Commentary/Opinion
Homeowners Dropped by Insurers And Facing Massive Rate Hikes Speak Out; Consumer Watchdog Says Lara Lied About Expanding Wildfire Coverage In Exchange For Higher Rates
Homeowners who were dropped by their insurance company and confronted with massive rate hikes spoke out at an Assembly Insurance Committee oversight hearing of Insurance Commissioner Lara's response to the homeowner insurance crisis.
Consumer Watchdog condemned Insurance Commissioner Lara's proposed regulation, the subject of a separate, simultaneous Department of Insurance Zoom hearing for the public Tuesday, which Lara would apparently not attend as it was at the same time as his Assembly testimony in Los Angeles.
The regulation will allow insurance companies to boost premiums based on secret algorithms related to climate models, but does not expand coverage for policyholders who have been non-renewed. Consumer Watchdog said the Commissioner lied when he promised insurance companies would have to cover 85% of homeowners in wildfire areas in exchange for that right to raise rates – no such requirement exists in the pending regulation.
"Lara promised Californians that he will require insurance companies to cover homeowners in 85% of the wildfire areas. Lara lied. His regulation will allow companies to increase coverage for only 5% of people in those areas – or not at all, if an insurance company says that it is already in compliance, or claims it is not yet ready to comply," said Harvey Rosenfield, author of insurance reform Prop 103 and founder of Consumer Watchdog. "This is an outrageous bait and switch. Every policyholder in California will be paying hundreds and potentially thousands of dollars more for their home insurance under his plan."
Two Warnings About AI | Insurance Thought Leadership
Customers are making clear that they hold AI to higher standards than they do humans — and hate when AI makes decisions for or about them.
If you've watched "The Good Place" — and you should, if you haven't already — you saw an enactment of a deep philosophical question known as "the trolley problem." The notion is that you're on a trolley heading down a hill, and the brakes fail. If you keep going straight, you're going to kill five people. You can throw a switch and head off onto a siding, but then you're going to kill one person.
Do you save the five people and accept the responsibility of killing someone? Does your thinking change if that one person is a friend of yours?
The trolley problem may seem like an odd one to include in a comedy, but the handling is extremely funny, and, of course, no character stays dead.
And the problem neatly exemplifies one of the issues that companies will face as they roll out AI that touches customers directly. If, like Chidi, the moral philosopher in "The Good Place," you make a spur-of-the-moment decision, you are given some grace because you're only human and can only process so fast. But AI doesn't get that grace. Someone sat down ahead of time and programmed or at least developed the AI, so whatever decision is made is treated as well-thought-out — and has to be defended.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
News
U.S. P&C Insurers Post Significant Underwriting Gain in H1 2024 - Risk & Insurance : Risk & Insurance
The U.S. Property and Casualty (P/C) insurance industry witnessed a turnaround in the first half of 2024, recording a net underwriting gain of $3.8 billion, a stark contrast to the $24 billion loss in the same period last year, according to a new report from AM Best.
The industry’s recovery was primarily driven by an 11.3% growth in net earned premiums, which offset a 2.5% increase in incurred losses and loss adjustment expenses (LAE) and a 24.9% rise in other underwriting expenses, according to the report, titled “First Look: Six-Month 2024 US Property/Casualty Financial Results.” The personal lines segment was chiefly responsible for this improvement in underwriting results.
The industry’s combined ratio also improved, standing at 97.7. Catastrophe losses, which had significantly impacted the previous year’s results due to severe convective storm losses, accounted for 7.4 points on the six-month 2024 combined ratio, down from an estimated 9.7 points in the prior year, Best reported.
Excluding $8 billion of favorable reserve development during the first six months of 2024, the industry’s accident year combined ratio was 99.4. This underwriting gain, along with a 26.6% increase in earned net investment income, propelled pre-tax operating income up by a 374.4%, reaching $47.3 billion, the report noted.
Progressive temporarily restricts some home insurance sales
Progressive Insurance will temporarily stop certain agents from writing new policies, leaving homeowners in Texas and several other states with fewer coverage options.
