Research
New data shows concerning trajectory of home insurance costs: 'The levels of risk ... are massively changing'
"Right now, there's a lot of confusion — not just among the homeowners, but also among the insurers."Home insurance rates are going through the roof, and experts believe the trend will continue, with severe weather a significant contributing factor."
What's happening?
Policygenius found that insurance rates at time of renewal rose, on average, 21% from May 2022 to May 2023, CNBC reported, noting "the rate of price increases is not expected to slow."
It stated that increasingly common severe weather events are making the cost of doing business higher for insurance companies, which pass on those expenses to consumers.
The details are scarce, as CNBC said insurers don't share data about premiums and risks. The upward trajectory is not new, however, and it's not uniform. From 2012 to 2021, the average home insurance premium rose by $377 — to $1,411 — about a 36.5% jump.
"The levels of risk and the kinds of hazards that a property can be exposed to are massively changing," said Carlos Martín, director of the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies, per the CNBC report.
"And right now, there's a lot of confusion — not just among the homeowners, but also among the insurers about how they should be pricing this actuarially."
Why is this important?
Extreme weather events are indeed happening more frequently, and they are becoming more intense as well. This is driven by rising temperatures, mostly caused by humans' use of dirty energy sources such as coal, gas, and oil.
Study: Car Insurance Prices Will Jump 22% This Year - Kelley Blue Book
The number comes from Insurify, an insurance comparison shopping service. Data scientists from Insurify “examined more than 97 million rates in its proprietary database, quoted via integrations with partnering insurance companies” in all 50 states and the District of Columbia.
Insurify says the average cost of comprehensive car insurance increased 24% last year and could nearly match that increase this year.
“The average annual cost of full coverage hit $2,329 in June 2024, a 15% increase from $2,018 at the end of 2023. Drivers could see a total increase of 22% in 2024, with average premiums of $2,469 by the end of the year,” Insurify says.
News
Disaster insurance drove billions in revenue for companies
Hawaii homeowners and businesses have purchased nearly $38 billion in disaster insurance over the last 20 years, generating more than $23 billion in net income for insurance companies and further driving Gov. Josh Green to insist that insurers be barred from suing the entities responsible for last year's Maui wildfires, including the state.
More than 160 insurance companies have paid out $2.3 billion in the year since the deadly wildfires and expect to pay another $1 billion.
But Green continued to single out State Farm Insurance for insisting that it should be able to sue the state, Maui County, Hawaiian Electric, Kamehameha Schools and telecommunications companies to recoup their payments in an industry practice known as "subrogation."
"And remember that while they make these giant profits they don't send refunds back to the people when there aren't incidents, they invest in the stock market or pay their CEO $25 million like this year at State Farm," Green wrote in a text to the Honolulu Star-Advertiser. "But when a tragedy occurs they want to recoup payments that go to the victims. It's fundamentally unfair, and they call it subrogation."
State Farm did not respond to a request for comment.
Liberty Mutual clarifies Calif. fire insurance pullback
Roughly 17,000 Liberty Mutual customers in California will lose their fire insurance, a company spokesperson has confirmed with PropertyCasualty360.com.
“This is related to a filing that dates back to 2023; non-renewals of impacted California customers began last fall and will conclude in November,” he said.
Subsidiary Liberty Mutual Fire Insurance Company is in the process of canceling dwelling fire insurance for the policyholders, after the company stopped writing the policies under the brand in California (and other states) in September 2023.
“We continue to offer dwelling fire coverage in California under our Safeco Insurance brand,” the spokesperson said.
Commentary/Opinion
How to Innovate in Homeowners Insurance
Executive Summary
A 42-year-old Northeastern regional carrier may not be the likeliest setting for homeowners insurance innovation, but the leader of Plymouth Rock Home Assurance sees advantages to launching tools usually associated with independent tech startups within an established company. Bill Martin, the CEO of Plymouth Rock Home Assurance, discusses predictive modeling innovations he has championed for more than a decade and what they mean for the future.
InsurTech/M&A/Finance💰/Collaboration
Ryan Specialty to acquire Ethos Specialty's P&C MGUs from Ascot
Ryan Specialty has signed a definitive agreement to acquire the property & casualty (P&C) MGUs owned by Ethos Specialty Insurance, LLC (Ethos P&C) from Ascot Group Limited, with the acquisition expected to close during September 2024.
Ethos P&C was founded in 2017 by Ascot Group, and following completion of the acquisition, it will become part of the Ryan Specialty Underwriting Managers (RSUM) division of Ryan Specialty.
It’s important to highlight, that Ethos’ Transactional Liability MGU is not included in the transaction and will remain with Ascot.
It has also been confirmed, that Evercore served as exclusive financial advisor to Ascot during the transaction.
Moreover, Ethos P&C comprises of eight programs which underwrite on behalf of a diversified panel of insurance carriers.
Within the property division, the firm mainly specialises in manufacturing, processing & warehousing, excess property, wind deductible buydowns, and all other perils buydowns.
As well as this, Ethos P&C’s casualty coverages include New York contractors, construction wraps, real estate and CleanTech general liability.
“Ethos P&C has established itself as an underwriting manager offering innovation and excellent service in niche specialty lines. Their entrepreneurial spirit and complementary portfolio add depth and breadth to Ryan Specialty. We welcome this team of highly experienced underwriters and look forward to our future together,” commented Patrick G. Ryan, Founder, Chairman & CEO of Ryan Specialty.
[Ed. Note: well informed perspective from investors' perspective]: VCs invested $1.2 billion in insurtechs in Q2 2024, according to PitchBook
Insurance used to be sexy.
