Commentary/Opinion
The power of big data: a game-changer for insurance
The following article was written in association with Victor Insurance.
Historically, insurers have amassed vast amounts of data, yet they have been slower to capitalize on this resource by developing new business models or services that leverage data and analytics. As more consumers in the insurance sector shift online to compare products, prices, and make purchases, the volume of data available has surged dramatically.
More importantly, advanced analytics technologies now offer agents the ability to utilize this data in ways they hadn’t previously imagined. However, many agents struggle with internal barriers to becoming truly data-driven organizations, while others delay upgrading their analytics capabilities, waiting for clear business opportunities to arise.
In conversation with Insurance Business, Michael Ferber, head of Victor Insurance’s small business division and Leslie Downs, director of strategic partnerships at Victor, emphasized the importance of data in today’s insurance environment.
Ferber, who transitioned to Victor following the acquisition of ICAT, pointed out that while agents are often inundated with day-to-day tasks, they may lack the time or resources to fully analyze the data at their disposal. This oversight can lead to misaligned strategies, where agents may focus on demographics that do not align with their actual client base or spend too much time on low-return segments.
Downs noted: “Agents might be spending a lot of time marketing to a certain demographic or customer segment, but when they start to dig into it, maybe only 30% of those customers are getting to the renewal cycle. This misalignment in focus can lead to wasted efforts and missed opportunities for growth.”
Research
CEO pay gap widens at most large US insurers in 2023
The gap between CEO and median employee compensation at most of the largest US insurers widened in 2023.
CEO-to-employee pay ratios at 14 of the 20 largest US-listed insurers by market capitalization increased on a year-over-year basis, according to an S&P Global Market Intelligence analysis. The median CEO pay ratio for the 20 insurers was up 6.6% year over year at 226 times the median employee compensation of $78,388.
Chubb Ltd. posted the largest CEO-to-employee pay ratio last year. CEO Evan Greenberg was paid 452 times the median employee compensation of $61,188, thanks in part to a 10% increase in his pay year over year. Chubb's position represents a shift in executive compensation that began in 2021, when several P&C and multiline insurers entered the previously managed care-dominated top six.
The CEO pay ratio at Chubb jumped significantly from 346 times the median employee pay in 2022 as the latter fell from $72,640, according to an analysis. The number of employees also grew during this period, rising from 34,000 in 2022 to 40,000 in 2023.
Chubb did not respond to a request for comment regarding the widening gap between the compensation received by Greenberg and a median employee.
The largest jump in executive compensation was seen at Markel Group Inc. CEO Thomas Gayner received 147 times as much as the median e
Buffett’s Insurance Leader Ajit Jain Sells Large Part of Berkshire Stake
Ajit Jain, the longtime top insurance executive at Warren Buffett’s Berkshire Hathaway BRKa.N, sold more than half of his Class A shares in the conglomerate this week.
According to a Wednesday night regulatory filing, the 73-year-old Jain sold 200 Berkshire Class A shares on Sept. 9 for about $139.1 million, at an average price of $695,418 per share. READ MORE
The popularity of e-bikes and e-scooters is soaring, but are they safe? - Harvard Health
Ever ridden an e-scooter or e-bike? The convenience, affordability, and flat-out fun of these "micromobility" modes of transportation are undeniable. But did it also seem a bit dangerous?
In fact, the rate of accidents involving e-bikes and e-scooters is climbing. Maybe that shouldn't be surprising given their dramatic jump in popularity. And then there's the way riders often use them: at high speed, near cars and pedestrians, and on roads and sidewalks that weren't designed for them.
Disruptive innovations, such as e-bikes and e-scooters, inevitably come with downsides. So, how can we minimize risks for accidents?
FREE PARTNERS - REVOLUTIONISING INSURANCE: IT'S TIME TO CHANGE PERCEPTIONS
The insurance industry is teetering on the brink of a major recruitment crisis. With an ageing workforce nearing retirement, the clock is ticking, and the talent pipeline is running dry. But here's the real kicker: it's not because young professionals are rejecting the industry - it's because they fail to see how it will meet their career aspirations.
