News
Maui judge issues key ruling on $4 billion wildfire settlement
Decision could cost insurers dearly
A Maui judge's ruling Tuesday resolves a critical roadblock to finalizing a $4 billion wildfire settlement: Insurance companies who have paid out more than $2 billion in claims can seek reimbursement only from the settlement amount defendants fire victims blame for causing the deadly tragedy have agreed to pay.
Lawyers representing plaintiffs in hundreds of lawsuits over the deaths and destruction caused by the fires asked the judge to bar insurers from bringing independent legal action to recoup the money paid to policyholders. Preventing insurers from going after the defendants is a key settlement term.
The settlement was reached earlier this month, days before the one-year anniversary of the the fires, amid fears that Hawaiian Electric, the power company that some blame for sparking the blaze, could be on the brink of bankruptcy. Other defendants include Maui County and large landowners.
The federal Bureau of Alcohol, Tobacco, Firearms and Explosives is investigating the Aug. 8, 2023, fires that killed 102 people, destroyed the historic downtown area of Lahaina, burned thousands of homes and displaced 12,000 people.
Plaintiff lawyers were worried allowing insurers to pursue reimbursement separately would be a deal-breaker, drain what is available to pay fire victims and lead to prolonged litigation.
Report: 2.6M Homes with a Cost of $1.3 Trillion at Moderate to Very High Risk of Wildfire
More than 2.6 million homes across 14 states with a total reconstruction cost of $1.3 trillion are at moderate to very high risk of wildfire damage during the 2024 wildfire season, a new report shows.
The 2024 CoreLogic Wildfire Risk Report found the western U.S. has the greatest wildfire risk, with California, Colorado and Texas comprising 70% of the risk.
The report from the Irvine, California-based catastrophe modeler and property data provider lists following states as having the highest number of homes at moderate or greater risk of wildfire exposure:
- California: 1,258,748 homes at risk
- Colorado: 321,294 homes at risk
- Texas: 244,617 homes at risk
- Oregon: 129,567 homes at risk
- Arizona: 124,603 homes at risk
Florida Approves New Writer Trident Reciprocal; State Farm Commits to Growth
The Florida Office of Insurance Regulations said another new company was approved to write in the state.
Trident Reciprocal Exchange is the ninth new property carrier to enter the state since 2023. The company was approved by the regulator on June 31 to write fire and homeowners multiperil, according to an order from Insurance Commissioner Michael Yaworsky. Attempt to gain further comment from Trident was not successful.
Following legislative reforms, Yaworsky met with a number of insurance company executives to discuss how they can expand business in the state, according to a insurance department spokesperson. These meetings proved fruitful, as executives from Progressive Casualty Insurance Co., State Farm, AAA and Kin Insurance Technology Hub LLC all reinforced their commitment to the state’s property market.
State Farm said it will continue to have a “substantial” presence in the state and a commitment to responsible growth, according to a Roszell Gadson, of State Farm corporate communications.
“We are encouraged by the recent insurance reforms and efforts to curb legal system abuse and we will continue to work constructively with the Florida legislature and the Office of Insurance Regulation to improve the marketplace on behalf of our Florida customers,” Gadson said in an emailed statement.
Attempts to gain further comment from Progressive was unsuccessful.
In addition to these company actions, recent rate filings show premiums are starting to moderate in the state. The regulator said the 180-day average request for homeowners rates, as of Aug. 1, was 1.2%. A dozen companies have filed for rate decreases to take effect this year and 24 companies filed to keep rates unchanged.
Research
Auto Insurance Shopping Continued to Rise in Q2 2024
TransUnion reports shopping increased versus 2023 even as rates stabilized.
Auto insurance shopping volume set a new record for the second consecutive quarter, according to new research from TransUnion (NYSE: TRU). The number of U.S. consumers shopping for auto insurance was up 7.4%, compared to Q2 2023 (YoY).
This trend has been driven in recent years by increasing insurance premiums that motivated consumers to shop for lower rates. However, for the first time since December 2021, the month-to-month Consumer Price Index for Motor Vehicle Insurance decreased—a 0.2% drop that occurred between April 2024 and May 2024.
