Commentary/Opinion
Top 5 Technology Predicaments Facing Insurance Leaders
As insurers look for ways to navigate evolving risks, some have pinned their hopes on generative AI (GenAI) as a quick fix.
But allegations of faulty algorithms rendering unfair denials have fueled critics, who claim that AI has become just one more problem in an already fraught landscape.
The truth, per SAS’ Stu Bradley, is more nuanced.
“While insurance leaders will certainly encounter obstacles as they advance their analytic maturity, AI itself isn’t the problem,” said Bradley, senior vice president of Risk, Fraud and Compliance Solutions. “Rather, organizations’ understanding of their data and the potential unintended consequences of AI is the root of the issue. With the appropriate ethical guardrails and human oversight, trustworthy AI is a solution, delivering the insights and agility needed to redefine the industry.”
More People Are Skipping Home Insurance to Save Money — and It Could Backfire
With homeowners insurance costs skyrocketing lately, more Americans are considering forgoing coverage to save money.
After double-digit increases last year, home insurance rates are expected to climb another 6% this year, according to Insurify, a comparison-shopping platform. Experts say the effects of climate change — compounded with the typical inflationary pressures of late — are largely to blame.
The latest data from the Insurance Information Institute (III), an industry trade group, shows 88% of homeowners are covered, but that figure has fallen from upwards of 95% just a few years ago. The dip can mostly be attributed to homeowners skipping home insurance coverage due to rapid price increases. In some cases, though, insurers are pulling out of high-risk areas, leaving residents in a scramble to find replacement coverage.
By the year’s end, Insurify estimates the average annual insurance premium will exceed $2,500, though residents of states susceptible to tornadoes, hurricanes and wildfires should brace for rates much higher than that. In hurricane-prone Florida, for example, annual rates are expected to climb above $11,700 — by far the highest in the nation. A “highly active” Atlantic hurricane season threatens to push premiums higher still.
People flocking to disaster-prone areas are also causing insurance prices to rise, notes Loretta Worters, a vice president at III. She says this trend, which predates the pandemic, isn’t likely to go away anytime soon and expects rates to continue climbing.
But that’s no excuse to skirt coverage altogether.
“Going bare” — industry jargon for eschewing homeowners insurance — “spells financial ruin for most homeowners,” says Worters, who spoke with Money in October 2023.
NHTSA shares back-to-school driving safety tips
More than 1,000 people died in school transportation-related incidents from 2013 to 2022.
NHTSA data shows that 1,082 people died in school transportation-related crashes from 2013 to 2022, with 198 of those deaths being children age 18 or younger. Of these young victims, 40% were occupants of other vehicles, 38% were pedestrians, 18% were in school vehicles, 3% were bicyclists and 1% were on personal devices (skateboards, scooters, wheelchairs, etc.). Even more tragic is that 55% of the children killed in these incidents were between the ages of 5 and 10.
The most dangerous time for school-age pedestrians, NHTSA found, was from 3 p.m. to 3:59 p.m., when more of these children were killed than at any other time of the day. One-fifth of school-aged pedestrian deaths in these accidents were hit by a school vehicle that was traveling straight.
In light of these troubling statistics, the NHTSA shared the following tips to help prevent school transportation-related crashes, injuries and deaths.
News
Flying for Labor Day weekend 2024? Expect very busy airports, TSA says
As summer travel comes to a close with Labor Day weekend, travelers should prepare for crowded airports and long lines. In fact, it may be the busiest Labor Day travel period on record, according to the Transportation Security Administration.
Over 17 million passengers are expected to hit the skies for the long weekend, which TSA is counting as Thursday, Aug. 29 through Wednesday, Sept. 4.
"People are traveling more than ever this summer and TSA along with our airline and airport partners stand ready to close the busiest summer travel period on record during this upcoming Labor Day weekend," said TSA Administrator David Pekoske in a statement.
Climate/Resilience/Sustainability
Toronto/Ontario flash flooding drives $940m in insured damage: CatIQ
According to initial estimates from Catastrophe Indices and Quantification Inc. (CatIQ), the flash flooding in Toronto and other parts of southern Ontario between July 15-16, 2024, is estimated to have caused over $940 million in insured damage.