The Perception Problem: It's Not What You Think
In our latest research, The Re:generation Report, Free Partners LLP surveyed over 1,000 young people across the UK and US. The results?
Eye-opening.
The insurance industry is sitting on a goldmine of career opportunities - meaningful work, career growth, and work / social life harmony - but it's wrapped in a package that's perceived as staid, untrustworthy, and uninspiring. This isn't a talent crisis; it's a perception crisis. And it's one we can fix.
Why This Matters: The Future of Insurance Depends on You
For CMOs, CEOs, insurance leaders, and HR professionals, this is your moment. The future of the insurance industry is in your hands. You have the power to flip the script and transform insurance into an industry that young professionals are eager to join. There's no question that we're in a crisis, but true leadership will determine how much of a crisis we're in. Those that can seize this opportunity will have a pool of the best and brightest, ready to propel the next generation of our industry.
The question is: are you ready to lead that change?
The Call to Action
"As the insurance industry faces the dual challenges of an ageing workforce and a shrinking talent pool, it's clear that the problem is more than just a recruitment issue – it's a perception issue. The time for action is now. We need to shift perceptions and showcase how much fulfilment the industry has to offer," comments Lorraine Jeckells, Managing Partner, Free Partners LLP.
"Our survey highlights that young professionals don't see insurance for what it truly is: a sector that offers impactful careers with growth potential and work-life harmony. Now, more than ever, marketing, HR, and industry leaders need to unite and drive a collective effort to reshape the narrative. Together, we can change perceptions and secure the future of our industry."
News
Surplus lines market hits new premium record amid industry challenges
The U.S. surplus lines insurance market reached a significant milestone in 2023, surpassing $100 billion in premiums for the first time and recording over $115 billion in direct premiums, according to a new report by AM Best in collaboration with the Wholesale & Specialty Insurance Association (WSIA). This represents a robust 16.8% growth over the previous year, marking six consecutive years of double-digit expansion.
Key growth factors
The sharp rise in surplus lines premiums is largely fueled by increasing demand for non-admitted insurance solutions, particularly for properties exposed to catastrophes and complex liability risks. As climate-related events, such as wildfires and severe storms, grow more frequent and severe, traditional insurance carriers are increasingly cautious, creating opportunities for surplus lines providers. Lloyd’s of London, a key player in the market, reported a substantial 28.8% premium increase in 2023.
Additional drivers of growth include higher pricing for certain types of coverage and a surge in submissions from wholesalers and managing general agents (MGAs). Non-admitted carriers have been particularly adept at crafting policies for emerging risks, including those related to climate change and cybersecurity, underscoring the sector’s evolving role.
Resilience amid challenges
Despite economic headwinds like inflation, regulatory pressures, and the rise of secondary perils such as tornadoes and storms, the surplus lines market has shown remarkable resilience. Insurers have adapted by refining strategies, developing innovative solutions, and emphasizing long-term risk management.
InsurTech/M&A/Finance💰/Collaboration
Top 10: Insurtech Platforms
We highlight the Top 10 insurtech platforms that are revolutionising the insurance industry through innovative technology and customer-centric solutions
Amid rapid digital transformation across all industries, insurtech platforms are reshaping the way consumers and businesses engage with insurance products and services. With a focus on innovation, these advanced platforms harness advanced technologies to streamline processes, enhance customer experiences and improve risk assessment.
As the industry embraces digital transformation, we highlight the top insurtech leaders which are emerging as key players.
Sedgwick announces strategic partnership with Altas Partners | Carlyle
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.”