In a statement sent to PropertyCasualty360.com, a company spokesperson said:
"We are temporarily restricting new homeowners (HO3) business for certain agents in several states including Texas. We remain committed to the property business in these states and expect that these actions will better position us to build a stronger, more stable, and more competitive Progressive Home business for consumers and independent agents in the long run. These actions will not impact any other lines of business in the affected states; impacted agents can continue to write Personal Auto, Recreational Lines, and Commercial Lines products. Additionally, property-appointed agents can continue to offer Renters, Condo, Flood, and Umbrella."
Progressive CEO Tricia Griffith said in a letter to company shareholders on Sep. 13 that reducing the impact from weather-related volatility was strategically important while shifting Progressive's geographic mix would remain a top priority.
"We continue to focus on growing in states where weather risk is relatively lower, while maintaining or reducing our market share in higher volatile states that are more susceptible to catastrophic weather events and have higher exposure to hail," she added. "In 2021, about 45% of our policies were in less volatile states and we expect to end 2024 with about 60%."
Cybercriminals hit more than half of U.S. companies in 2024
More than half of U.S. companies filed a cyber claim in 2024, according to a recent report by Delinea.
The frequency of cyber insurance claims remains high, the data showed, with 62% filing a claim during the last 12 months and more than 27% filing multiple claims.
"When I think about insurance carriers' and underwriters' expectations, identity security has become table stakes," CJ Dietzman, senior vice president of Alliant Insurance Service, said in the report.
"The way cyber insurance companies measure risk is based on incidents, law, and claims," he added. "As we reverse engineer cyberattacks, often-times there were soft spots in identity management. You must have a good narrative of integrated controls and a holistic story on how you're mitigating unauthorized access risk and protecting identities."
Key insights from the study include:
77% of companies with insurance have previously filed a claim.
41% of insurance companies require proof of least privilege access controls or authorization before granting a policy.
95% of U.S. companies reported the necessity of investing in identity security solutions before obtaining cyber insurance. These findings underscore the growing demand for stringent identity security protocols to secure comprehensive coverage.
79% of companies said that insurance costs increased since their latest application or renewal.
Half of U.S. companies now leverage AI-supported threat detection and monitoring solutions. These advanced technologies are proving instrumental in reducing cyber insurance premiums, offering a strategic advantage to policyholders in an environment where overall insurance costs are on the rise.
Research
Rampant Home Insurance Increases Strain Customer Satisfaction—and Drive Policy Shopping, J.D. Power Finds
Chubb Ranks Highest in Homeowners Insurance Segment, Erie Insurance Ranks Highest among Renters Insurance Providers
Homeowners and renters insurance costs have now exceeded both the rate of inflation1 and the average rate increases experienced by auto insurance customers during the past year. According to the J.D. Power 2024 U.S. Home Insurance Study,℠ released today, that nationwide surge in rates has driven a sharp increase in the percentage of customers shopping for new policies because their rates are too high
Insurance insiders are divided on whether home or motor insurance premiums will rise the most
A GlobalData poll reveals that insurance industry insiders believe both home and motor insurance will experience the sharpest increases in premiums over the next year. While insurers are battling emerging risks and rising repair costs, the news will naturally leave a sour taste for consumers—who will have to pay more at renewal without necessarily understanding the industry’s challenges.
A GlobalData poll ran on Verdict Media sites in Q3 2024 found that home and motor insurance are viewed as the lines that will see premiums rise the most over the next 12 months, each attracting 22.7% of responses from insurance industry insiders. While the cost-of-living crisis has pushed prices up—with insurance being no exception—rising costs linked to home and motor insurance lines have split opinions on which premiums will fare worst.
Stubbornly high inflation remains a significant challenge to the industry; while it has the potential to affect all lines, home and motor insurance are among the most widespread personal lines. The costs associated with rebuilding a property—as well as the repair and replacement costs linked to vehicles—have mounted, yet insurers are also trying to grapple with emerging risks on both lines.
69% of underwriters & 67% of actuaries concerned about being replaced by AI: hyperexponential - Reinsurance News
69% of underwriters and 67% of actuaries are concerned about being replaced by artificial intelligence (AI) in the next five years, according to research from hyperexponential, the pricing platform for global re/insurers.
Moreover, research has also showcased a major mismatch between the widespread buzz and investment in AI technology, and the pressing gaps in technical skills, talent and infrastructure within the insurance industry.
