Climate/Change/Sustainability/ESG
CAN CLIMATE TECH SAVE INSURANCE?
The future of the insurance industry is dependent on how it responds to climate change
Extreme weather is disrupting Property & Casualty insurance profitability while destroying coverage affordability and restricting availability.
Stephen Applebaum and Alan Demers
Insurance resilience up in 2023 amid worldwide recognition for increased protection: Swiss Re -
In 2023, insurance resilience either increased or was stable across the natural catastrophe, crop, health, and mortality perils tracked by Swiss Re’s Resilience Index.
According to the firm, this reflected a general focus on the shock-absorbing role of insurance for households, farms, and businesses.
“In 2023, we saw signs of individuals and policymakers worldwide recognising the benefit of higher insurance protection and taking steps to increase insurance coverage, and hence resilience,” Swiss Re explained.
As a figure, global insurance resilience was reportedly stable at 58% in 2023.
However, the global protection gap across the perils above reached a new high of $1.83 trillion in premium equivalent terms in the year.
Insurers cannot afford to ignore the peril of real-life Twisters | The Insurer
MS Amlin’s Ed Pope examines the risk of tornadoes to the (re)insurance sector…
As the highly anticipated sequel to Twister comes to cinemas, it is not just Hollywood special effects that have evolved since the original film’s 1996 debut. For the insurance industry, a key question remains: is climate change driving an increase in the frequency and intensity of destructive storms and the hazards, such as tornadoes, associated with them?
The wind speeds generated by tornadoes are among the strongest on Earth. The Bridge Creek Tornado, which occurred in Oklahoma in 1999, had a highest confirmed wind speed of 321 mph. This is 106 mph faster than the most intense one-minute sustained wind speed from a hurricane (Hurricane Patricia in 2015).
Combined with their unpredictability (tornado warnings are still often less than 10 minutes), tornadoes represent a severe risk to both property and life where they occur.
Indeed, in the US, where tornadoes are most common, resulting annual fatalities have been greater than hurricanes for 16 out of the last 24 years, with tornado-related fatalities being 50 percent higher than those from hurricanes if we exclude the most deadly years for both phenomena.
News
Insured losses from CrowdStrike outage could reach $1.8B: Parametrix
Parametrix Insurance Services LLC, a provider of technology downtime insurance, said Wednesday that insured losses among U.S. Fortune 500 companies caused by last week’s CrowdStrike outage are likely to be between $540 million and $1.8 billion.
Parametrix estimates the total direct financial loss facing Fortune 500 companies, excluding Microsoft, is $5.4 billion, but it said the portion of the loss covered under cyber insurance policies is likely to be no more than 10% to 20% “due to many companies’ large risk retentions, and to low policy limits relative to the potential outage loss,” Parametrix said in a statement.
Flat commercial insurance rates in Q2 halt 26-quarter increase trend: Marsh
Global commercial insurance rates were reportedly flat in Q2 of 2024, down from a 1% increase in Q1, ending the 26 consecutive quarter streak of increasing rates, as per Marsh’s Global Insurance Market Index.
According to Marsh, Q2 of 2024 marks the first time in nearly seven years that the global composite rate has not increased.
“The continued moderation of rates was largely driven by increasing competition among insurers in the global property market,” the firm explained.
The Global Insurance Market Index revealed that on average, rates decreased in Canada and the Pacific by 5%, and in the UK and Asia regions by 3%.
Telematics, Driving & Insurance
Enabling Faster Car Crash Response | Insurance Thought Leadership
With usage-based insurance, carriers can detect accidents instantly and dispatch assistance, but many aren't taking full advantage of their programs.
Among drivers and insurers alike, usage-based insurance (UBI) programs have increased in popularity in recent years. The UBI market is projected to grow from $30.6 billion in 2023 to $80.7 billion by 2028 – and for good reason.
According to WalletHub, switching to UBI can save drivers 10% to 15% in annual costs. Moreover, UBI’s rise in popularity is important considering the financial pressures insurers face and the trend toward price increases, with 31% of auto insurers raising rates in 2023 by an average of 16%.
As more drivers opt for UBI to save money, insurers have an opportunity to capitalize on and maximize their UBI offerings. How exactly? The answer lies in the data that UBI employs.
UBI programs can leverage technology that provides real-time information and insight into a policyholder’s driving habits, such as driving patterns, speed, phone usage and sudden stops. Insurers can use this same data to implement a crash response component in their UBI program to identify probable accidents and immediately dispatch emergency support, enabling a faster accident response.
While this technology is readily available, many insurance programs are not applying it in a way that maximizes its full potential and allows a faster crash response. In turn, insurers are leaving myriad benefits on the table for themselves and their policyholders.
Let’s explore why crash response can be a game-changer when introduced into UBI programs.
Matt Clarenson is director of product for Agero
Financial Results
Greenberg cites “another great quarter” in earnings report
Chubb Limited chair and chief executive Evan G. Greenberg (pictured) is happy with the insurer’s performance in the three months ended June 30, calling the period “another great quarter” for the company.
