News
Consumer Watchdog Calls for Public Hearing on State Farm's Unprecedented Request for 4-Year, $5.2 Billion Policyholder Bailout
Consumer Watchdog is asking Insurance Commissioner Lara to hold a public hearing on State Farm's new request for a 30% increase in its homeowners insurance rates because the company wants to use the money to improve its general financial condition, far beyond what it needs to pay expected claims.
The proposal amounts to a $5.2 billion bailout by policyholders over the next four years, according to Consumer Watchdog.
"State Farm's request is unprecedented in the 36 years since voters passed Proposition 103," Consumer Watchdog said. "Under the law, an insurance company must open its books and prove that its financial condition warrants forcing policyholders to bankroll the company. And the company must show that it will repay policyholders. State Farm has done neither so far," said Carmen Balber executive director of Consumer Watchdog.
The Petition raises concerns that State Farm's California arm, a wholly-owned subsidiary, is sending profits out of state by overpaying the parent company for reinsurance and services.
A hearing on the 30% rate increase is required when sought by the public under the 1988 insurance reform initiative Proposition 103.
According to the Petition:
"The additional $1.3 billion a year for at least four years, or at least $5.2 billion in total, [State Farm General] wants to collect from its California policyholders would be used to 're-capitalize' the company—in other words, to purportedly rescue the company from what State Farm describes as a deteriorating financial condition. However, State Farm has failed to adequately support its purported need for such an extraordinary bail-out by policyholders, especially in light of State Farm's parent company's $100+ billion surplus in recent years."
Class action claims California's FAIR Plan sold unlawful policies
A class action lawsuit was filed in the Alameda County Superior Court last week on behalf of four Californians – representing over 365,000 policyholders – against the state's FAIR Plan Association. The suit claims the state-regulated insurer of last resort sold policies that illegally fail to properly cover fire damage.
The suit also accuses the state's Department of Insurance and Insurance Commissioner Richard Lara of not enforcing the laws that are supposed to set standards for these policies.
The San Francisco Chronicle reports that the goal of the suit is not to seek damage for lost benefits, but to obtain a court order requiring the FAIR Plan to comply with state law and increase the scope of wildfire coverage in its policies to include all direct physical loss from fire and smoke.
The number of Californians leaning on the FAIR plan for coverage has seen a massive increase over the last several years thanks to increasing damage from weather events and, in particular, wildfires. In the first nine months of the current fiscal year (through June 2024), the California FAIR Plan Association has written 134,576 new commercial and residential policies – compared to 65,500 and 89,995 for the entirety of fiscal years 2022 and 2023, respectively.
As of June, the FAIR Plan had a total exposure of around $393 billion – 38.3% higher than at the end of the last fiscal year in September 2023. The number of FAIR dwelling policies has increased 164% since 2019, from 154,494 in September 2019 to 408,432 in June 2024.
GEICO updates asTech pricing agreement; industry and competition react
GEICO released an updated standardized pricing sheet Monday for asTech scans and calibrations following “discussion and feedback,” according to an email to Auto Repair Xpress (ARX) Network shops, provided to Repairer Driven News (RDN).
The insurance company announced an agreement for standardized pricing with asTech earlier this month. The announcement was instantly met with criticism from independent collision repair shops on social media and during a Collision Industry Conference (CIC) meeting held in Denver.
Concerns about the agreement attempting to establish “standardized” or prevailing market prices for scanning and calibration operations have been raised. Another criticism is that it appears GEICO will prioritize the recommendation of asTech’s Rules Engine on whether an aftermarket scan is a sufficient replacement for an OEM scan; which was not amended in the updated Monday email communication.
InsurTech/M&A/Finance💰/Collaboration
Amica Mutual Insurance Expands Partnership With ZestyAI to Enhance Property Risk Assessment in the Face of Increasing Climate Risks
Today, ZestyAI, the leading provider of climate and property risk analytics solutions powered by Artificial Intelligence (AI), and Amica Mutual Insurance, a leader in auto, home, and life insurance, announced they will be expanding their long-standing partnership. Amica will now leverage ZestyAI's full property and climate risk analytics platform. This includes AI-powered climate risk models that evaluate both the hazard and vulnerability of hail and wind damage, Z-HAIL™ and Z-WIND™, as well as ZestyAI's property risk solution, Z-PROPERTY™. Amica will integrate these new predictive analytics models into a unified AI platform with their existing wildfire risk assessment, Z-FIRE™, and regulatory compliance solutions, CA Compliance Prefill.
