News
Allstate announces massive home insurance rate increase
Come November, Allstate will be raising home insurance premiums for policyholders in California by an average of 34.1%, representing what has been described as the most significant rate increase by a major insurer in the state over the past three years.
The approved prices will affect around 350,000 insureds across California, where a property insurance crisis already exists, Bloomberg reported. Documents filed by Allstate indicate that the premium changes will vary widely, with some seeing hikes as steep as 650%, while others could experience decreases of up to 57%.
In California, major insurers such as State Farm and Farmers Insurance have scaled back their operations, blaming the growing financial pressures from wildfires and longstanding regulatory constraints that have limited their ability to raise rates.
Allstate, meanwhile, halted the issuance of new homeowner policies in the state in 2022, attributing its decision to the increasing financial risks in the market.
In a statement, spokesperson Michael Passman said: “Higher home values and repair costs coupled with more frequent, severe weather lead to higher payments to help customers recover, so we need to adjust rates to better reflect the cost of protecting our customers.”
Research
LexisNexis reports huge shopping and new policy growth during Q2
During Q2 2024, U.S. auto insurance shopping and purchasing registered as “nuclear,” the highest point on the LexisNexis Insurance Demand Meter since its benchmarking began more than a decade ago.
The quarterly year-over-year (YoY) shopping growth rate increased by 16.1% compared to a 2.9% increase last quarter, according to LexisNexis Risk Solutions. The quarterly YoY growth for new policies was 19.5% compared to an 8.7% increase last quarter.
“Notably, this quarter’s results were driven by both ends of the market, with record shopping and new business volumes in the preferred segment and a rebounding non-standard market,” said Jeff Batiste, LexisNexis U.S. Auto Insurance Client Engagement senior vice president and general manager. “This is the latest sign of the strengthening and stabilizing personal lines market and has overall policy-in-force growth trending back to historical norms.”
Fewer Teens Want to Drive. It’s Changing How They Spend.
Driving a car, long a symbol of true independence, is now more expensive and complicated than it’s worth for many young Americans.
This changed view on driving for teens and 20-somethings is manifesting itself in everything from a decline in car purchases to fewer road trips with friends. They say they’re often comfortable relying on public transportation, walking or having a family member give them a lift—and saving money along the way.
The percentage of 19-year-olds with a driver’s license dropped steadily from 87.3% in 1983 to 68.7% in 2022, according to most recent data from the Federal Highway Administration.
Those who decide to own a car must contend with large jumps in costs, says Breanne Armstrong, director of insurance intelligence at research firm J.D. Power. Prices for cars, car parts and insurance have all risen in the past few years.
To Angelina Reyes, a 19-year-old student without a driver’s license at the University of Hartford from Connecticut, driving felt scary and wasn’t worth the expense.
“I was always sure of myself when I did things,” Reyes says. “Driving was one of the first times that I wasn’t.”
She says she has been fine without a license. Her parents or boyfriend drove her to her internship this summer. She says she’ll learn when she’s ready.
Car insurance costs are rising. Uninsured motorists aren't helping.
Uninsured motorists are on the rise, and they are driving up the cost of auto insurance for the rest of us.
The car insurance industry is caught, analysts say, in a vicious cycle of spiraling costs. Car insurance costs have surged by 52% in three years. Rising premiums are prompting more motorists to drop insurance, and their choice is pushing up premiums for other drivers.
The share of motorists without insurance rose from 11% in 2019 to 14% in 2022, the latest data available, according to the nonprofit Insurance Research Council.
Initial data for 2023 suggests the share of uninsured motorists continued to rise, a council spokesman said. And survey data from J.D. Power shows a further upward trend in the first half of 2024.
“We’ve gone now 2½ years of pretty historic increases in auto insurance premiums,” said Stephen Crewdson, senior director of insurance business intelligence at J.D. Power. “Some households are really struggling to make that payment.”
Climate/Change/Sustainability/ESG
Extreme rain is a growing climate threat to Northeastern US
As high temperatures break records around the US and wildfires rip through the West, another climate-driven weather hazard — extreme rainfall — is pummeling the country's Northeast and scientists say it will get worse as the climate changes. That will bring more rain-induced flooding to a region of millions that isn't prepared.
The latest example played out on Aug. 18, when a slow-moving storm system approached Northeastern states from the Great Lakes. A patch of low pressure high above Connecticut and New York drew all that wet air upwards, creating perfect conditions for rain. Remnants of Hurricane Ernesto also arrived, slowing down the movement of air masses across the region into a kind of "traffic jam," according to AccuWeather Inc.
"The situation itself wasn't all that unusual," said Tom Kines, a senior meteorologist at AccuWeather. "It just happened to be the kind of the worst-case scenario where you get heavy thunderstorms over one area for an extended period of time."
The outcome was anything but usual. Within 12 hours, the area saw two 1,000-year rainfalls — events that have a 0.1% annual chance of occurring — only 35 miles apart.