Commenting on the numbers, the CEO said: “We had another great quarter which contributed to record six-month results. Per-share core operating income in the quarter was up 9.3% while record year-to-date operating income was up 15.7%. Our P&C underwriting results in the quarter were simply excellent in spite of a higher level of catastrophe losses, highlighted by a published combined ratio of 86.8%, and supported by record ex-CAT current accident year underwriting income of $1.8 billion and a combined ratio of 83.2%.
“Adjusted investment income topped $1.5 billion, up nearly 26% and a record, and we grew life segment income about 11.5% in constant dollars with international life up over 15%. We produced double-digit premium revenue growth across the globe with strong results in our North America P&C, international P&C, and life insurance divisions.”
Greenberg went on to say: “In summary, we had a great quarter, and our results reflect the strength, breadth, and depth globally of the company. We are confident in our ability to continue growing our operating earnings at a superior rate through P&C revenue growth and underwriting margins, investment income, and life income.”
State Farm No. 1 in full-year 2023 premiums written, Q2 2024 new business climbs for Progressive
Ranked by 2023 total net premiums written (NPW), State Farm remains No. 1 property and casualty (P&C) underwriter in the U.S. based on AM Best rankings data compiled by Reinsurance News.
State Farm’s total NPW increased by 19.1% reaching $92.6 billion in 2023, according to the data.
The top 10 U.S. P&C insurance companies, according to Reinsurance News, are:
State Farm’s total P&C NPW was $15.4 billion ahead of second-place Berkshire Hathaway (GEICO parent company), which saw a total NPW of $77.2 billion, maintaining its position from 2022 rankings.
Progressive also maintained its No. 3 spot and saw the biggest percentage increase in its total P&C NPW within the top 20, jumping 20.4% to nearly $61.5 billion.
Among the top 20, rankings largely remained the same with the first 16 maintaining their positions from 2022, according to the rankings data.
While the top insurers remain highly profitable, the latest loyalty indicator and shopping trends (LIST) report from J.D. Power and TransUnion for Q2 shows consumers continue to feel the pinch of inflation with auto insurance.
In 2023, according to J.D. Power LIST reports, shopping decreased in Q4 and Q3. J.D. Power speculated that consumers shopped the first half of the year and relented to the costs during the last half.
Q2 results show a shopping/quote rate of 13.3% for the quarter, up from 12.8% in Q1 2024 and the highest quarterly rate J.D. Power and TransUnion have recorded.
During Q1, about 12.8% of consumers were shopping for new insurance compared to 12% in Q4, according to the Q1 LIST report. The switch rate rose from 3.6% to 3.9% during the same period.
InsurTech/M&A/Finance💰/Collaboration
Top Insurtech Companies | Global 5-Star Technology and Software Providers
Celebrating the world’s top insurtech companies leading the way in software and technology by providing essential solutions for their clients
Insurtech innovators Insurance Business recognizes the Global 5-Star Technology and Software Providers of 2024. During a 15-week process, IB’s research team conducted interviews with brokers and surveyed thousands more within IB’s global network to gain expert insight into what insurance professionals think about the current market and who are the top insurtech companies. Additional data shows how insurtech is a vital part of the industry and is expected to undergo incredible growth. Gallagher Re’s Global Insurtech Report 2024 highlights this by focusing on the stage of investments for those firms looking to become top insurtech companies.
Additionally, Market.us data shows:
- By 2032, the projected value of the insurtech sector is estimated to be US$336.5 billion.
- By 2032, the sector is projected to undergo a compound annual growth rate (CAGR) of 41%.
Jewelers Mutual® Group Is Acquiring Union Life & Casualty Insurance Agency
The acquisition provides greater choice and flexibility, and best-in-class products and services to pawn businesses nationwide
Jewelers Mutual® Group, the insurance and business solutions provider dedicated to the jewelry industry since 1913, recently announced its acquisition of the trusted pawnbroker insurance provider, Union Life & Casualty Insurance Agency (UL&C).
JM Insurance Agency Partners, Inc., a Jewelers Mutual Group company, will join forces with UL&C, expanding the Group’s expertise, helping strengthen both the pawn market and the insurance industry, and helping meet customers’ needs for best-in-class pawnbroker coverage.
“This strategic acquisition empowers us to leverage our combined expertise and expand our suite of innovative insurance solutions to further strengthen our market position in the pawn industry,” said Mike Alexander, Chief Operating Officer at Jewelers Mutual. “Together, we will accelerate our growth and continue to deliver incredible value to our customers.”
Data Privacy/Cyber Security
CIECA Webinar - What the Collision Industry Needs to Know About the Unauthorized Use of Its Information and Data
Pete Tagliapietra, Managing Director of DataTouch, discusses how the lack of data and information security is adversely affecting the collision industry.
Topics include how body shops’ collision repair estimate information is obtained by third-party companies in the supply chain, the primary purchasers of the data and what shops can do to protect customer information and repair data.
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
Register now and save, $200 off. Use promo code 200ITC1813
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