As natural catastrophic events, like severe convective storms and wildfires, become increasingly frequent and severe, insurers need to find better ways to accurately predict and proactively address the growing threat of climate risk. ZestyAI provides accurate, property-specific data to help insurers determine the true risk for each property. The models examine the interaction of climatology, geography, and the unique characteristics of every structure and roof, analyzed in 3D, including accumulated damage from historical storms. The models are rooted in decades of science and experimentation by researchers, including the Insurance Institute for Business & Home Safety (IBHS), and are trained on huge amounts of loss data, making them the most accurate solutions on the market.
The Zebra Announces Strategic Acquisition of Insurance Management Platform Marble
The Zebra, the nation's leading insurance comparison site, today announced it has acquired Marble, a digital platform for managing and saving on insurance. The acquisition is effective as of July 25, 2024.
Both The Zebra and Marble share a vision for simplifying insurance shopping for consumers. This acquisition combines the strengths and expertise of the two companies, allowing The Zebra to innovate more rapidly and expand its consumer offerings - including policy uploading and management, a virtual insurance wallet and automated shopping.
"Our goal at The Zebra has always been to take the hassle out of shopping for insurance - and to make it accessible, fast and simple for everyone," said Keith Melnick, CEO of The Zebra. "By acquiring Marble, we're excited to bring aboard teams and technology perfectly aligned with our goals. This is only going to make it easier for us to provide all types of customers better ways to not only save on insurance, but also organize and access their policies."
By leveraging the technology and experts from Marble, The Zebra plans to provide more value and convenience to existing and future customers by giving them a way to organize their insurance information while using the platform to shop, compare, re-shop and save on all their insurance policies.
Sixth Street to acquire Enstar in $5.1bn transaction
Global insurance group Enstar is set to be acquired by existing investor Sixth Street in a $5.1 billion transaction, with Liberty Strategic Capital, J.C. Flowers & Co. LLC, and other institutional investors participating in the deal.
Upon closing of the transaction, Enstar shareholders will receive a total of $338.00 in cash per ordinary share of Enstar, which represents a total equity value of $5.1 billion.
The deal has been unanimously approved and recommended to its shareholders by Enstar’s Board of Directors, and is expected to close in mid-2025, subject to approval by Enstar’s shareholders, regulatory approvals, and other customary closing conditions.
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
Code not valid on Independent Agent, Startup, Groups, or LATAM tickets. Discounts only apply to new registrations.
Financial Results
CNA Announces Second Quarter 2024 Results
CNA FINANCIAL ANNOUNCES SECOND QUARTER 2024 NET INCOME OF $1.17 PER SHARE AND CORE INCOME OF $1.19 PER SHARE
CNA Financial Corporation (NYSE: CNA) today announced second quarter 2024 net income of $317 million, or $1.17 per share, versus $283 million, or $1.04 per share, in the prior year quarter.
Net investment losses for the quarter were $9 million compared to $25 million in the prior year quarter. Core income for the quarter was $326 million, or $1.19 per share, versus $308 million, or $1.13 per share, in the prior year quarter. Our Property & Casualty segments produced core income of $380 million for the second quarter of 2024, an increase of $6 million compared to the prior year quarter driven by higher investment income partially offset by higher catastrophe losses. P&C segments, excluding third party captives, generated gross written premium growth of 7% and net written premium growth of 6%, driven by retention of 85% and renewal premium change of +5%.
Our Life & Group segment produced core loss of $1 million for the second quarter of 2024, versus core loss of $20 million in the prior year quarter.
Our Corporate & Other segment produced a core loss of $53 million for the second quarter of 2024, versus $46 million in the prior year quarter.