The slight shift could signal that insurers are approaching rate adequacy and prospective loss trends could be moderating. These insights and more are part of TransUnion’s latest quarterly Insurance Personal Lines Trends and Perspectives Report.
“It is very encouraging to see indicators that carriers are returning to rate adequacy, and ultimately profitability,” said Stothard Deal, vice president of strategic planning for TransUnion’s insurance business. “TransUnion’s research has uncovered ways for insurers to accelerate the move to profitability and prepare to resume marketing activity in a more-efficient manner.”
Labor Market Study: 14% of Carriers Plan to Reduce Headcounts
Fourteen percent of insurance companies plan to reduce employee headcounts in the next year, according to numbers from Aon and The Jacobson Group’s latest insurance labor market study.
Greg Jacobson, CEO of The Jacobson Group, explained that the majority of companies that decreased their staff sizes by more than 5% in the past 12 months had exposure to personal lines. Taking a step back, half of companies that reduced staff at all had exposure to personal lines.
Financial Results
Unpacking Insurtech Hippo's Q2 2024 Results
As I delved into Hippo’s Q2 2024 shareholder letter, I couldn’t help but draw parallels to the classic film “Jurassic Park.” In the wild and unpredictable world of Insurtech, Hippo seems to be navigating a landscape as thrilling and treacherous as Isla Nublar. Like the park’s creators, Hippo is showcasing innovation and ambition, but also grappling with the challenges of controlling a complex system.
Welcome to Jurassic Park: Financial Highlights
Hippo’s Q2 2024 results reveal a company still trying to contain its financial velociraptors:
- Total Generated Premium (TGP) grew 20% year-over-year to $380.1 million
- Revenue surged 88% to $89.6 million
- Net loss improved by 62% to $40.5 million
- Adjusted EBITDA loss decreased by 72% to $24.9 million
These numbers suggest Hippo is making progress in taming its financial beasts, but like the park’s dinosaurs, profitability remains elusive and potentially volatile.
Kaenan Hertz is a professional in the areas of block chain, telematics, wearables, analytics, artificial intelligence (AI) and Insurtech. He has played a key role in innovating many start-ups and established carriers. His advice has been widely appreciated in the financial community, which resulted in multiple quotes and publications in various media.
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.
Global Insurance Forum 2024 | Presented by the IIS | Nov. 17-19 | MIami
Global Insurance Forum 2024 | Presented by the International Insurance Society
Celebrate excellence and explore the impact of insurance innovation at the Hyatt Regency Miami on Nov. 17-19. The Global Insurance Forum comprises a diverse audience of c-suite leaders, offering you a unique opportunity to connect with your international colleagues and discuss the issues facing insurers and the world at large.
Nov. 18: Global Innovation Awards and Reception
Data Privacy/Cyber Security
Your Car Insurance Company Wants Your Data. Is It Worth the Discount? | Bankrate
**When Seychelle Thomas signed up for a safe driving discount from her car insurance company, she didn’t expect to sign away her privacy.((
A resident of Maryland, Thomas has auto insurance through Geico. Geico customers are eligible for safe driving discounts through DriveEasy, a telematics program that offers potential premium discounts to customers who agree to let Geico track their driving habits via a mobile app. But when Thomas went to enroll in the DriveEasy program, she encountered some concerning things.
“Geico wanted 24/7 location access,” she says. “Access to my audio, electronic and visual data, for some reason.” Uneasy about the level of data access required to sign up, she called a Geico customer service rep to clarify her concerns.
“When I raised concerns about the level of permissions they were requesting,” Thomas says, “It was kind of brushed off. Like, ‘Oh, this is normal.’ So I backed out on the second to last step.”
In recent years, insurance companies have touted telematics discounts like the one Thomas declined as a potential solution to the steep rate increases drivers have seen in the wake of the COVID-19 pandemic. According to Bankrate’s research, full coverage car insurance rates increased by an average of 20 percent from June 2022 to June 2024. Key factors behind these increases include inflation, rising repair costs and an uptick in serious and fatal accidents.
