Climate/Change/Sustainability/ESG
One-Third of Global Population at Risk for Floods: Moody’s
A new white paper from Moody’s reveals that 2.7 billion people — more than one-third of the global population — live in areas vulnerable to inland or coastal flooding.
Moody’s estimates that approximately 2.4 billion individuals live in locations that are exposed to inland flood risk at the 100-year return period, representing just over 31 percent of the global population. (Return period is defined as the inverse of the probability of occurrence, for instance a 100-year return period represents a 1 percent chance in any given year.)
Approximately 260 million people are at risk from coastal flooding at the same return period, with over 70 percent of those individuals living in just 5 countries: Bangladesh, China, India, Vietnam and the Philippines.
Sustained Weather Damage? Expect Insurance Rate Hikes of 50% to 100%
Between $8 billion and $14 billion with a "best" estimate of $11 billion is Moody's RMS Event Response's projection for the total U.S. private market insured losses from Hurricane Helene.
That was before Hurricane Milton, which saw a rapid intensification that was one of the "most extreme ever recorded," according to Everstream Analytics. However, it landed in Florida as a Category 3 hurricane — a serious risk but far better than the Category 4 or 5 experts expected.
By 5 a.m. Thursday, maximum sustained winds had dropped to 85 mph, making it a Category 1. However, it still means more damage to Florida and southern Georgia, although currently it's not projected to directly cross into any other U.S. state or territory. According to Reuters, the storm set off at least 19 reported tornados.
It's not just hurricanes: tornadoes, wildfires, droughts, winter storms, flooding, earthquakes, and heatwaves. Figures that the Insurance Information Institute has compiled on U.S. natural catastrophe estimated insured losses run as follows: 2010, $13.6 billion; 2011, $35.8 billion; 2012, $57.9 billion; 2013, $12.8 billion; 2014, $15.3 billion; 2015, $16.1 billion; 2016, $23.8 billion; 2017, $78.0 billion; 2018, $52.3 billion; 2019, $25.5 billion; 2020, $74.0 billion; 2021, $92,0 billion; 2022, $98.9 billion; and 2023, $79.6 billion.
There's some variation, but the trend line is increasing. A report from insurance brokerage MarshMcLennan Agency said that commercial property insurance rates have seen year-over-year increases across 24 consecutive quarters and that rate increases averaged 11% at the end of 2023.
Redfin: People now consider weather when deciding where to live | PropertyCasualty360
Navigating insurance can be more difficult given the increase in frequency and severity of natural disasters.
With the arrival of Hurricane Milton, the state of Florida has now been impacted by two major hurricanes in just two weeks. With impacts from natural catastrophes becoming more frequent, unpredictable and severe, many Americans are now considering the likelihood of these disasters when deciding where to settle down.
According to a Redfin report conducted last week, nearly a third of U.S. residents between the ages of 18 and 34 said they are reconsidering where they want to move in the future after seeing the damage caused by Hurricane Helene, one of the deadliest storms to hit mainland America in almost two decades. About 15% of those over age 35 felt the same.
Research
Study: E-bike and Powered Scooter Injuries Soar
Electric bike and powered scooter injuries surged between 2019 and 2022 by 293 percent and 88 percent, respectively, according to Columbia University’s Mailman School of Public Health.
The findings, published in the American Journal of Public Health, examines the existing information and knowledge gap related to sociodemographic and risk factor variables that may contribute to micromobility vehicle-related injuries.
According to the university, micromobility generally refers to any small, low-speed, human- or electric-powered transportation device.
Rental Car Customer Loyalty Hinges on Trust, J.D. Power Finds | Business Wire
Overly Complicated Vehicles Strain Customer Experience
Customers who give their rental car companies the highest scores for trust are also most likely to reuse that brand for their next rental. However, according to the J.D. Power 2024 North America Rental Car Satisfaction Study, released today, overly complicated vehicles, problems experienced during the rental car experience and the inability to choose a specific vehicle can negatively affect trust, thereby damaging customer loyalty.