"Some areas picked up two or three months' worth of rain," Kines said. >
Commentary/Opinion
Prevention: The New Frontier in Insurance
The insurance industry, traditionally reactive in nature, is undergoing a paradigm shift. Prevention, once a peripheral concern, is now at the forefront of innovation. As technology advances and consumer awareness grows, insurers are realizing the potential of shifting their focus from merely compensating for losses to actively preventing them. This transformation promises to reshape the industry, impacting underwriting, customer value propositions, and the competitive landscape.
At the core of this shift lies the recognition that prevention can significantly reduce claims. For instance, in health insurance, wellness programs, and preventive check-ups can lower the incidence of chronic diseases, leading to lower healthcare costs (For example look at Lumen – app and device for measuring metabolism- https://www.lumen.me/) .
In auto insurance, telematics and driver behavior analysis can identify risky driving habits, enabling insurers to offer tailored interventions and reduce accident rates (For example see VComm – a company that provides and analyzed information on the behavior of two wheeler drivers- https://www.vcomm.tech/). Similarly, home insurance providers can leverage IoT devices to monitor home conditions, preventing losses from fire, theft, or water damage (For example look at Essence’s IOT products – https://www.essencesmartcare.com/solutions/product-catalog/)
The author of this article is Dr. Yael Benvenisti, Deputy CEO at Insurtech Israel.
Financial Results
U.S. Insurance Industry Begins to See Surplus Recovery, Boosted by First Half Capital Gains and Signs of U.S. Property and Casualty Firms Inching Towards Stabilization
Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, and The American Property Casualty Insurance Association (APCIA), the primary national trade association for home, auto and business insurers, today reported that half-year 2024 gains for the insurance industry are estimated to be $95 billion.
Adjusting for over $50 billion in capital gains realized by one insurer, first half 2024 gains are estimated to be approximately $45 billion. According to key financial indicators for private U.S. property/casualty insurers, while the first half of 2024 experienced similar losses for insurers as those seen in 2023, the losses are no longer reducing surplus as they did over the past few years.
However, when adjusting for inflation, current surplus has still not recovered to the levels seen in early 2022, when surplus decline began. Additionally, given the ever-increasing impact of extreme weather patterns, and new exposures and risks such as cyber, a higher level of surplus may be required.
“While there are some positive signals in the 1H2024 results, insurers are still recovering from significant underwriting losses in recent years,” said Robert Gordon, senior vice president of policy, research, and international at APCIA. “Insurers’ underwriting income swung from a $22.6 billion loss in the first half of 2023 to a $4.7 billion gain at 1H2024. Insurers’ surplus is continuing to recover from the catastrophic losses in 2022, although it has not kept pace with inflation or the economic demands for insurance coverage. Commercial lines have been profitable and are restabilizing, while personal lines have improved but are still struggling to keep up with rising losses. With an expected spike in hurricane season activity in the forecast and the remaining months of wildfire season still ahead, it remains to be seen if insurers can finish the year with an underwriting profit after two straight years of underwriting losses.”
Innovation
Activating Prevention, Igniting AI Insights Applied to Worker’s Comp
Active Insurance
Active insurance sounds like a new insurance workout program fad. In reality, it’s spotting risks proactively so they can be addressed before an accident happens. Active insurance uses technologies like artificial intelligence or wearables to detect risks and get ahead of unsafe problems. The concept emphasizes a shift away from the traditional focus on claims management or reactionary measures.
Nationwide has set a goal of reducing workers’ compensation claims by one million by 2030 by using insurtech solutions, like the ones developed by CompScience, which focuses on true loss prevention by obtaining and analyzing customer information quickly to prevent claims before they occur.
Artificial Intelligence can discover risks in the workplace
A game changer in the world of workers’ compensation right now is CompScience and how they are using artificial intelligence (AI). Specifically, computer vision technology that has the potential to detect risk that can be addressed before an accident happens.
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation
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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.
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Curators' Corner: Stephen Applebaum & Alan Demers
SO MANY CONFERENCES, SO LITTLE TIME AND BUDGET
August 28, 2024
The oversaturated insurance conference landscape; which to attend and how to maximize experience
RIDING THE INSURANCE ROLLER COASTER
August 2, 2024
Over the past four years the P&C industry, among others, fits the roller coaster analogy perfectly. And that is an understatement. Homeowner and Auto lines have been the most tumultuous in comparison to commercial lines, mainly due to premium adequacy efforts.
SOCIAL INFLATION: DECADES OF INSURANCE LITIGATION ABUSE
July 16, 2024
The scourge of legal abuse in insurance is hardly new or even recent but rather has been insidiously growing throughout the industry for decades. Referred to today as social inflation, the stakes are higher and so-called “tort reform” seems distant with no signs of slowing.
CAN CLIMATE TECH SAVE INSURANCE?
July 22, 2024
The future of the insurance industry is dependent on how it responds to climate change