Climate/Change/Sustainability/ESG
Zillow zeroing in on climate risk
Move over, taxes and local school test scores; homeowners want to know about the potential for adverse climate events, according to the home sales listing website Zillow, which announced Thursday it will be providing climate risk assessments on its real estate listings.
The company said this will give prospective buyers their first combined look at climate risk information with home insurance recommendations, all at a time when home insurance costs are soaring in parts of the country.
The new data will come from the climate risk company First Street and will include historical data on past climate events that affected the area where a property is located, such as flooding or wildfires. It will also have scores on future risks to properties from floods, wildfires, high winds, extreme heat and poor air quality.
Research
LexisNexis Risk Solutions Releases New Study on U.S. Homeowner Insurance Preferences and Behaviors
Today, LexisNexis® Risk Solutions announced its U.S. Home Insurance Consumer Insights report, a new study that reveals a gap between homeowners' understanding of their insurance coverage, the actual risks their properties face and their willingness to provide data to help ensure proper coverage. The consumer study highlights homeowners' reliance on insurance carriers or agents to help ensure they have adequate coverage while also identifying two distinct cohorts of policyholders: those with a "Set It & Forget It" mindset or those who are "Insurance Involved."
By gaining a deeper understanding of each group's motivations to develop more effective engagement strategies and by leveraging emerging technologies to better assist with risk assessment, home insurers can bridge these gaps with consumers and address profitability challenges faced by the industry.
Key takeaways
Homeowners value insurance and are willing to pay more: 72% of homeowners are willing to pay higher premiums to help ensure they are fully covered.
Renewals drive shopping behavior: One-third of homeowners shop for home insurance regularly and most often at renewal. If they do not shop regularly, price and competitive offers can move consumers to act.
Home insurers with the most satisfied customers in 2024
Both homeowners and renters insurance premiums have exceeded the rate of inflation, and this surge in costs has led to a sharp increase in the number of customers who are shopping for new policies, J.D. Power reports. "'The average shopping rate among home insurance customers has climbed to a record high of 6.8% through the second quarter of 2024, up from 5.9% two years ago," Breanne Armstrong, director of insurance intelligence at J.D. Power, said in a release.
"Many shoppers have ended up staying put because there are so few alternatives available, but carriers need to recognize that steady rate increases put policy retention at risk and has a negative effect on customer satisfaction."
These insights come from the company's recently released 2024 U.S. Home Insurance Study. The study also showed that increased premiums have an impact on customer satisfaction. J.D. Power uses a 1,000-point scale to rate customer satisfaction, and the report shows that customers who received an insurer-initiated rate increase had a satisfaction level of 594, which is 92 points lower than customers who did not receive an insurer-initiated rate increase.
News
State Farm Posts Worst HO Loss Ratio Since 2011; Peers Recover: S&P
State Farm was the only one of 10 major players in the homeowners insurance market reporting a worse second-quarter loss ratio for the line than it did in 2023, according to a new analysis.
The outlier result came even as State Farm, like its competitors in the space, recorded a double-digit jump in premiums, according to S&P Global Market Intelligence.
Commentary/Opinion
Personal Auto Insurance Could Be Obsolete in 20 Years: Morningstar
Self-driving cars could make personal auto insurance largely obsolete within 20 years, according to a worst-case scenario modeled by Morningstar. A more likely, moderate scenario forecasts the line could remain necessary for a few more decades, until 2060.
The firm’s new report, “Insuring Autonomy: Analyzing the Implications of Self-Driving Cars for the Auto Insurance Industry,” finds that by 2044, in the most aggressive adoption scenario, most cars on the road could be automated to a level where liability shifts from driver to manufacturer. Morningstar believes that wide adoption of autonomous vehicles likely means that car insurance would be replaced by product liability insurance, which would ultimately be borne by the auto manufacturers when Level 4 or 5 autonomy is achieved.
This transition could be the end of the line for insurers that rely too heavily on personal auto premiums, Morningstar warned, highlighting Progressive as potentially being at risk.
Are insurance markets really softening?
Is the global insurance market softening? Not exactly according to industry stakeholders, including major brokerages Marsh, WTW and Aon. Reports from these firms say that directors and officers (D&O) is soft and cyber is soft or getting close. However, inflationary and capacity pressures remain across other lines, including property and casualty (P&C) insurance.
“The insurance market is transitioning between hard to soft,” said Scott Eccleston. “I would classify it as multi-speed.”
Eccleston is head of Global Placement for Marsh in the Pacific Region. He said that the D&O market is now in a soft cycle.
“Whereas all other classes aren’t quite there yet,” said the Melbourne-based broker.
Competition has returned to some lines
The Marsh leader said improved insurer underwriting performance and increased overall profitability are behind the softening.
“This has led to an increased appetite for growth and a welcome return of competition and choice for insureds,” he said. “Insurers have entered growth mode but are still cautious, in particular for insureds who have natural catastrophe exposures.
