
“Widespread and prolonged power outages in Texas are likely to be a legacy of Beryl’s arrival in the state,” Verisk said.
![Swiss Re rethinks its wildfire underwriting approach with latest technology](https://dxj7eshgz03ln.cloudfront.net/production/link/image/969892/original_ratio_extra_large_e389bec3-1ed2-4c69-a805-7ce296733bb4.png)
Swiss Re rethinks its wildfire underwriting approach with latest technology
Wildfires are an escalating threat, consistently surpassing historical records. Since 2000, they have consumed 7 million acres annually, double the yearly acreage burned in the 1990s, according to Swiss Re.
According to a report from the reinsurer, this trend shows little sign of abating. In 2023, wildfires in Hawaii led to the largest insured loss from any natural catastrophe event ever seen in the state, in a region previously considered to have low catastrophe risk.
The Smokehouse Creek fire, burning more than 1.2 million acres, was the largest ever in Texas. These events underscore the urgent need for proactive measures to mitigate these risks.
Swiss Re, in collaboration with Bellwether, announced that it is using AI and comprehensive data harvesting to enhance underwriting capabilities for insurers facing wildfire risk.
Bellwether’s technology harnesses 600 layers of geodata from sources like Google, including detailed information on canopy, vegetation, precipitation, and wind speed. These datasets train machine learning models to forecast wildfire risk in specific areas accurately.
News
![Travelers profit jumps on investment gains, underwriting strength](https://dxj7eshgz03ln.cloudfront.net/production/link/image/969895/original_ratio_extra_large_684c9d29-5f31-4196-a737-6230c49c562a.jpg)
Travelers profit jumps on investment gains, underwriting strength
Travelers Cos. Inc. reported a jump in second-quarter profit, driven by higher investment income and strong underwriting that offset a hit from catastrophe losses, the insurance bellwether said on Friday.
Underwriting gains jumped 55% to $1.2 billion, while net investment income rose 24%, thanks to strong fixed income returns and growth in fixed maturity investments.
A steady U.S. economy, bets of interest-rate cuts and rising geopolitical uncertainty have helped fuel activity across U.S. equity markets.
“We are pleased to have generated a strong bottom-line result in a quarter that included a record level of severe convective storms across the United States,” said Chairman and CEO Alan Schnitzer
![Avail shuts down D2C offering](https://dxj7eshgz03ln.cloudfront.net/production/link/image/969959/original_ratio_extra_large_dfed9da4-84b6-4eb3-8176-cd4b019de594.jpg)
Avail shuts down D2C offering
Avail Carsharing , the peer-to-peer car sharing startup launched by Allstate in 2018, has ceased operations in Chicago and Denver effective July 16, 2024.
In a message displayed via its site, it shared that it’s no longer accepting new bookings. “We are contacting borrowers to cancel bookings that are scheduled to start on or after July 16.”
This move marks a significant shift for the company, which has faced ongoing financial challenges since its inception. Established in 2018, Avail competed with Turo and Getaround. Initially, it operated at select airports across the country before expanding to neighborhoods in Chicago, Denver, and Seattle. Avail eventually shut down its airport operations and continued in select locations in Chicago and Denver, but now those operations have ended as well.
In June we covered Avail’s launch of a B2B offering and that offer is still standing. “While we are ceasing our peer-to-peer car sharing operations, Avail will continue to explore innovations in the vehicle space through our business-to-business partnerships,” writes Avail.
Commentary/Opinion
![The Hartford’s Mo Tooker on the Insurance Industry’s Need For More Technology Investment : Risk & Insurance](https://dxj7eshgz03ln.cloudfront.net/production/link/image/970135/original_ratio_extra_large_9b62e477-3787-45a4-bf5f-107b71ab4b62.jpg)
The Hartford’s Mo Tooker on the Insurance Industry’s Need For More Technology Investment : Risk & Insurance
Risk & Insurance recently had the opportunity to sit down with Mo Tooker, head of commercial lines at The Hartford, to discuss the ways insurers can leverage their data to drive higher efficiency and better ratios, and how AI will shape the business models of insurers and their clients alike in the years ahead.
What follows is a transcript of that conversation, edited for length and clarity.
Risk & Insurance: What are your strategic priorities for the commercial lines business at The Hartford?
Mo Tooker: At The Hartford, our commercial lines businesses — including small and middle-market, global specialty and our Lloyd’s platform — are all performing well, with top quartile profitability. This strong foundation allows us to invest in technology at a rapid pace, which is crucial in the small and medium-sized space.
We believe that if we continuously improve efficiency and leverage AI, we will remain a leader in this competitive market. Another priority is to provide our customers with a comprehensive set of products from a single carrier, including our benefits operation, which offers group health, life, disability and voluntary products.
As a commercial lines organization, we aim to support our customers throughout their entire life cycle. For example, a life sciences customer may start as a small business, but with the right human clinical trial or patent, they can experience rapid growth. Our goal is to be able to support them through every stage of their development.
R&I: What are your thoughts on the data explosion in the insurance industry, and how are you leveraging data to differentiate your company?