In their State of Pricing 2024 report, hyperexponential found that 91% of insurance organisations are already investing in AI technology, or plan to do so within the next five years. But, there is a growing concern looming behind the scenes about the technology and the readiness for the change it will bring to industry roles.
Overall, a staggering 80% of actuaries and 74% of underwriters are worried about not having the right tech skills for the future because of the widespread adoption of AI.
While 69% of underwriters and 67% of actuaries are concerned about being replaced completely by AI in the next five years.
InsurTech/M&A/Finance💰/Collaboration
Roots Automation Raises $22.2 Million to Unlock the Value Held within Unstructured Data across Insurance with AI
Roots Automation, creator of the AI-powered Digital Coworker and InsurGPT™, the world's first generative AI model for insurance, today announced the closing of a $22.2 million Series B funding round. Harbert Growth Partners led the round, with follow-on investments from MissionOG, Liberty Mutual Strategic Ventures and Vestigo Ventures.
Unstructured data trapped in everyday correspondence - including submissions, legal demands, and medical records - constitutes around 80% of all data across insurance. The inability to effectively harness this data for decision-making costs insurance companies $100 billion annually due to underpricing premiums, insurance fraud and overpaying claims.
To address this, Roots Automation created the most advanced AI-powered Digital Coworker. It leverages Roots' proprietary generative AI, InsurGPT, and the Roots Autonomous Workforce Platform to transform unstructured information into clear, actionable insights. This allows insurance leaders to make faster decisions with greater confidence.
Roots Automation has delivered transformative results for the company's 35 customers in the US insurance industry, including:
99% accuracy on data extraction for an East Coast-based regional P&C insurer
97% reduction in handling times for a US-based commercial P&C and workers' compensation carrier
90% error reduction in premium calculations for a US-based commercial auto insurer
* 85% increase in claims processing capacity for a US-based third-party claims administrator
"The benefit of Roots' team's experience in and focus on the insurance industry is that we are already speaking the same language. This means we can come to an understanding on the business requirements and objectives quickly in the solution development lifecycle," said Ned Rand, CEO of ProAssurance Group. "After seeing the success of a Digital Coworker at Eastern Alliance, our workers' compensation business, executives from our medical malpractice and life sciences/medical technology are now looking to Roots for potential implementations."
Platform Science to acquire Trimble’s global transportation telematics business units - FreightWaves
Deal will give Trimble 32.5% stake in newly expanded business
Trimble (NASDAQ: TRMB) and Platform Science have announced an agreement for Platform Science to acquire Trimble’s global transportation telematics business units.
As part of the agreement announced Sunday, Trimble will become a shareholder in Platform Science’s expanded business and hold a 32.5% stake. The transaction is expected to close in the first half of 2025.
In a press release, the companies said the deal aims to improve driver experience, fleet safety, efficiency and compliance. Customers will gain access to a wider range of applications and offerings through a combination of the two companies’ in-cab commercial vehicle ecosystems.
“We believe combining our global transportation telematics portfolio with Platform Science’s will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems,” said Rob Painter, president and CEO of Trimble, in a statement.
Akur8 Secures $120 Million in Series C Round to Accelerate Growth of its Next Generation Actuarial Platform
Akur8, the machine learning-powered insurance pricing and reserving platform, announced today that it has secured $120 million in series C funding, bringing its total raised investment to $180 million.
This latest funding round was led by One Peak, a leading growth equity firm investing in software scale-ups, with participation from Partners Group, one of the largest firms in the global private markets industry acting on behalf of its clients, and historical investor Guidewire Software, Inc. (NYSE:GWRE). The new funding will significantly bolster Akur8’s ability to expand its product portfolio and fuel its growth in key global markets.
Developed explicitly for insurers, Akur8 has been revolutionizing non-life insurance pricing with transparent AI since 2019. Its cloud-based, fully integrated platform empowers insurers to price at unprecedented speed, directly influencing financial outcomes and enhancing risk assessments. With the recent acquisition of the Arius reserving platform (read PR), Akur8 further expands its product portfolio and customer base, amplifying the value delivered to insurance carriers worldwide.