With insurance companies instituting across-the-board rate hikes, there’s a growing sense of injustice to which telematics — car insurance directly based on how an individual actually drives — seems like a perfect answer. But is it? For many drivers, the level of access to personal data that telematics requires in order to work feels intrusive and risky. And finding concrete answers about that data — why it’s needed, how it’s protected and what it might be used for — is surprisingly difficult.
Attorney General Ken Paxton Sues General Motors for Unlawfully Collecting Drivers’ Private Data and Selling It To Several Companies, Including Insurance Companies
*Texas Attorney General Ken Paxton sued General Motors for its false, deceptive, and misleading business practices related to its unlawful collection and sale of over 1.5 million Texans’ private driving data to insurance companies without their knowledge or consent.
This action follows Attorney General Paxton’s June 2024 announcement that he opened an investigation into several car manufacturers regarding allegations that the companies had improperly collected mass amounts of data about drivers directly from the vehicles and then sold the information to third parties.
“Our investigation revealed that General Motors has engaged in egregious business practices that violated Texans’ privacy and broke the law. We will hold them accountable,” said Attorney General Paxton. “Companies are using invasive technology to violate the rights of our citizens in unthinkable ways. Millions of American drivers wanted to buy a car, not a comprehensive surveillance system that unlawfully records information about every drive they take and sells their data to any company willing to pay for it.”
Fraud
Challenges in Insurance Claim Fraud Management
A new Verisk survey highlights the pressing concerns and emerging trends shaping the future of property/casualty insurance claim fraud detection and prevention. The comprehensive survey of 44 industry professionals—primarily leaders and decision-makers for SIU teams—was conducted in March 2024 at the Insurance Fraud Management (IFM) Conference in The Woodlands, Texas.
Executive Summary
This article is the first in a series examining the pressing issues confronting SIU decision-makers and the transformative potential of emerging technologies.
Shane A. Riedman is vice president and general manager of Verisk Claims Solutions, where he leads innovation and development of the anti-fraud products portfolio.
Helena Cornell is vice president and general manager of anti-fraud analytics for Verisk.
Podcast
Exploring the Forces Reshaping the Property and Casualty Insurance Landscape | William Blair
The casualty side of the insurance industry is being hit by rising levels of claims and losses.
In this episode of William Blair Thinking Presents, Adam Klauber, CFA, partner, group head of the financial services and technology sector, provides a framework for understanding the depth of the issue and delves into the underlying nature and causes.
And it's not just really the amount of lawsuits and this is one of the aha’s or conclusions that it's the amount of large lawsuits. - Adam Klauber, CFA, partner and group head of the financial services and technology sector
Announcements
HONK’s New, Innovative Service Plans Are a Game Changer for the Roadside Assistance Industry
HONK, long the leader in roadside assistance software innovation, is set to revolutionize the industry once again with three levels of service and a suite of AI-driven digital tools.
Industry-leading roadside assistance software company HONK Technologies today launched a suite of service plans which simplify the process of comparing service offerings among roadside assistance software providers.
While plans like these are fairly standard for SaaS companies, this has not been the case for the roadside assistance industry. HONK’s three innovative plans: HONK Core, HONK Enhanced and HONK Enterprise are designed to simplify decision-making for customers looking for a new roadside assistance partner and bring an unmatched level of transparency to the industry.
HONK’s newly designed website also makes it easy for insurers, OEMs, and fleet managers looking to offer white-labeled, cloud-based roadside assistance by clearly delineating specific service offerings.
This expansion comes as HONK continues its steady growth while maintaining the highest customer satisfaction scores in the industry.
HONK has long been considered the innovation leader in the roadside industry with solutions that make integrating roadside assistance into service portfolios a seamless experience for businesses of all sizes.
"Our mission is to continue to redefine the roadside assistance industry through technology and innovation," said HONK CEO Corey Brundage. "We don’t just talk about redefining roadside assistance, we have the technology to back it up. It’s this commitment to innovation that allows us to follow through on our promises. We’re enabling organizations of all sizes to offer safe, reliable, exceptional service to their customers.”