Commentary/Opinion
"Are we going into a hard casualty market in reinsurance?"
In a ‘Reinsurance Renewal Season’ briefing, senior leaders from Aon came together to discuss global market dynamics amid challenging market conditions. Mike Van Slooten, head of business intelligence, reinsurance at Aon, highlighted how insured losses from secondary perils are continuing at record levels, with 2024 on course to be $100 billion loss year, irrespective of what happens in the remainder of the Atlantic hurricane season.
On the casualty side, he said, litigation funding, adverse legal environments and emerging risks are creating significant uncertainty around ultimate loss costs. The question on the mind of the market and addressed by Amanda Lyons (pictured), global product leader, reinsurance, is “are we going into a hard casualty market in reinsurance?”
“We definitely don’t think the reinsurance market is hard per se,” she said. “There’s definitely not a shortage of capacity in the casualty reinsurance space. Yes, there are challenges from multiple angles. Think continued development from soft market years, increase in nuclear verdicts overlaid with continued legal system abuse.
“But that said, there are a lot of positive trends that we’re seeing on the primary side, and reinsurance capacity has been waiting on the sidelines for this change to start to happen. So on the primary side, clients have realized the focus on claims is incredibly important including, specifically, early intervention and renewed claim settlement strategies. Focus on loss trends and achieving rate in excess of that is absolutely paramount.”
Research
AAA: Driving patterns rebound as nearly half of trips are in older vehicles | Repairer Driven News
The AAA Foundation for Traffic Safety’s recently released 2023 American Driving Survey shows that overall driving patterns have rebounded from the lowest points reached during the COVID-19 pandemic.
The percentage of Americans who drove at least occasionally remained steady at 95.3% compared to 2022, according to the survey results. Driving trips averaged slightly less than 2.5 per day with a duration of just over an hour and nearly 30 miles. The figures continue the trends observed in the past two years.
Most driving trips taken last year were to run errands (31.1%) or to commute to and from work (22.5%). Most trips began between 11 a.m. to 2:59 p.m. (26.1%) or 3-6:59 p.m. (27.6%).
People living in metropolitan areas and those with a higher level of education tend to drive newer vehicles whereas teenagers and those with a lower level of education are more likely to drive older vehicles, AAA Foundation said.
News
Hurricane Francine losses manageable for P&C insurers, minimal for reinsurance: RBC - Artemis.bm
According to equity analysts at RBC Capital Markets, hurricane Francine is expected to be a manageable loss for the property and casualty insurance industry, while little in the way of loss impact is expected for the reinsurance market.
While Francine was the third hurricane landfall of the 2024 season for the United States, the financial costs for insurers and reinsurers remain minimal so far.
The storm made landfall in Louisiana on Wednesday as a Category 2 hurricane with 100 mph sustained winds.
Widespread flooding impacts from storm surge and inches of rainfall appear to have been the most notable impacts, while wind-related damage does not appear overly extensive from media reports.
Hurricane Francine’s landfall was in a region with relatively lower insured exposures, which will help to limit losses from the storm, but the water-related impacts spread widely, including to New Orleans.
“While it is too early for loss assessments, we expect Hurricane Francine to be a highly manageable loss event for the P&C insurance industry,” RBC Capital Markets analysts said.
Adding, “We don’t expect Francine to be a major insured loss event for the P&C insurance industry and our initial expectation would be insured losses somewhere in the very low billions.”
It will add to the 2024 hurricane season toll for some insurers, given hurricane Beryl’s landfall in Texas has been estimated as a roughly $2.5 billion to $4.5 billion market loss and hurricane Debby’s landfall in Florida a $1 billion to $2 billion industry loss event, the analysts noted.
Sentry Insurance to Acquire The General® from American Family Insurance, Expanding Its Reach in Non-Standard Auto
Sentry Insurance announced it will acquire The General® from American Family Insurance.
Sentry will purchase The General from American Family Insurance for approximately $1.1 billion in cash consideration. Including the value of assumed liabilities and required capital, the total transaction value will be $1.7 billion. The transaction is expected to close by year-end 2024, pending regulatory approvals.
This acquisition by Sentry Insurance brings together two of the strongest brands in the non-standard auto industry.
Sentry, a mutual insurance company known for its expertise in business insurance, also provides comprehensive coverage for non-standard auto (NSA), motorcycle, and off-road vehicles through its Dairyland® brand. Non-standard auto insurance is for drivers who face challenges obtaining standard auto coverage.
