Research
What's happening with US commercial insurance rates?
The latest data from WTW indicates that US commercial insurance rates experienced a 5.9% rise in the second quarter of 2024.
The findings come from the brokerage’s Commercial Lines Insurance Pricing Survey (CLIPS) for Q2, showing a modest deceleration from the 6.3% rate reported by insurance carriers in Q1 of 2024 and 6.1% during the same period last year.
The quarterly CLIPS survey by WTW offers a retrospective view of historical price movements in the commercial property and casualty insurance space, as well as claims cost inflation.
The slowdown in overall commercial insurance price increases was primarily due to a notable reduction in the growth of commercial property rates. The sector, which had seen strong price hikes earlier in the year, appears to be stabilizing, indicating it may have hit its peak in Q1 2024.
According to WTW, the trend in commercial property pricing has had a ripple effect across the broader commercial insurance market, contributing to the smaller overall rate increase seen in Q2.
The most significant changes were observed in large account commercial property, while pricing in other market segments remained relatively stable.
News
S&P warns of rising climate risks for P&C insurers despite diversification efforts
Reinsurance will continue to be integral in risk management efforts
According to S&P Global Ratings, insurers are expected to mitigate the rising risk from natural catastrophe-related claims through revised underwriting strategies.
S&P warns that while these measures may help, credit impacts on insurers with greater exposure to physical climate risks could become more likely over the medium term, particularly if their portfolios are less diversified.
This warning comes as 2023 marks the fourth consecutive year where global insured losses from natural disasters have exceeded $100 billion. The insurance industry has seen profitability take a hit due to increasingly frequent and severe events such as thunderstorms across the US, France, and Italy in both 2022 and 2023.
S&P notes that economic growth, population growth, and claims inflation continue to drive long-term increases in insured losses, while climate change adds volatility to the frequency and severity of events.
Personal lines drives increase in US downgrades over last three years: AM Best
Recent years have seen a higher number of negative ratings actions on businesses operating in US insurance markets, with downgrades of AM Best-rated US firms increasing by 60% in 2023.
According to AM Best, this deterioration reflects the conditions that US property & casualty (P&C) insurers have been facing in recent years, including worsening economic and social inflation, combined with rising operating and loss costs.
In fact, the downgrades reflect deteriorating operating results, notably within the personal lines segment, which has had a Negative outlook from the agency since September 2022, and has seen a growing number of downgrades in the last two years.
The agency stated that personal lines carriers have accounted for 43% of Issuer Credit Rating (ICR) downgrades over the last three years.
“The number of personal lines’ rating downgrades rose in 2023, as property insurers have navigated the perfect storm of elevated catastrophe losses, secondary perils, reinsurance pricing increases leading to greater business retention, inflation and regulatory hurdles,” AM Best said.
Importantly, AM Best notes that while rating upgrades and downgrades are dependent on the individual circumstances of each rated company, the wider trajectory of rating movements can reflect marketplace dynamics.
Commentary/Opinion
Cars Collect Troves of Data About Traffic And Road Hazards. Should They Share It?
Cars Collect Troves of Data About Traffic And Road Hazards. Should They Share It?
The secret to avoiding red lights during rush hour in Utah’s largest city might be as simple as following a bus.
Transportation officials have spent the past few years refining a system in which radio transmitters inside commuter buses talk directly to the traffic signals in the Salt Lake City area, requesting a few extra seconds of green when they approach.
Jeff McMurray
The Role of Invisible Technology in Insurance
There has been much talk about insurance becoming invisible in the future as AI (Artificial Intelligence) and the IoT make embedded insurance appear, just when customers need it, wiping out the need for cumbersome searches and potentially lengthy onboarding.
The industry hasn’t quite disappeared under a cloak of invisibility just yet, but there is already masses of data and silent technology seamlessly supporting improved customer service and other core functions of insurance while enabling innovation. This technology provides exciting opportunities, but we must never lose sight of the needs of the end customer or the value of human input in developing innovative ideas and pushing the boundaries of technology.
