News
Wednesday updates: Hurricane Helene forms as more evacuation orders issued
[Editor's comments: Here we go again as Helene reminds us that hurricane season is far from over]
Hurricane Helene formed Wednesday morning as Tampa Bay officials issued more evacuation orders and urged residents to get ready as the window to prepare is shrinking.
A stretch from Pasco County north along the Big Bend to Mexico Beach in the Panhandle is under a hurricane warning.
A long stretch to the south, including Pinellas and Hillsborough counties, is under a tropical storm warning. The Tampa Bay region is also part of a long swath of coast under a storm surge warning, and a flood watch has been issued for Pinellas, Hillsborough, Pasco and Hernando counties.
Forecasters expect Hurricane Helene to become a Category 3 storm or higher, with sustained winds of at least 111 mph, as it approaches Florida on Thursday. Local governments in Pinellas, Hillsborough, Pasco and Hernando counties have issued mandatory evacuation orders for some residents.
Pressures mount on US mutual insurers
Financial analyst shines light on what's happening in the market
Pressures mount on US mutual insurers
Amid pressures from inflation, a hardened reinsurance market, and severe weather events, mutual insurers are grappling with many of the same challenges as the broader property & casualty insurance industry, according to AM Best financial analyst Lauren Magro (pictured). But how are they coping? Magro delved into the matter in a recent interview.
“The main one that they’re really facing pressure from is rising inflation,” Magro told AM Best TV. “That has driven loss costs upward since about 2022.”
Another key pressure comes from the hardened reinsurance market, where increased retentions are forcing many mutual insurers to absorb more losses. “A lot of mutual insurers are now taking these losses to their bottom lines,” Magro noted, adding that severe weather activity across various US regions has not spared mutual insurers.
Meanwhile, although many mutual insurers began raising rates in 2022 and continued throughout 2023, the delayed impact of the changes has made it hard to realize immediate benefits. “Given the nature of a 12-month homeowner’s insurance policy, it takes time for rate to earn through,” Magro explained.
There are signs of improvement, however. “In 2024, we are seeing some of that rate earn in – net earned premiums up substantially,” Magro said in the interview, pointing out that the mutual segment posted net income in the first half of 2024, indicating that rate increases are beginning to cover the elevated loss levels.
Private P&C grew at 9.2%, higher than commercial for first time in years: Insuramore
According to Insuramore analysis, the value of the global market for property and casualty (P&C) insurance rose by 8.6% in 2023, before adjusting for inflation with private P&C lines at 9.2% outgrowing commercial P&C lines with 8.0% for the first time in several years
Insuramore’s global rankings disclosed that the top ten P&C (non-life) insurer groups accounted for 26.2% of total P&C gross direct premiums written worldwide in 2023, a slight increase from 2022’s 25.9%.
In descending order, the top ten were State Farm, Allianz, Progressive, Berkshire Hathaway Insurance, and PICC, followed by Allstate, Liberty Mutual, AXA, Chubb and Zurich.
Together their combined GDPW was around $595.5 billion within a worldwide market for P&C lines worth around $2.275 trillion in 2023.
Insuramore further reveals that Allianz was the only group to rank in the global top five by both commercial and private P&C (non-life) GDPW among the top 300 groups by total P&C GDPW, while Convex Group advanced most rapidly with a compound annual growth rate of well over 100%.
Auto insurance rates become part of national political campaigns, new federal bill
The rise of auto insurance premiums across the nation has sparked commentary in the national campaign agenda addressing a mounting issue for consumers.
Last week, Congresswoman Yadira Caraveo (D-CO), currently in a heated race in her state, introduced HB9618 or the “Lowering CAR Insurance Act.”> “One of the main concerns I hear from working families is the cost of living — they are struggling to cover the most essential living expenses,” Caraveo says in the release.
Commentary/Opinion
A New Federal Bill Would Protect Car Owners’ Right To Repair — and It Could Help To Slow Rising Insurance Prices
The rapid development of vehicle technology has led to safer and more efficient cars, but it has also made vehicle repairs more complex. What might have been a simple fix two decades ago now likely involves electrical work, calibration and specialized labor. And when repair shops lack the vehicle information needed for a fix, they often have to pay for it or send you to a pricier shop, passing along these higher costs to drivers and insurers.