"This acquisition is the largest in our 120-year history. It brings together two of the strongest brands in the non-standard auto industry," said Pete McPartland, Chairman and CEO of Sentry. "Together, Dairyland and The General will be better able to meet the specialized needs of even more drivers across the country. It's an exciting step forward for both companies, and I'm proud of the work our team has done to make this possible."
"As part of our enterprise, The General has grown its revenue more than fivefold, driven consistently profitable business, entered into new states while remaining dedicated and passionate about the customers and the market it serves," said Bill Westrate, Chair and CEO of American Family Insurance. "We've found a strategic and cultural fit in Sentry, where the growth and momentum that The General has will continue. We're confident that Sentry's expertise, strong reputation in this market and employment culture will not only continue to serve The General's customers well but will also ease the transition for The General's employees." ..
InsurTech/M&A/Finance💰/Collaboration
Sedgwick announces strategic partnership with Altas Partners
Sedgwick, a leading global provider of claims management, loss adjusting and technology-enabled business solutions, announced a strategic investment from Altas Partners (“Altas”), a North American private equity firm. Current investors, including funds managed by global investment firm Carlyle (NASDAQ: CG) and by Stone Point Capital LLC, will remain as investors and continue to make significant new investments in the business, with Carlyle maintaining its control position in partnership with the investor group and the Sedgwick management team.
This transaction implies a total enterprise value of approximately $13.2 billion, an increase from $6.7 billion when Carlyle made its initial investment in Sedgwick in 2018. Altas has committed to invest $1 billion of equity as part of the transaction and will be an active participant in the company’s value creation journey going forward.
“This new partnership with Altas, and our current stakeholders, brings together a strategic vision that builds our global footprint, expands comprehensive service capabilities and enhances our business for decades to come,” said Mike Arbour, CEO of Sedgwick. “Altas has a history of actively supporting companies in its portfolio, and they are very knowledgeable in the challenges our clients face in today’s competitive business environment. We look forward to leveraging their expertise as informed and engaged strategic allies as we continue to lead the industry in innovation and enable clients to thrive by helping them navigate the unexpected.”
“We are incredibly proud of the growth Sedgwick has achieved under our ownership,” said Will McMullan, Partner and co-Head of Global Financial Services at Carlyle. “As we welcome Altas to the partnership, we are excited about the future and look forward to supporting Sedgwick’s continued growth and innovation. Together, with our new and existing partners, we are committed to further enhancing Sedgwick’s industry-leading capabilities and global footprint.”
Climate/Change/Sustainability/ESG
Cytora and Mitiga Solutions Partner to improve insurers’ resilience to climate risk
Cytora (London/New York), provider of a digital risk processing platform, has partnered with Mitiga Solutions (Barcelona), a provider of science-based climate risk intelligence. The partnership gives insurers access to EarthScan’s asset-level climate risk intelligence data through Cytora’s platform. In a joint statement, the vendors emphasize the value of their collaboration at a time when the threat of climate change is a key concern for businesses and new regulations mandate insurance players and their clients to disclose their exposure to climate risk.
EarthScan is Mitiga’s on-demand climate risk analysis platform. The application uses data modeling, machine learning and state-of-the-art climate science to help companies analyze, report and act on their exposure to risks such as flooding, drought and extreme temperatures, across different climate scenarios and decades-long timeframes, the vendors say.
By using EarthScan’s integration with Cytora, the joint statement says underwriters will immediately gain insight into the climate risk exposure of both individual assets and large portfolios consisting of hundreds of thousands of assets. Accordingly, the vendors say, underwriters will be able to account for new climate trends and the increasing frequency of extreme weather events to analyze the sustainability of their portfolio
Financial Results
The P&C business line that's outperforming all others in the US
New report gives the lowdown on sector's 'winning streak'
The workers’ compensation insurance sector remains the top performer in the US property & casualty industry, thanks to steady reductions in loss frequency and favorable reserve development trends, according to a new report by AM Best.
Titled “Workers’ Compensation Segment’s Winning Streak Continues,” the report highlights that, since 2015, the workers’ compensation segment has consistently been more profitable than any other commercial or personal insurance line. This ongoing success supports AM Best’s current stable outlook for the segment.