If you go way back to the 40s, there were a number of classic film noirs in which the central romantic hero is an insurance salesman. The most famous case of this (and my favorite) is Billy Wilder’s Double Indemnity, so named for a clause still used in life insurance policies today.
“If she thinks she’s gonna live long enough, she’s a fool,” insurance man Walter Neff says of a femme fatale deliciously played by Barbara Stanwyck. “That’s the one thing about insurance you can always bank on—people die when they least expect it.”
That’s also true of sector-specific booms that frequently die in ways unanticipated but inevitable. If we flash forward to the late 2010s, insurance became sexy again (at least, to investors) in the guise of insurtech, as companies like Lemonade, Kin, and Hippo attracted billions in venture backing. That all began crashing down in 2021, as the zero interest-rate policy, or ZIRP, era ended and the insurtech darlings that hit the public markets got slammed.
Today, the insurtech sector is still attracting investment, albeit pulled-back and with asterisks. In the second quarter of 2024, $1.2 billion in VC money was invested across 106 insurtech deals, a recent PitchBook report showed. On the face of it, this number marks some nice increases for the sector, like a 27.1% quarter-over-quarter spike in deal value and an almost 4% quarter-over-quarter increase in deal count. But when it comes to insurtech, we’re far from “we’re so back” territory.
Allie Garfinkle, Fortune.com
AI in Insurance
Pioneering Ethical AI: P&C Insurers to Play a Critical Role, Say Triple-I and SAS
New report explores insurers’ cross-industry opportunity to influence the responsible development, use of AI, and help establish regulatory best practices
Artificial Intelligence (AI) promises to revolutionize how property and casualty (P&C) business gets done. As a result, P&C insurers are uniquely positioned to advance the conversation for ethical AI – not just for their own businesses, but for all businesses. How they might help establish cross-industry regulatory and technology best practices is the topic of a new report for insurers, Pioneering Ethical AI: The Crucial Role of Property and Casualty Insurersby the Insurance Information Institute (Triple-I), an affiliate of The Institutes, and data and AI leader SAS, a collaborating partner.
As a complement to the report, Triple-I and SAS will present the webinar, Pioneering Ethical AI, on Thursday, Sept. 12, 2024, streaming at three convenient times and making it available later on demand. Triple-I and SAS will be joined by industry experts, including Jennifer Kyung, Vice President of P&C Underwriting at USAA; Iris Devriese, Underwriter and AI Liability Lead at Munich Re; and Matthew McHatten, President and CEO of MMG Insurance.
"When it comes to artificial intelligence, insurers must work alongside regulators to build trust," said McHatten. "Carriers can add valuable context that guides the regulatory conversation while emphasizing the value AI can bring to our policyholders."
Webinar panelists will discuss key takeaways from the report, among them:
Regulation of AI has already begun and will only continue to develop. Actions to date reflect a fractured, geographically based approach that will likely result in a fragmented regulatory picture. The need for leaders who understand risk and regulation is imperative – and it’s a role for which P&C insurers are uniquely qualified. READ ON
Wilbur unveils AI and analytics tools for insurance industry
Wilbur, which specialises in insurance technology (insurtech), has rolled out new AI and Analytics modules tailored for insurers, managing general agents (MGAs), brokers, and third-party administrators (TPAs).
The modules are launched as Australian insurance companies integrate AI into their systems to keep up with the evolving cyber environment, prompting the Insurance Council of Australia (ICA) to outline the advantages and disadvantages of the integration and regulation of AI within the general insurance sector.
Wilbur’s AI and Analytics modules
The new AI and Analytics tools are designed to integrate with Wilbur’s existing platform, with a focus on enhancing efficiency in claims processing, reducing fraud, and improving underwriting practices.
Wilbur chief technology officer James Pepplinkhouse emphasised that the modules were created to address the unique challenges faced by TPAs, insurers, MGAs, and brokers.
“We understand the challenges these organisations face in managing data and processes, and our new tools provide them with the intelligence they need to stay competitive and deliver exceptional value to their clients,” he said
Announcements
CCC Launches CCC® Payroll to Streamline Payroll Management for Collision Repair Shops
CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, announces today the launch of CCC® Payroll, a new solution designed to streamline payroll management for collision repair shops. Integrated into the CCC ONE® platform, CCC Payroll enables shops to track production and labor, and streamline payroll within a single system, simplifying the payroll process from start to finish and giving employees greater visibility into how their pay is calculated.
The payroll services will be managed by Check, the leading payroll platform that pioneered the ability for companies to differentiate and open up new revenue streams by embedding payroll into their platforms.
“CCC Payroll addresses these challenges by streamlining payroll management and giving technicians clear and immediate access to their earnings information, which helps build trust and satisfaction, ultimately supporting a more stable workforce.”
“Payroll management in the collision repair industry is complex with unique challenges that generic solutions often fail to address,” said Mark Fincher, vice president of product management at CCC. “CCC Payroll is purpose-built for collision repair to simplify this process while enhancing transparency and trust within the shop.”
People
AF Group Announces Kim Leggette as Senior Vice President of Claims
Continuing its proven success in claim excellence as a growing, national specialty carrier, AF Group has announced the appointment of Kim Leggette as senior vice president of Claims.
"We are so pleased to welcome Kim as a respected leader and claims expert," said Kriss Barronton, chief operating officer for AF Group. "With decades of experience and demonstrated success in leading the claim operations at top-performing carriers nationwide, his innovative insights will further strengthen our ability to respond to the needs of our customers."
Before joining AF Group, Leggette served as chief claims officer for Aviva Insurance where he was responsible for more than $6 billion in commercial and personal lines. He has also held executive roles for Kemper Insurance, AIG, Selective and Travelers.
Leggette earned a bachelor's degree in Business, Risk Management and Insurance from the University of Georgia.
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