Overall, just more than half (53%) of rental car customers say it was very easy to operate the features and amenities in their vehicle, an issue rental car companies will need to start addressing as in-car technologies grow increasingly complex.
“When customers feel that a company is genuinely focused on their needs and provides a seamless experience, they are more likely to trust that brand and choose it repeatedly,” said Azari Jones, rental car practice lead at J.D. Power.
“Trust fosters loyalty, enhances the company’s reputation and differentiates it in a competitive market. This leads to higher customer retention and positive word-of-mouth. Without this trust, even a well-known brand may struggle to maintain long-term relationships with customers.”
Events
[MARK YOUR CALENDAR] - ClimateTech Connect to Unite Global Leaders in Washington DC for Climate Resilience and Innovation | April 15th-16th, 2025
ClimateTech Connect 2025 in Washington DC will unite global leaders, innovators, and experts to advance climate resilience through technology**
ClimateTech Connect, the first of its kind global conference focused on climate resilience through technology, is coming to Washington DC, April 15th-16th, 2025.
The conference will be held at the prestigious Ronald Reagan National Building and International Trade Center, located in the heart of Washington DC’s renowned Pennsylvania Avenue Corridor.
“We chose Washington DC for its global significance, home to numerous embassies, think tanks, research institutes and key trade associations. We are thrilled to bring ClimateTech Connect to our Nation’s Capital,” stated ClimateTech Connect CEO Megan Kuczynski.
“We are creating a masterclass program, together with the ClimateTech Connect Advisory Council, to advance climate resilience through data-driven strategies and technology.”
About ClimateTech Connect:
ClimateTech Connect is the premier global conference and tradeshow dedicated to advancing innovation in climate resilience and sustainable technology solutions. Bringing together over 1,500 leaders from diverse sectors — insurance, financial services, government, corporates, start-ups and investors — ClimateTech Connect provides a platform for thought leaders, innovators, policymakers, and industry experts to collaborate on data-driven strategies and innovative technologies that address the growing challenges of climate change.
RECOMMENDED EVENT: Property Insurance Report National Conference | Risk Information | Laguna Nigel, CA | Nov. 10-12, 2024
As always, we promise an outstanding program and the best networking in the business.
For a good understanding of how our event works, just download the prior programs and attendee list available on this page. Virtually every active property insurer will be in attendance, along with all the leading providers of data and professional services.
We'll see you November 10-12 at the Ritz-Carlton, Laguna Niguel in Dana Point, California!
Insurance Digitalization
For Insurers, Digitization Is Essential For Competitive Edge: Oliver Wyman
Knowing where and how to cut costs is vital to guide insurers in reallocating resources to digitization initiatives.
These five areas are a good starting point.
Digitization is no longer a nice-to-have for health insurers — it is table stakes for any company aiming to remain ahead of the curve in a competitive environment. Although our minds quickly jump to dynamic consumer-facing applications or the siren song of generative artificial intelligence to fuel this change, we believe back-office and administrative functions are where most insurers need to focus their energies. Simply put, the current reliance on legacy technology is untenable.
The core problem is that modernizing the tech stack and automating processes is expensive. On top of this reality, there are a myriad of competing demands for capital. This is true for national insurers that are trying to expand their footprints or acquire provider practices, as well as for smaller regional plans that are typically at a disadvantage due to constrained budgets. Across the industry, insurer profit margins stood at 2.2% in 2023, down from 3.8% in 2020.
Knowing where and how to cut costs enables payers to reallocate resources towards digitization, yielding a high return on investment. To this end, CEOs require guidance on cost transformation initiatives that will unlock investments in a more sustainable operating chassis. We’ve zeroed in on five key cross-cutting areas where insurers should focus their attention: automation and process improvement, tech stack improvement, spans and layers, outsourcing, and system rationalization.