Legislation protecting the right to repair has the potential to reduce two of the hidden costs of car ownership: auto repairs and car insurance. But experts in the automotive world remain divided on the best way to protect consumers’ right to affordable, safe vehicle repairs. While many advocates in the insurance industry support a federal bill to guarantee consumers’ right to repair, collision repair specialists say that legislation might protect insurance companies more than it protects their customers.
What is the right to repair?
Thanks to increased technology in modern cars, auto repairs require more access to vehicle data, repair instructions and specialized tools than ever before. According to a study by CCC Intelligent Solutions, the average combustion engine passenger vehicle in 2024 has between 1,400 and 1,500 semiconductor chips powering everything from connectivity and infotainment to the vehicle’s powertrain and safety systems.
Research
U.S. Commercial Insurance Market Remains Largely Favorable to Buyers, but Uncertainty Lurks: Lockton Market Update
Commercial insurance market conditions favor buyers across most lines of coverage. Still, a sense of fragility in both the economy and the insurance marketplace looms over the industry, according to the latest edition of the Lockton Market Update.
"We're seeing generally favorable market conditions, some of the best we have seen in the last five years, and with insurers reporting strong profits, there's reason for continued optimism," said Mark Moitoso, Lockton's Risk Practices Leader. "However, a large, unexpected event could end this stable and predictable market, so it's critical to be mindful of the uncertainty ahead when evaluating your insurance program."
Despite overall favorable conditions, liability remains a significant exception. Loss costs continue to rise across virtually all liability lines. Even as rates climb, however, conditions are generally predictable for buyers.
Key takeaways from the report:
Insurers are closely watching the economy and geopolitical landscape.
Property conditions continue to improve, to the benefit of buyers.
Workers' compensation remains competitive, while reserve redundancies help offset pressure in third-party liability.
As social inflation continues to impact attachments, limits, and rates across third-party liability lines, insurers are carefully watching loss trends and reserve adequacy.
Strong capacity continues to fuel a buyer-friendly directors and officers liability (D&O) market, especially public companies.
Cyber pricing continues to decline, even as concerns grow about accumulating losses.
State Farm says catalytic converter thefts are way down
Catalytic convert thefts dropped 74% the first half of 2024, according to State Farm auto claims data.
Spanning from Jan. 1 through June 30, the data shows thefts down for a second consecutive year with just over 3,800 claims totaling roughly $11.2 million paid to customers. The auto insurer received over 14,800 catalytic converter theft claims from the same time in 2023.
Meanwhile, the average claim during the first half of 2024 was nearly $2,900.
State Farm's annual claims comparison for catalytic converter thefts:
2019: 2,500 claims totaling $4.7 million—$1,900 average claim. 2020: 10K claims totaling $20.9 million—$2,100 average claim. 2021: 32K claims totaling $73.7 million—$2,300 average claim. 2022: 45K claims totaling $115.4 million—$2,500 average claim. 2023: 21.2K claims totaling $62.5 million—$2,900 average claim. 2024: 3,800+ claims totaling $11.2M—$2,900 average claim. (Jan. 1, to June 30, 2024)
Meanwhile, California led all states the first half of 2024 with over 2,000 claims, followed by Illinois with 540 claims and New York with nearly 200 claims. Texas and Florida rounded out the top five for most claims during the period with 140 and 115 claims, respectively.
Climate/Change/Sustainability/ESG
The Insurance Apocalypse Is Upon Us
“We’ve got ourselves a little monster out there,” anchorman Jim Cantore warned, facing the camera in the Weather Channel’s newsroom on a sultry August weekend in 1992. At first, few in Florida were paying attention. “It’s very hard to get people to believe that there’s some danger from some element of nature that they haven’t experienced before,” a reporter told Cantore, as the channel played tape of tranquil beaches and neat vacation homes.
As the storm approached Florida, it gained the moniker “Andrew,” rapidly intensifying into a Category 5 hurricane as it exceeded wind speeds of 165 mph. Karen Clark watched updates on TV from her home in Boston with fascinated horror — and her career on the line.
Most insurance companies at that time assessed hurricane exposure in their portfolios by simply multiplying customer premiums by a rough factor of supposed risk, rather than tracking actual property replacement costs. “They were just very crude formulas,” she said.