AI in Insurance
U.S. Department of the Treasury Hosts Roundtable on Artificial Intelligence in the Insurance Sector
The Federal Insurance Office (FIO) at the U.S. Department of the Treasury hosted a roundtable discussion (Sept. 24, 2024) with representatives from the insurance industry, consumer groups, state insurance regulators, academics, and other stakeholders to discuss artificial intelligence (AI) in the insurance sector.
Among other issues, the roundtable discussed the growing use of AI by insurers and its potential for facilitating innovation and modernization in insurance product design, distribution, delivery, and cost. Insurers are using AI in various aspects of the insurance business, including claims processing, underwriting, marketing, fraud detection, and rating. The roundtable discussion also focused on potential risks and challenges around various issues, including fairness and privacy.
Senior Treasury Department officials led discussions that addressed the benefits and challenges associated with the use of AI by insurers, potential consumer protections to prevent discrimination, the current state regulatory framework, and best practices for the sector.
Insurance sector's race to adopt AI spurs private equity investment
The potential for digital transformation to propel growth in the insurance sector is expected to be the primary force behind insurance dealmaking over the next 12-24 months, according to the opinions of 250 private equity and insurance executives in the US and Europe surveyed by West Monroe in the second quarter. Half of the survey respondents selected digital transformation as a "main driver" of insurance sector M&A, and nearly one-fifth ranked it as the most important spur to dealmaking.
Predict & Prevent
Farm Bureau Insurance of Michigan Launches Ting Fire Prevention Program
Farm Bureau Insurance of Michigan is proud to announce a new fire safety program that will provide Ting smart sensors and three years of fire prevention service at no cost to homeowners.
Ting is an industry-leading peril-based solution that helps to protect families and homes as it reduces fire and water related losses. At launch, Farm Bureau Insurance of Michigan will provide Ting for free to 10,500 policyholders and is planning for program expansion, marking a significant step toward enhanced safety in homes across Michigan.
Ting is a simple plug-in sensor, created by Whisker Labs, that monitors a home for electrical hazards that can lead to fires. It provides early detection of otherwise invisible problems in home wiring, appliances and devices, and utility-provided power. Ting delivers real-time alerts and works directly with homeowners to identify and mitigate electrical hazards to avoid catastrophic fire damage. Ting offers additional benefits like power outage and dangerous power notifications and frozen pipe prevention, helping to keep families safe.
"Farm Bureau Insurance of Michigan is committed to protecting what matters most to our policyholders," said Don Simon, Chief Executive Officer. "Ting is a win-win for Farm Bureau Insurance of Michigan and for our customers. The proven claims cost reductions allow us to provide this at no charge to our customers. It’s a sound business decision that helps keep our customers safe."
Events
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Data Privacy/Cyber Security
Navigating Your Privacy: Automakers That Don't Sell Driving Data to Insurers
Issues of Driving Data Privacy
In today’s technologically advanced world, the topic of driving data privacy has become increasingly important for car owners. With vehicles equipped with comprehensive telematics systems that collect detailed information about our driving habits, the specter of privacy invasion looms large. Recent investigations have revealed that many automakers are not only gathering data on how we drive but are also selling this information to third-party insurance companies through data brokers. This raises significant concerns for consumers who value their privacy.
The collection of driving data often occurs through features marketed as ‘safe driving programs’. For example, General Motors offers a system known as OnStar Smart Driver, which tracks hard acceleration, braking, and other driving behaviors. Unfortunately, many drivers enroll in these programs without fully understanding the implications, including potential increases in insurance premiums based on driving habits. This scenario is not isolated to GM; automakers like Kia, Mitsubishi, and Subaru also engage in similar practices, using various names for their safe driving initiatives.
Understanding the intricacies of how data is collected and shared is crucial for consumers who are increasingly wary of these practices. When automakers partner with data brokers like LexisNexis and Verisk, the information collected goes far beyond simple metrics. It can include detailed records of every trip made in a vehicle, with timestamps, distances, and even instances of hard braking or rapid acceleration. The implications of this data sharing are profound; they can lead to significant increases in insurance costs for drivers deemed ‘high risk’—not because of accidents or reckless driving, but due to algorithmic assessments based on their driving behavior.
Claims
Insurer in Baltimore bridge collapse seeks millions in reimbursement
An insurance company has filed a claim for more than $350 million in reimbursement for coverage of the total loss of the ship-wrecked Francis Scott Key Bridge in Baltimore, a March 26 collapse that killed six and injured two maintenance workers and has prompted lawsuits from surviving family members.
Ace American Insurance Co. paid the $350 million property insurance claim to Maryland and now requests equal compensation plus interest from the owner and manager of the cargo ship that struck and destroyed the Key Bridge, according to a claim Cozen O'Connor filed Friday on behalf of Ace.
Counsel for the eight workers injured or killed in the collapse also filed claims or formal court responses on Friday seeking to hold Grace Ocean Private Ltd. and Synergy Marine Group liable.
"This fatal and costly disaster could and should have been avoided," stated a claim filed by White and Williams on behalf of Brawner and Zurich American Insurance Co. "This catastrophic event resulted in the deaths of six Brawner workers and serious and permanent injuries to a seventh worker and halted all commercial traffic into and out of the Port of Baltimore.