Digitization is no longer a nice-to-have for health insurers — it is table stakes for any company aiming to remain ahead of the curve in a competitive environment. Although our minds quickly jump to dynamic consumer-facing applications or the siren song of generative artificial intelligence to fuel this change, we believe back-office and administrative functions are where most insurers need to focus their energies. Simply put, the current reliance on legacy technology is untenable.
The core problem is that modernizing the tech stack and automating processes is expensive. On top of this reality, there are a myriad of competing demands for capital. This is true for national insurers that are trying to expand their footprints or acquire provider practices, as well as for smaller regional plans that are typically at a disadvantage due to constrained budgets. Across the industry, insurer profit margins stood at 2.2% in 2023, down from 3.8% in 2020.
Knowing where and how to cut costs enables payers to reallocate resources towards digitization, yielding a high return on investment. To this end, CEOs require guidance on cost transformation initiatives that will unlock investments in a more sustainable operating chassis. We’ve zeroed in on five key cross-cutting areas where insurers should focus their attention: automation and process improvement, tech stack improvement, spans and layers, outsourcing, and system rationalization.
Ashish Kaura, Nikhil Sarathi, and, Blake Krantz at Oliver Wyman
Transformation is pending for insurance digitalization
The P&C Insurance Industry has yet to materially make the shift from analog to digital.
Documentation is essential for underwriting, claims, pricing, rate filing and most other insurance functions.
To be clear, this article is not meant to insult the insurance industry; there is already more than enough of that.
In fact, we love the insurance industry. It has provided us with lucrative employment over our careers, allowed us to grow and learn, enabled us to forge many valued relationships and above all, actively assist the industry to serve customers and communities in times of need and stress. Its products and services are critical in managing risk for everyone and it is a pillar of all economic systems.
What we do hope to accomplish with this article is to spotlight the insurance industry's glaring digital gap, especially in contrast to other industries. Often closely compared to financial services, specifically banking, insurance seems far behind.
We consider what it may take to focus on and accelerate the shift from its legacy, analog-intense infrastructure to the digital world in which other segments successfully operate. Not only would such a shift improve business and operational results and elevate worker skillsets but it will help make insurance more visible to consumers, most of whom now live in a digital, virtual world.
Stephen Applebaum and Alan Demers as published in PropertyCasualty360
Data Privacy/Cyber Security
New Data Privacy Trends Help Drive Growth in Frequency and Severity of Large Cyber Claims: Allianz | Business Wire
Cyber claims have continued their upwards trend over the past year, driven in large part by a rise in data and privacy breach incidents,
Allianz Commercial warns in its annual cyber risk outlook. The frequency of large cyber claims (>€1mn) in the first six months of 2024 was up 14% while severity increased by 17%, according to the insurer’s claims analysis, following just a 1% increase in severity during 2023. Data and privacy breach-related elements are present in two thirds of these large losses. Overall, the total number of cyber claims in 2024 is expected to stabilize, following a 30% increase in frequency during 2023, which resulted in 700+ claims.
- Frequency and value of large cyber insurance claims up 14% and 17% year-on-year in the first half of 2024, with data and privacy breach-related elements present in two thirds of these losses
- Growing trend in the US for class action litigation against large US and international corporations related to privacy violations leads to surging costs
- Number of cyber claims overall expected to stabilize in 2024 after 30% increase in 2023
Curators' Corner: Stephen Applebaum & Alan Demers
Articles
A selection of our recent original thought leadership articles for your review
SO MANY CONFERENCES, SO LITTLE TIME AND BUDGET
Riding the Insurance Roller Coaster
Can Climate Tech Save Insurance?
Social Inflation Decades Of Insurance Litigation Abuse
Does The P&C Insurance Cycle No Longer Exist?
Co-authored by Alan Demers and Stephen Applebaum
Podcast Sponsor
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