Amanda Dean, Vice-President, Ontario and Atlantic, Insurance Bureau of Canada (IBC), commented, “The insurance industry has long warned that severe weather events are becoming more frequent and intense. This summer is, unfortunately, proving that statement is correct.
“This summer, Canada’s insurers have been simultaneously supporting customers impacted by the Toronto floods, the Calgary hailstorm, the Jasper wildfire and flooding across Quebec.
“The insurance industry is on the ground in Ontario, Alberta and Quebec, assisting customers as they put their lives back together. The emotional distress that these events have caused thousands of Canadians cannot be overlooked.”
As per the IBC, severe weather in 2023 has caused over $3.1 billion in insured damage across Canada.
Financial Results
Swiss Re posts strong H1'24 results despite reserve additions
Global reinsurer Swiss Re has today reported profit of $996 million and net income of $2.1 billion for the first half of 2024, as the firm’s property and casualty (P&C) and life and health (L&H) reinsurance businesses performed well in the period.
Swiss Re attributes the reported net income and an ROE of 20.1% for H1 2024 to disciplined underwriting, low claims from natural catastrophes, and strong investment income.
Group-wide, insurance revenue totalled $22.5 billion and the insurance service result, which reflects underwriting profitability, hit $2.9 billion.
The return on investments was also strong in H1 2024 at 4%, which the firm attributes to contributions from recurring income.
Within the P&C reinsurance arm, performance was strong in H1 2024 with net income of $989 million on the back of disciplined underwriting and a low large natural catastrophe experience. P&C Re insurance revenue was $9.8 billion for H1 2024.
In P&C Re, the firm has reported a favourable large nat cat impact of $600 million, offset by $500 million additions across natural catastrophe and man-made loss reserves in property and specialty, the large majority of which were in the form of IBNR reserves. P&C Re also increased reserves on specific casualty lines to the tune of $650 million. The prudence Swiss Re is building into reserves is important and is being described as positive by investors, as it better protects the company going forwards.
Data Privacy
Toyota disclosed a data breach after ZeroSevenGroup leaked stolen data on a cybercrime forum
Toyota has confirmed a data breach after a threat actor leaked 240GB of data stolen from its infrastructure on a cybercrime forum.
Toyota disclosed a data breach after a threat actor leaked an archive of 240GB of data stolen from its systems on a cybercrime forum, BleepingComputer reported.
The threat actor ZeroSevenGroup claims to have breached a U.S. branch of Toyota, stealing 240GB of files containing information on Toyota employees, customers, contracts, and financial details.
However, the company attempted to downplay the incident claiming that the security breach is limited in scope.
The car vendor has already notified impacted individuals, but it did not provide technical details about the incident.
“We are aware of the situation. The issue is limited in scope and is not a system wide issue,” Toyota told BleepingComputer. “[We are] engaged with those who are impacted and will provide assistance if needed,” added the statement from the company.
ZeroSevenGroup extracted a huge quantity of information from Toyota’s environments, including network information and credentials,
AI in Insurance
AI is coming for claims management – here's how to prepare your teams
If there was one phrase that’s dominated the past year, both professionally and societally, it has to be “generative AI”.
According to KPMG’s Generative AI Survey, results reveal that 77% of insurance executives believe AI will have a more significant societal impact within the next three to five years than any other technology. What’s more, 84% of firms, including insurers, say that investing in this new AI will give them a competitive edge.
On the claims management side of things, AI has had an almost unprecedented impact – speeding up claims processes to an electrifying speed. Speaking to IB, Michael Combs (pictured), president and CEO of CorVel, said that this increased efficiency had enabled adjusters to gather more crucial information on claims and helped injured workers return to their jobs swiftly.
“With the application of technology, decision-making processes have evolved,” said Combs. “Generative AI has helped reduce what was a lag time of days, weeks or months, collapsing the feedback loop and allowing our partners to look at historical data to understand what happened and, more importantly, what do we do about it.”