In 2023, the workers’ compensation line achieved a combined ratio of 88.7, outperforming the 10-year median of 91.5. This figure demonstrates the line’s resilience and efficiency compared to other P&C business lines.
Christopher Graham, an AM Best senior industry research analyst, noted: “Effective workplace safety initiatives of the past decade or more have helped control loss frequency, and, along with declines in fraud and in defense costs, have contributed to the line’s excellent underwriting margins.
“Equally as impressive, the workers’ compensation line’s net operating ratio was 14.5 points better than that of the industry.”
AI in Insurance
Davies taps Paul O’Brien as first group chief AI officer | Insurance Business America
Specialist professional services firm Davies has appointed Paul O’Brien as its inaugural group chief AI officer.
Previously, O’Brien served as chief technology officer for Davies’ Global Solutions division, where he oversaw the development and launch of technology products for the insurance and financial services sectors, as well as other regulated markets.
In that role, he was responsible for driving the global technology strategy across several of Davies’ business units, including insurance solutions, consulting, technology solutions, and forensic accounting.
For this new function, O’Brien will oversee the deployment of AI across Davies, focusing on the ethical use of generative AI and expanding its applications in products and services aimed at enhancing value for the company’s global client base.
Jen Morrissey, Davies’ chief operations officer, highlighted the importance of this move in strengthening the firm’s AI capabilities.
“In a time where GenAI is rapidly reshaping business landscapes, Davies is proactively positioning itself at the forefront by appointing Paul to this critical role. With a profound understanding of AI and its dynamic applications, Paul is uniquely qualified to optimize our internal processes and harness the power of AI to provide our clients with superior services,” Morrissey said.
Telematics, Driving & Insurance
How Telematics Can Keep Fleets Safe, Insurers Happy
Unified fleet management platforms with AI dash cams provide critical insights to improve safety, satisfy insurers, and optimize operations.
Juggling multiple software systems to manage a fleet is like trying to assemble a puzzle with missing pieces. You're constantly switching between platforms, searching for data, and hoping everything fits together. It's a time-consuming process that often leaves you with an incomplete picture of your fleet's health.
But the real problem with these data silos? They put your fleet at risk. Without a unified view of everything that’s happening, how can you identify trends or make data-driven decisions? Imagine guessing if a driver is speeding or if a truck is about to have a breakdown. Not exactly a recipe for safety or peace of mind.
Here’s a concern I recently heard from other fleet managers: Insurance companies are getting tougher. Without strong driver safety tech stacks that include telematics and AI-powered dash cameras, there’s talk about nonrenewal of policies or increased rates. Distracted driving accidents are on the rise, and insurers are starting to require proactive fleet safety programs.
A unified fleet management platform can serve as a command center for your entire fleet operation. Everything—GPS location, engine data, driver behavior captured by AI dash cams, maintenance schedules—is all in one place, accessible with a single click. No more switching between systems, no more piecing together reports. Just a clear picture of your fleet’s health, right at your fingertips.
Erin Gilchrist is vice president of fleet evangelism at IntelliShift
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation
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Event Date: Tuesday, October 15 – Thursday, October 17, 2024
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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
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Announcements
American Red Cross welcomes State Farm® as newest Mission Leader
The American Red Cross recognizes State Farm® as the newest Mission Leader for its substantial disaster preparedness and relief support. As a Mission Leader, State Farm joins an elite group of the most generous Red Cross donors — those giving more than $3 million annually to help alleviate suffering in the face of emergencies.
During National Preparedness Month and throughout the year, State Farm is supporting Red Cross efforts to help individuals and families recover from the unexpected. The Red Cross responds to more than 65,000 disasters across the country every year — mobilizing a team every eight minutes — providing relief, comfort and hope to people during what can be the worst days of their lives.
Over the last few days, disaster activity has escalated with intensifying wildfires in the West and Hurricane Francine impacting the Gulf Coast. As large disasters like wildfires and hurricanes increase in frequency and intensity, support from donors like State Farm continue to fuel Red Cross readiness and build response capacity in times of crisis.
"Mission Leaders like State Farm are vital to our work, helping drive innovation across our organization and providing capacity to respond immediately in times of crisis," said Cliff Holtz, president and CEO of the American Red Cross. "I am thrilled to welcome State Farm as our newest Mission Leader and am grateful for their generosity, which safeguards our ability to care for those in need when the unthinkable happens."