News
Hurricane Helene insurance losses expected to reach $6.4 billion
[Ed. comment: As insured losses are far lower than the complete economic impact, the growing protection gap for flood perils has never been clearer. Homes and business are widely under-prepared and unprotected for such events]
The destruction from Hurricane Helene is expected to cost insurers roughly $6.4 billion, according to an early estimate from catastrophe modeling firm Karen Clark & Company.
The insured losses in the estimate would cover wind, storm surge and inland flooding damage across nine states, KCC said in a statement Wednesday.
KCC’s assessment includes damage to privately insured automobiles as well as residential, commercial and industrial properties and the impact of business interruption.
State Farm General Insurance Co. and Citizens Property Insurance Corp., two leading insurers in the Southeast, are bracing for the sector’s largest losses after fielding more than 60,000 claims combined.
Hurricane Helene exposes FEMA assistance gap in Appalachian areas
Only 1 in 200 homes in flood-hit area has flood insurance
Federal flood program doesn't consider rain risks
Global warming likely to spur increased rain storms
As residents of western North Carolina piece together their lives following Hurricane Helene, few will be able to rely on federal flood insurance to help them rebuild. Roughly 1 in 200 single-family homes in the region is covered by the National Flood Insurance Program (NFIP), according to a Reuters analysis of federal government data – a far lower level of coverage than can be found in the coastal and riverside neighborhoods the program was designed to serve.
That is because the federal program is focused on the flood risks posed only by rising seas and swelling rivers, not the threat posed by the sort of extreme rainfall brought on by Helene.
The storm dumped more than 35 centimeters (14 inches) of rain over three days onto western North Carolina, transforming mountainsides into mudslides and creeks into torrents.
Climate/Resilience/Sustainability
Solar Power Comes With New Hazards
Investment by the power sector in solar photovoltaic – or solar PV – is expected to exceed $500 billion in 2024, surpassing all other generation technologies combined, and solar PV alone is expected to meet roughly half of the growth in global electricity demand to 2025.
Global solar yearly installations in 2023 grew by 87% on the previous year, with growth dominated by China, which installed 57% of the world’s solar. There are now 33 countries where solar provides more than 10% of power generation, including Chile (20%), Australia (17%), and the Netherlands (17%), as well as the state of California at 28% -- itself the world’s fifth-largest economy.
Solar PV installations offer the chance to reduce energy costs, demonstrate a company’s commitment to sustainability, and create energy independence, but they also present new risks.
As this market grows, installers need to be aware of the hazards such systems can introduce and understand how to mitigate these. The rapid rise of installed systems on rooftops, for example, has created complex challenges for both fire services and the code enforcement community. Several high-profile fires have occurred in commercial buildings with roof-mounted solar PV systems.
Daniel Schroeder is senior risk engineer at Allianz Commercial
InsurTech/M&A/Finance💰/Collaboration
LM Re & Safehub sensor-triggered parametric coverage to protect UC campuses from earthquake damages -
Liberty Mutual Reinsurance (LM Re), the reinsurance arm of Liberty Mutual, and Safehub, a technology provider in seismic sensor and risk management solutions, have entered into a partnership with the University of California (UC) to protect their campuses from the risk of earthquake damage.
The UC coverage is reportedly the first sensor-triggered parametric earthquake coverage to be purchased in the US, as both LM Re and Safehub continue to expand their reach to offer the solution worldwide.
It’s worth noting that this partnership builds on the success of LM Re and Safehub’s bespoke sensor-triggered policies which have previously been rolled out in Mexico and the Caribbean.
Best’s Special Report: Gradual Increase in Insurers’ Private Equity Investments in 2023
U.S. insurers experienced a second straight year of declining income on their private equity investments, which dropped to $7.7 billion in 2023, down from $10.2 billion in 2022, according to AM Best.
A new Best’s Special Report notes that U.S. insurers’ private equity holdings rose 10.8% to $146.2 billion, up from $132 billion in 2022; this followed growth of 3.3% in 2022 and 37% in 2021. That increase in 2023 was driven by $7.4 billion from new investment acquisitions or additional investments in current holdings, with the book value of current holdings increasing by approximately $6.8 billion.
Nearly all of that growth was generated by life-annuity (L/A) insurers, which account for over three quarters of the insurance industry’s private equity investments.
Demand for private equity investments had slowed in 2022 compared with 2021, due to a rise in interest rates and concerns about a potential recession, but private equity investments again rose in 2023, as insurers sought higher yields with alternative options.