CNA Financial declared a quarterly dividend of $0.44 per share payable August 29, 2024 to stockholders of record on August 12, 2024.
Aon publishes quarterly earnings
Aon has published its interim earnings for the second quarter of 2024 – a period of “excellent” financial results, according to chief executive Greg Case (pictured).
Of the quarterly revenue, $2.02 billion came from commercial risk solutions; $635 million, reinsurance solutions; $662 million, health solutions; and $463 million from wealth solutions.
Lifting the lid on the numbers, Aon noted: Total revenue increased $583 million, or 18%, to $3.8 billion, compared to the prior year period, reflecting acquired revenues from NFP and organic revenue growth of 6%, driven by net new business generation and ongoing strong retention, partially offset by a 1% unfavorable impact from foreign currency translation.”
Announcements
CCC Launches CCC® Intelligent Reinspection to Help Auto Insurers Review Repair Estimates Faster, Expediting Repairer Workflows and Claims Resolutions
AI-Powered Solution Streamlines Estimate Reviews and Helps Get Drivers Back on the Road Sooner Following an Accident
CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, announces today the launch of CCC® Intelligent Reinspection, a new solution designed to help auto insurers streamline the review of incoming repair facility estimates, expediting repairer workflows and claims resolutions. Leveraging advanced AI technology, CCC Intelligent Reinspection identifies areas for review, and provides reason codes based on insurer rules, helping reinspectors review increasingly complex estimates quickly, reducing repair and claim cycle times so drivers can get back on the road sooner following a car accident.
“The increasing complexity of vehicles today requires advanced solutions to streamline the claims and repair process,” said John Goodson, chief product and technology officer for CCC. “With CCC Intelligent Reinspection, AI helps insurers review repair estimates more quickly and transparently, allowing them to resolve questions with their repair partners. Our solution integrates seamlessly into existing insurer and repairer workflows, so estimates turn into completed repairs and claims can be resolved faster.”
Using AI-powered analysis and audit capabilities, CCC Intelligent Reinspection assesses incoming shop estimates based on insurer-provided rules. It automatically routes estimates for approval or review, significantly reducing manual workloads for appraisers and desk reviewers. This fosters better collaboration between insurers and repairers, helping to provide timely and accurate feedback without disrupting workflows, helping both save valuable time. CCC’s AI, developed over ten years and used broadly across collision repairers and insurers, employs computer vision and other advanced AI technologies to analyze photos of vehicle damage along with the repair estimate, improving accuracy and supporting repairers’ commitment to quality repairs.
OEMs & Auto Insurance
Alphabet to invest $5 billion in Waymo
Google’s parent company, Alphabet , will invest another $5 billion over the next few years in its autonomous driving operation, Waymo.
Alphabet CTO Ruth Porat announced the news during the company’s quarterly financial results call with investors last week – “This is consistent with enabling Waymo to build the world’s leading self-driving technology,” Porat said
Canada
Jasper wildfire could become one of the costliest on record, report shows
The Jasper wildfires could cause up to $700 million in insured damages, with “extra claims” from business interruption, after preliminary estimates show approximately 30% of the structures in the Alberta resort town were destroyed.
That would make the Jasper wildfires one of the most expensive in Canadian history, says Morningstar DBRS said in a Friday commentary.
Losses incurred in the Jasper wildfires could come close to or surpass damages from the Slave Lake wildfire in 2011, which cost insurers approximately $666 million adjusted for inflation.
As of now, the Slave Lake wildfire is second only to the Fort McMurray wildfire of 2016, which cost $4.4 billion in insured damages, according to DBRS.
“In addition, Jasper National Park is one of the most popular tourism destinations in Canada, which may cause insurers to face additional business claims in respect of commercial building and business interruption losses,” the DBRS commentary says.
The credit rating agency made its estimate based on information from last Friday, when the Alberta premier announced 30% to 50% of the town’s structures were damaged.
Since then, preliminary estimates report 358 of the 1,113 structures in Jasper were destroyed in the fire — meaning nearly 70% survived the blazes, according to the Canadian Press.