MT: We’ve been investing in data capture and analytics for the past decade. About seven years ago, we implemented a modern claim system that allows us to track every element of a claim across all our lines of business. This has given us a comprehensive understanding of litigation rates and the types of claims where litigation is more likely to occur.FULL INTERVIEW
OEMs & Auto Insurance
![Donald Trump Wants to End Federal Support for EVs on 'Day One'](https://dxj7eshgz03ln.cloudfront.net/production/link/image/970113/original_ratio_extra_large_9a84756d-c0eb-4a63-a2fb-c9303e5ad74f.jpg)
Donald Trump Wants to End Federal Support for EVs on 'Day One'
The former president says that if re-elected, he will "end the Electric Vehicle Mandate" immediately.
Electric vehicles and the subsidies, infrastructure, and manufacturing dollars around them have become a highly politicized topic, and former President Donald Trump attacked the segment during his address at the Republican National Convention on Thursday. Following a discussion about bringing oil drilling back to its days of glory, Trump took aim at President Joe Biden’s electric vehicle policies, saying he would end them all on his first day in office.
"I will end the Electric Vehicle Mandate on Day One — thereby saving the U.S. auto industry from complete obliteration, and saving U.S. customers thousands of dollars per car," Trump said in his address in Milwaukee on Thursday.
InsurTech/M&A/Finance💰/Collaboration
Top insurtechs rally as property and casualty earnings season begins
Several publicly traded insurance technology companies saw their stocks rise sharply this week as earnings kicked off in earnest for the property and casualty space.
Through the first four trading days of the week, insurance technology (insurtech) companies Hippo Holdings Inc., Lemonade Inc. and Root Inc. saw their stocks rise by at least 14%. Hippo posted the largest increase at 29.1% as of market close July 18, while Lemonade was up 15.6%. Root was higher by 14.2%.
While equities in general can be volatile during earnings season, Insurtech Advisors analyst Kaenan Hertz said the recent surge has more to do with "general investor interest."
"The movement has less to do with the insurance operations and results than it does with market players," Hertz said in an interview. "Also, some analysts are retooling where they think the stock will be, which may or may not be fully based on performance on business performance, but rather on market expectations."
All three companies are set to report their financial results late in the earnings season.
![European InsurTech seed funding on track to bounce back 32% in 2024](https://dxj7eshgz03ln.cloudfront.net/production/textual/image/970219/original_ratio_extra_large_5b7b59df-9046-4920-a367-683d9b73e74c.png)
European InsurTech seed funding on track to bounce back 32% in 2024
Key European InsurTech seed deal investment stats in Q1 2024
- European InsurTech seed deals reached 13 deals in Q1 which puts deal activity on track to reach 52 deals in 2024, a 26% decrease from 2023
- European InsurTech seed investment totalled at $35m and is on track to reach $140m based on Q1 funding activity, a 32% increase from the previous year
- Germany was the most active InsurTech seed country with four deals, a 31% share of total deals
In the first quarter, the European InsurTech sector saw a total of 13 seed deals, indicating a projected 52 transactions by the end of 2024, marking a 26% decrease from the previous year's activity. However, InsurTech seed investments in Europe amounted to $35m in Q1, putting potential investment to reach $140m for the year, setting it on track for a 32% increase from the previous year's figures.
Germany was the most active InsurTech seed country with four deals, a 31% share of total deals. The UK was the second most active country with three deals, a 23% share of deals and France and Estonia were joint third with two deals each.
FinTech Global
US insurtech company Embroker launches real estate insurance programme
Embroker, a US digital insurance company, has introduced an insurance programme specifically designed for real estate agents and brokers.
This specialised coverage, built on Embroker’s ONE technology, aims to streamline the process by utilising a single-application approach to offer professional liability, cyber, business owners' and workers' compensation coverage.
In May 2024, Embroker conducted a survey with more than 150 real estate leaders, agents and auditors to identify the unique risks and challenges they face.
The findings indicated that the real estate industry is under considerable pressure, with frequent critical errors leading to financial losses.
The survey by Embroker revealed that more than half of the professionals in the industry depend almost entirely on their mobile phones for work, with 35% admitting to making frequent mistakes while using them.
This has resulted in nearly half of the respondents' companies reporting financial losses.
Additionally, 48% of real estate professionals have filed a professional liability claim in the past year, demonstrating the need for tailored professional liability coverage.
Cyber threats are another concern for real estate professionals, with 45% having suffered a breach and 82% facing phishing attempts.
Despite these risks, only 37% have updated their cyber coverage recently.
Claims
Navigating the key trends and challenges in the insurance claims landscape - InsurTech Analyst
The insurance sector is a dynamic market that continuously evolves due to technology, policyholder demands, and legislation. To stay competitive and provide optimal service, insurers must adapt to these changes. Comarch, a global IT business products provider, explores several trends shaping the insurance claims landscape.
Digital transformation is far from over in the insurance industry. Insurers are increasingly leveraging digital technologies to enhance operations and improve the policyholder experience.
Many insurers now offer user-friendly web and mobile platforms for requesting quotes, purchasing policies, filing claims, and checking claim status.
Embedded insurance, which allows customers to buy insurance at the point of sale for another product, is also gaining traction. These digital advancements streamline operations, improve efficiency, and enhance the customer experience.
Digital platforms are crucial as digital policyholders prefer managing policies and interacting with insurers online. Companies like Comarch Insurance provide InsurTech software that helps insurers modernise and simplify the claims process.
Read the full blog from Comarch here
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