Investments in private equity remain concentrated in a few large insurers, according to the report. Fifteen companies, almost entirely L/A carriers, account for just over 60% of private equity holdings, with allocations averaging only 5% of invested assets.
“The ratio of these holdings to capital can be a better guide for determining potential exposure,” said David Lopes, senior industry analyst, AM Best. The report notes that the average exposure for capital & surplus (C&S) among the top 15 holders of private equity investments is 40.2%. However, more than half of AM Best’s rated companies with private equity investments have exposures amounting to less than 10% of their C&S.
Research
CCC Crash Course Report Explores Critical Trends That Will Shape the Auto Claims and Collision Repair Industry in 2025 | CCC Intelligent Solutions
Q3 2024 Edition Examines Rising Repair Costs, Growing Impact of EVs, Vehicle Complexity and Insights for Navigating the Challenges Ahead
CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, today published its Crash Course Q3 2024 Report, identifying the key trends that will shape the auto claims and collision repair industry in 2025.
The report examines pressing challenges such as the impact of inflation and labor shortages, the growing impact of electric vehicles (EVs) and rising repair costs, while also offering insights to help insurers and repairers successfully navigate the complexities of the year ahead.
Crash Course is based on information derived from 300 million claims-related transactions and millions of bodily injury and personal injury protection (PIP) /medical payments (MedPay) casualty claims processed by CCC customers using the company's solutions.
“2025 will present unique challenges and opportunities for the auto claims and repair industries,” said Kyle Krumlauf, director of industry analytics at CCC and co-author of Crash Course.
“From rising repair costs and labor shortages to the growing complexity of vehicles and supply chain disruptions, staying ahead of these trends is critical to the industry’s viability. Our Q3 report provides key insights and strategies the industry can use to overcome these challenges and succeed in an increasingly competitive market."
Key findings of Crash Course Q3 2024 include:
Rising Repair Costs and Vehicle Complexity: The total cost of repair (TCOR) increased by 3.7% in the first half of 2024 compared to the same period in 2023, driven primarily by labor and parts costs. Labor rates rose by 4.9% year-over-year, placing additional financial strain on repair shops and insurers. The growing complexity of vehicles, particularly with the increased adoption of EVs, is resulting in more parts and labor hours per repair.
Electric Vehicles (EVs): EVs now represent 2.4% of all repairable claims in the first half of 2024, up from 1.6% in the same period in 2023. However, EV repairs remain more expensive than non-EVs, with the average repair cost for an EV 46.9% higher than that of a non-EV. Labor accounts for 43.3% of total EV repair costs in vehicles three years or newer, compared to 36.5% for non-EVs.
Inflation and Casualty Costs: Persistent inflation is continuing to drive up industry costs, particularly in casualty claims. Third-party medical bill line severity has risen by 5.4% and first-party medical bill line severity has increased 6.1% since the first half of 2023. Uninsured and underinsured motorist injury claim submissions have also increased significantly along with insurance premiums for consumers.
Total Loss Frequency: CCC data reveals a 1.8% year-over-year increase in vehicles flagged by carriers as total losses in 2024, primarily due to the continued erosion of used vehicle values and a maturing vehicle pool. 73% of valuations are for vehicles seven years or older, reflecting the aging nature of the U.S. car fleet.
Announcements
Duck Creek Launches Payments Facilitator End-to-End Payment Solution
Duck Creek Technologies (Boston), a major provider of a core system/insurance platform and related solutions for the property/casualty industry, has introduced its latest insurance-focused payments solution, the Duck Creek Payments Facilitator. The vendor describes the new offering as a modern, end-to-end payment solution that caters to the nuances of payments within insurance by providing carriers with access to digital payment methods for both collecting and disbursing funds.
Duck Creek Payments Facilitator is designed to deliver a global solution, combining real-time capabilities, such as FedNow, with traditional payments services and Banking as a Service (BaaS) functionalities, such as transactions via push-to-card or digital wallets. Thus, according to a Duck Creek statement, insurers can now collect or pay out to policyholders using any payment technologies in their market of choice.
“In today’s fast-evolving insurance landscape, carriers require more than just transactional solutions. They need a secure, agile, and future-proof approach to global payment processing,” comments Jess Keeney, Chief Product and Technology Officer at Duck Creek Technologies. “The Duck Creek Payments Facilitator delivers exactly that—enabling insurers to effortlessly manage instant claims payouts to real-time premium payments—all from a single, proven solution.”