Research
52% of Consumers Would Buy from Insurers that Actively Invest in New Technologies to Improve Claims Experience Following Severe Weather, According to Insurity Survey
Insurity’s survey finds that consumers prioritize comprehensive coverage and technological capabilities over cost, and are willing to switch providers or pay higher premiums for better claims experiences during severe weather events
Insurity, the leading provider of cloud-based software and analytics for insurance carriers, brokers, and MGAs, today announced findings from its 2024 Severe Weather Consumer Pulse Survey, revealing deeper insights into consumer opinions on how severe weather events influence their insurance coverage decisions. Insurity’s survey uncovered a shift in consumer priorities, emphasizing that cost is no longer the greatest driver for policy selection. The survey highlights the value consumers place on the technology their insurance providers use to offer a better experience during severe weather events.
Despite 48% of Americans expressing confidence that their current insurance adequately prepares them for the potential financial impacts of severe weather events, 36% of Americans would consider switching to an insurance provider that offers more comprehensive coverage for severe weather events, even if it means paying a higher premium.
Moreover, 52% of respondents indicated they were more likely to buy a policy from an insurance provider that actively invests in new technology to improve the insurance claims process after severe weather events. This underscores that the right coverage, rather than cost, is the primary concern for many consumers. With severe weather on the rise, insurers looking to retain and grow their customer base in a competitive marketplace should consider investing in new technology that enhances the claims process and improves overall customer experience.
Global insurance spending set to approach $10 trillion by 2028
Global insurance spending is projected to sustain its growth trajectory, reaching nearly $10 trillion by 2028, according to data presented by Stocklytics.com.
It was noted that the global insurance market, spanning the life and non-life sectors, has experienced a 25% surge over the past four years, with the total insurance premiums value increasing to over $9 trillion this year. While the growth rate has decelerated since the peak in 2021, the market is still expected to achieve record-high spending in the coming years.
Several factors are driving the market’s growth, including economic expansion, the rise of the middle class, technological innovations like insurtech, and an evolving risk environment. According to Statista, the gross written premium in the global insurance market stood at $7.24 trillion in 2017, rising to nearly $8 trillion by the end of 2020.
The 10 highest-income U.S. states
The median annual income for those in the United States is approximately $74,600. However, there is a large disparity between regions when it comes to how well off Americans are, which can heavily influence property insurance costs and challenges in the area.
How does income impact property coverage?
- Premiums: In areas with higher incomes, property values may trend higher. This results in elevated insurance premiums, since the cost of rebuilding or replacing property is likely also higher than in other areas.
- Coverage options: Those who live in more affluent areas may opt to purchase higher limits of coverage or additional riders, like those for high-value possessions or special home features.
- Advanced risk management: Wealthier homeowners have more resources to invest in advanced security systems, fire suppression systems and other risk mitigation measures, which can help reduce their premiums a bit and guard against future claims.
Higher-income states present a unique landscape for insurers as they navigate higher-value assets, diverse coverage needs and higher claims costs. In the slideshow above, we'll look at the U.S. states where people have the highest income, according to WalletHub.
InsurTech/M&A/Finance💰/Collaboration
YA Group Announces a Majority Investment from THL Partners
Partnership will support continued investments to drive organic growth and strategic acquisitions
YA GROUP ("YA," or "the Company"), an international professional services organization providing forensic consulting, engineering, risk mitigation, and related services, today announced that it will receive a majority investment from THL Partners ("THL"), a premier private equity firm investing in middle market growth companies.
The partnership will help accelerate the Company's organic growth through investments in its core service areas and support opportunities to expand its platform through strategic acquisitions. YA's management, employees and current capital partner, CIVC Partners ("CIVC"), will retain significant ownership positions in the Company, with management and employees remaining in their current roles.
Founded in 1997 as a property damage consulting firm, YA is recognized as a trusted service provider to global insurance carriers and claims services firms. The Company has over 600 interdisciplinary experts servicing complex and sophisticated client projects across 27 countries.
"As we enter our next stage of growth and innovation, we determined that THL is the right choice for a strategic partner," said Wade Bushman, CEO, YA. "Their deep proficiency and relationships across the broader insurance industry will prove invaluable as we continue to serve our clients and expand our service offerings in the future. We look forward to partnering with their industry and operating experts to enhance the critical work that we provide for our clients."