Hagerty Renews Multi-Year Partnership with Agero to Continue Delivering Specialized Roadside Assistance to Driving Enthusiasts
Agero, the leading white-label provider of digital driver assistance services and software for the majority of automotive and auto insurance companies, today announced it has renewed its multi-year partnership with Hagerty (NYSE: HGTY), an automotive enthusiast brand and a leading specialty vehicle insurance provider. With this agreement, Agero will continue providing unparalleled roadside assistance services to Hagerty clients and Hagerty Drivers Club members across the U.S.
“For our more than 770,500 U.S. members, cars are more than just a mode of transportation; they represent a lifestyle that Agero firmly embraces as part of its mission,” said Eric Kurt, Director of Hagerty Roadside. “The combination of Agero’s advanced technology solutions and trusted roadside assistance services enable Hagerty to deliver on our promise to enhance the driver experience, promote safety, and continually exceed our members’ expectations. Driving is central to everything we do, and Agero is a true partner in ensuring that we continually support drivers when they need us most.”
Financial Results
Progressive Insurance reports latest monthly results
Progressive Insurance has published its financial results for the month of August 2024.
According to the insurer, its net income in August was $935.3 million. The company’s net premiums written and net premiums earned stood at $6.51 billion and $5.97 billion, respectively.
The latest combined ratio, meanwhile, was 85.5%, an improvement from last year’s 97.2%.
Additionally, Progressive’s policies in force grew across all segments: personal lines, commercial lines, and property business. Total policies in force amounted to 33.4 million.
In August, the firm introduced “We exist to help people move forward and live fully” as its new purpose statement.
The brand purpose seeks to “amplify” the insurer’s commitments while continuing to champion existing initiatives spanning progress on the road, in the home, and in business.
Branch Insurance Exchange reports Q2 results
Branch Insurance Exchange, the reciprocal managed by insurance startup Branch, has released its Q2 2024 results, ending the first six months with $40 million in written premiums, a 60% decrease compared to the same period last year.
The reciprocal reported a net underwriting loss of $44 million for the first six months of the year, a slight decrease compared to the $46 million loss that was reported for the first six months of 2023. Despite ceding 82% of earned premiums, the reciprocal was on the hook for nearly 50% of the incurred losses. Loss ratio, excluding loss adjustment expenses, stood at 335% for the first six months of the year, and combined ratio reached 579%.
The reciprocal has been writing less business in nearly every state and Texas had the biggest drop – going from $50.6 million in written premiums to $16 million. With these latest results, Texas accounts for 40% of written premiums, a decrease of 10 percentage points compared to the first six months of 2023.
For 2023, the reciprocal reported a net underwriting loss of $85.5 million.
Claims
Can We Improve the Traditional Claim Review? | Insurance Innovation Reporter
Claims organizations can reap the benefits of AI by choosing tools uniquely designed to remove friction and simplify processes.
Claim reviews are an essential task in the world of property and casualty insurance. However, in an era marked by rapidly evolving risks and advancing technologies, the claim review process has not evolved much over time. Most claim reviews today bear a striking resemblance to those conducted in the 1990s or even the 1980s.
Before a single review takes place, the claims professional has much to do, including a line-by-line audit of each claim in the client’s caseload. This labor-intensive process creates capacity constraints on adjusters who already have an assigned caseload with claims to investigate, evaluate and resolve. The preparation for these claim reviews can take many hours and even days for the claims professional to complete. It is typical for an experienced adjuster to prepare for and attend multiple claim reviews each month. It is common for brokers, MGAs, policyholders, self-insureds and carriers to request monthly, quarterly, annual and even some ad hoc claim reviews.
Robin L. Spaulding, CPCU, AIC is a seasoned insurance executive with a deep domain background in property and casualty insurance. As Chief Insurance Officer for CLARA Analytics, she advises clients on operational best practices to fully leverage AI opportunities as they transform their claims operations.
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation
Insurtech Consulting and our ‘Connected’ newsletter are proud media partners of ITC Vegas 2024
Event Date: Tuesday, October 15 – Thursday, October 17, 2024
Event Location: Mandalay Bay Convention Center
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Las Vegas, NV 89119
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
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