So in 1987, Clark had started her own company, Applied Insurance Research, or AIR, to develop software that better estimated the potential losses from catastrophic events. Unlike the rest of the industry, she used granular data and sophisticated analyses, an approach now called catastrophe modeling. Her first computer model estimated that a Category 5 hurricane hitting Dade County could cause losses almost ten times more than previously believed. She warned her customers about the risk in Florida, but until Hurricane Andrew, no one listened. FULL ARTICLE
California sues Exxon over global plastic pollution - Business Insurance
California and several environmental groups sued Exxon Mobil on Monday and accused the oil giant of engaging in a decades-long campaign that helped fuel global plastic waste pollution.
Speaking at an event during Climate Week in New York City, California Attorney General Rob Bonta said the state sued Exxon after concluding a nearly two-year investigation that he said showed Exxon was deliberately misleading the public about the limitations of recycling.
The investigation mirrors California’s previous probes into the oil industry’s alleged efforts to mislead the public about climate change, which the state is also suing over.
The latest case was filed in a state court in San Francisco. A coalition of environmental groups including the Sierra Club filed a related lawsuit in that court against Exxon on Monday raising similar allegations.
Mr. Bonta, a Democrat, said his office specifically had sought information on Exxon’s promotion of its “advanced recycling” technology, which uses a process called pyrolysis to turn hard-to-recycle plastic into fuel. He had said the technology’s slow progress was a sign of Exxon’s ongoing deception.
“Today’s lawsuit shows the fullest picture to date of ExxonMobil’s decades-long deception, and we are asking the court to hold ExxonMobil fully accountable for its role in actively creating and exacerbating the plastics pollution crisis through its campaign of deception,” Mr. Bonta said in a statement.
Innovation
The unique challenges facing space insurance
The 'final frontier' presents new threats – necessitating new risk strategies
The market for insuring satellites in orbit has evolved significantly over the years, but space remains a uniquely challenging environment for these operations. Satellites must endure extreme conditions, from intense solar radiation and vacuum exposure to temperature fluctuations ranging from minus 150°C to plus 200°C.
Despite careful engineering and testing, failures can still occur, highlighting the importance of space insurance as a critical risk mitigation tool for satellite operators, manufacturers, and financiers.
Russell Sawyer, satellite account executive at Lockton, notes that space insurance is essential given the substantial revenue that can be generated by communications satellites. A single satellite can bring in between $100 million and $200 million annually, and when multiplied across a fleet of 30 spacecraft, the potential financial impact is enormous.
This makes securing insurance to cover the operational lifespan of satellites a prudent investment.
While space insurance has seen continuous development, it is far from a new concept. The first space insurance policy was issued in 1965 for the Intelsat I satellite, covering third-party liability and pre-launch risks. Since then, the field has matured, adapting to meet the needs of satellite operators.
Events
Insurtech on the Silicon Prairie | October 28-29 | Omaha, NB
Insurtech on the Silicon Prairie is a two-day insurtech event bringing national experts, companies and regulators to Nebraska for a one-of-a-kind, single-stage conference focused on the rapidly changing insurance landscape and technology**.
The 2024 conference will be October 28-29 in Omaha. The 2023 annual conference set records with 420+ attendees from 44 states, the UK, Canada and Japan. As one of the leading insurance hubs in the United States with over 110 domestic insurance companies, Nebraska ranks #2 in the nation in domestic surplus (over $205 billion), and #3 in the nation in domestic assets (over $650 billion)
Announcements
Majesco introduces AI ecosystem to streamline insurance workflows - FinTech Global
Majesco, a leading provider of cloud-based insurance software, has announced the launch of its new AI ecosystem designed to streamline insurance workflows.
The AI ecosystem, which is powered by Majesco Copilot, was introduced to help streamline operations in the insurance sector. Majesco is committed to advancing digital transformation, and this new product leverages AI to automate tasks, improve efficiency, and offer advanced data insights.
The offering allows seamless integration of AI models from various industry partners directly into Majesco’s workflows.
This integration enhances the company’s core insurance offerings by embedding intelligence into their software, allowing insurers to automate tasks, improve decision-making, and deliver data-driven insights.
Some of the initial AI partners in the ecosystem include Charlee AI, CyberCube, Fenris, Gradient AI, and CoreLogic. Each partner provides unique AI-driven models, ranging from predictive claims analysis to cyber risk evaluation and property insurance tools.
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