Hippo Expands Home Builder Access to New Homes Program in California, Florida, and Texas
Hippo (NYSE: HIPO), the home insurance group focused on proactive home protection, announced today that it will expand home builder access to its New Homes Program in California, Florida, and Texas. By the year's end, Hippo's New Homes Program expects to provide access to insurance for almost 50,000 additional new homes in the three states, which, according to the U.S. Census Bureau, accounted for more than a third of new construction permits in the U.S. in 2023.
Hippo also announced Perry Homes and Van Daele have joined the Hippo New Homes Program, which already works with some of the nation's leading home builders.
"In recent years, many of our home builder partners have struggled to find a consistent insurance solution for new homes in California, Florida, and Texas," said Rick McCathron, Hippo's President and CEO. "These three states are home to some of the hottest residential new construction markets in the country, and our growth marks the beginning of a nationwide expansion of Hippo's New Homes Program."
Hippo's New Homes Program provides home builders access to insurance products specifically designed for new homes from a panel of carrier partners. New Homes Program carriers simplify the underwriting process by only using information about the house to issue policies that typically provide lower deductibles and more flexibility than a standard homeowner's policy.
Due to the historically lower risk associated with new construction and based on average state premiums, Hippo and its carrier partners can offer policies for new homes with premiums as much as 69% lower in California, 42% lower in Florida, and 56% lower in Texas than policies for an existing home.
Plnar Unveils 'Instant Exterior Measurements' – Further Transforming the Property Claims Process
Plnar, the leading smartphone imagery solution for claims and underwriting, is excited to announce the launch of its latest innovation: SmartPix Exterior.
This groundbreaking technology expands Plnar’s patented SmartPix interior measurement capabilities to include spaces and objects on the exterior of a building or home.
Comprehensive Damage Assessment
With SmartPix Exterior, users can capture detailed images of various exterior structures, such as siding, fences, foundations, outbuildings, garage doors, decks including hail damage. Our measure-ready technology ensures that these images are not only clear but also embedded with data for precise measurement extraction. This advancement accelerates claims processing and enhances overall workflow efficiency.
Awards
Solera’s Bill Brower Honored With 2024 PropertyCasualty360 Insurance Luminaries Award
Solera, the leading global provider of SaaS solutions to the vehicle lifecycle ecosystem, today announced Bill Brower, Senior Vice President of Industry Relations and Claims Solutions at Solera, has been named to PropertyCasualty360’s Insurance Luminaries Class of 2024 in the Claims Innovation category.
This recognition celebrates innovation in the property and casualty insurance industry. The program spotlights top professionals, teams, organizations, programs, practices and products within the sector that strive to modernize and humanize the business. The 2024 honorees were selected by a panel of industry experts based on how well they stated and achieved goals with regards to the nomination category; how impactful their work has been; how dedicated the nominee has been to furthering modernization and humanization in the P&C insurance business; and how committed and dedicated the nominee has been to high ethical standards, service and excellence.
Brower, a highly regarded leader in the insurance property and casualty and automotive industry, has over three decades of experience overseeing claims teams for renowned companies including LexisNexis Risk Solutions, Liberty Mutual Insurance, Nationwide Insurance and now Solera.
He’s being recognized, for the second consecutive year, for his dedication to forward-thinking claims innovation, using artificial intelligence (AI) and other emerging technologies to pave the path toward a more efficient and sustainable future for the industry and Solera’s customers.
Hi Marley, Copart, and Plymouth Rock Assurance, Named a 2024 Insurance Luminary by PropertyCasualty360 for Total Loss Assist Innovation
The Trio's Collaboration Wins in the Technology Innovation Category
Hi Marley, creators of the only intelligent conversational platform built for the P&C insurance industry, in partnership with Copart, Inc., the global leader in online vehicle auctions, and Plymouth Rock Assurance, a leading home and auto insurance provider throughout the northeast, have been named to PropertyCasualty360's Insurance Luminaries 2024 in the Technology Innovation category.
This recognition was awarded for their partnership in developing Hi Marley's Total Loss Assist, a first-of-its-kind solution that streamlines and accelerates the auto total loss claims process, reducing carrier touchpoints and significantly boosting customer satisfaction.
The Technology Innovation category honors pacesetters who push insurance carriers, organizations, vendors, agencies, and brokerages forward regarding digitalization, modernization, and client and customer experiences. A panel of industry experts selected the 2024 honorees based on the impact of their work, their dedication to furthering modernization and humanization in the P&C insurance business, and their commitment to high ethical standards, service, and excellence.
Hi Marley's Total Loss Assist integrates a trusted, unified conversation thread between policyholders, insurers, and all relevant parties. The tool comes equipped with automated workflows to improve communication.