Technology – an invisible means to an end
Technology has evolved from being a tangible part of the insurance process used by specialists to an integral, almost invisible, component of the industry. The younger generation entering the workforce view technology not as an end but as a means to an end. They don’t necessarily want to understand the intricacies of the systems they use, they just want them to work.
When technology fails, as many businesses and individuals experienced with a recent Microsoft outage, the disruption is starkly apparent.READ ON
Martyn Mathews, MD, SSP Broker
InsurTech/M&A/Finance💰/Collaboration
10 biggest global insurtech equity deals in the second quarter
The top three largest global insurtech equity deals in Q2 had an average funding round of $117 million. These three largest deals earned an average of 9.20% of their total funding in Q2. In total, all ten of the top insurtech equity deals in Q2 earned $763 million in funding.
Source: CB Insights
Funding See Details
1 Sidecar Health $165M Series D 6/26
2 ICEYE $93M Series D 4/17
3 Vitesse $93M Series C 5/21
4 Cover Genius $80M Series E 5/15
5 Honey Insurance $71M Series A 4/8
6 Arbol $60M Series B 4/30
7 FintechOS $60M Series B 5/30
8 Clearcover $55M Series E 4/11
9 Chapter $50M Series C 5/14 $451M
10 Honeycomb $36M Series B 5/7 $130M
Insurtech MGA Ledgebrook raises $17m in Series B funds to expand operations
US-based insurtech managing general agent (MGA) Ledgebrook has secured $17m in a Series B financing round.
The round was led by Duquesne Family Office and included the Stephens Group, alongside continued support from long-term partners Brand Foundry Ventures and American Family Ventures.
Set up in 2022, Ledgebrook plans to use the capital to speed up the expansion of its existing business and explore new opportunities.
This capital infusion also coincides with the appointment of a new chief financial officer, Anthony Segal-Knowles.
“This investment not only supports Gage and the Ledgebrook team but also reinforces our commitment to fostering innovation in the insurance industry. We are excited to partner with Gage and the Ledgebrook team as they transform the way brokers place E&S policies.”
Data Privacy/Cyber Security
Avis Discloses Massive Customer Data Breach - Rental Operations - Auto Rental News
Avis Rent-A-Car has sent notices to state Attorney General’s offices of a customer data breach affecting the private and personal information of nearly 300,000 customers nationwide.
Avis discovered that “an unauthorized third party gained access to one of our business applications,” according to a notice filed with the Office of California Attorney General Rob Bonta, and similar notices filed to Attorney General offices in Texas, Maine, and Iowa.
The party accessed the information of 299,006 customers between Aug. 3 and 5, according to the Iowa filing. Among the personal customer information that hackers could have obtained on each customer: Name, mailing address, email address, phone number, date of birth, credit card number with expiration date, and driver’s license number, according to the Iowa AG filing.
Claims
UpdatePromise Unveils New Collaboration with Mitchell to Revolutionize Vehicle Repair Communication and Satisfaction
UpdatePromise, a pioneer in automotive and customer experience solutions, is excited to announce its latest collaboration with Mitchell, an Enlyte company and a leading technology and information provider for the Property & Casualty (P&C) claims and Collision Repair industries. This strategic partnership introduces Mitchell ServiceLink powered by UpdatePromise, an innovative solution designed to streamline vehicle repair communication and enhance customer satisfaction.
The integration allows collision repair facilities to utilize Mitchell's platform to send automated vehicle repair status updates via email or text, directly engaging policyholders with timely and preferred communication methods. Additionally, the solution provides a comprehensive post-repair satisfaction survey tool that enables repair facilities to gather valuable customer feedback instantly and respond proactively to any negative experiences.
How claims teams can stay ready for hurricanes
A natural catastrophe like a hurricane can completely upend a company's operations and finances.
The 2024 Hurricane Season officially kicked off June 1 and has already caused approximately $8.915 billion in damages, with Hurricanes Beryl and Debby being the primary contributors.
And it's not over yet: Colorado State University hurricane researchers are continuing to call for an extremely busy season, with a total of 23 named storms expected, 12 of them predicted to reach hurricane strength, and six of the 12 forecasted to reach major hurricane strength (Category 3, 4 or 5) with sustained winds of 111 mph or greater.
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