Commentary/Opinion
Why insurers are losing but still winning big – Reckon
These days, buying home insurance feels like playing roulette in a casino, where the spinning wheel is nature itself—unpredictable, relentless, and increasingly unforgiving.
Like gamblers at the table, homeowners place their bets—buying policies and coverage options—to ensure they aren’t left financially ruined because of nature’s increasingly volatile spin. But each spin is getting wilder and, apparently, more expensive. Much like the casino’s house, home insurance companies set the odds and manage payouts to keep the balance sheet comfortably in the black. But those days are fading if you read the news.
In 2023, the property and casualty (P&C) sector within insurance companies paid out $1.10 in claims for every dollar collected in premiums, according to the Sept. 2024 U.S. Treasury Department report on the insurance industry, which will follow up with a more detailed report on the effects of climate risk on the sector before the end of the year.
That’s not a one-off. Since 2014, the industry has seen five years where claims outstripped premiums, with 2017, 2022, and 2023 each leaving insurers roughly $20 billion in the red on home insurance policies, noted the Treasury report. Hurricanes Helene and Milton could deepen the wounds, but early reports suggest that few homeowners were adequately covered against the worst damage: flooding.
Reinsurance braces for impact after Hurricane Milton's massive losses – Moody's
Losses may push reinsurers to maintain high attachment points during renewals
Catastrophe modeling firms have released estimates of insured losses resulting from Hurricane Milton, which struck Florida's west coast on Oct. 9, shortly after Hurricane Helene.
According to the estimates, insured losses from Milton range between $17 billion and $50 billion. These losses are expected to contribute to what is shaping up to be the fifth consecutive year in which insured catastrophe losses exceed $100 billion, as reported by Moody’s.
Earlier in 2024, the reinsurance sector had seen pricing for higher-attaching layers decline by 5% to 10% during midyear renewals in the US.
Financial Results
Progressive sees hurricane losses but still doubles Q3 income from last year
Despite incurring $563 million of catastrophic losses related to Hurricane Helene, Progressive reports its third quarter profit doubled, according to a September earnings report released Oct. 15.
Progressive’s net income increased to $2.33 billion ($3.97 per share) from the $1.12 billion ($1.89 per share) reported in Q3 2023.
Reuters reports the profit is driven by demand for personal auto insurance policies.
“Encouraged by expectations of a soft landing, individuals and businesses are spending on insurance policies despite higher prices,” Reuters says. “Wage growth and a relatively strong labor market have also given confidence to customers to buy policies.”
Personal auto lines rose 15% from 25.4 million to 29.2 million in the past year, according to Progressive’s release.
“Net premiums written jumped 25% to $19.46 billion, while its combined ratio was 89%, versus 92.4% last year,” Reuters said. “A ratio below 100% means the insurer earned more in premiums than it paid out in claims.”
Progressive says it incurred 9.0 loss ratio points related to Hurricane Helene. This included vehicle losses of 401 million, counting boats and recreational vehicles.
The company also estimated that its vehicle business incurred losses of approximately $325 million from Hurricane Milton as of Oct. 14.
Cincinnati Financial Reports Third-Quarter 2024 Results
Cincinnati Financial Corporation (Nasdaq: CINF) today reported:
Third-quarter 2024 net income of $820 million, or $5.20 per share, compared with a net loss of $99 million, or $0.63 per share, in the third quarter of 2023, after recognizing a $645 million third-quarter 2024 after-tax increase in the fair value of equity securities still held.
Third-quarter 2024 non-GAAP operating income* of $224 million, or $1.42 per share, compared with $261 million, or $1.66 per share, in the third quarter of last year. The decrease of $37 million, or 14%, was primarily due to an $86 million increase in after-tax catastrophe losses.
$919 million increase in third-quarter 2024 net income, compared with third-quarter 2023, primarily due to the after-tax net effect of a $956 million increase in net investment gains.
$88.32 book value per share at September 30, 2024, up $11.26 since year-end.
17.8% value creation ratio for the first nine months of 2024, compared with 4.4% for the same period of 2023.
News
Global insurance sees rate declines as property competition heats up – Marsh
Global commercial insurance rates decreased by 1% in the third quarter of 2024, marking the first quarterly decline since the third quarter of 2017, according to the latest Global Insurance Market Index released by Marsh.
This decline follows a trend of moderating rates, driven primarily by increased competition among insurers in the global property market. According to Marsh, the average rates fell by 6% in the Pacific region, 5% in the UK, 4% in Asia, 3% in Canada, and 2% in India, Middle East, and Africa (IMEA) region.
Meanwhile, rates increased by 3% in the US and in Latin America and the Caribbean (LAC), while rates remained flat in Europe.
The report also highlighted that global property insurance rates fell by 2% after remaining flat in the second quarter of 2024 and rising by 3% in the first quarter. Rate declines were seen in the US, UK, Canada, Asia, Pacific, and IMEA, while Europe and LAC saw increases.
Climate/Resilience/Sustainability
Vexcel Collects High-Resolution Aerial Imagery After Hurricane Milton
Vexcel has completed a wide-scale, multi-day aerial imagery collection in response to Hurricane Milton, covering nearly 20% of Florida. As part of its post-disaster Gray Sky Program, the collection includes high-resolution ortho and multispectral imagery across all areas, with oblique imagery captured in select urban locations.
Every property in the Hurricane Milton Gray Sky collection features a comprehensive damage assessment along with timestamped before-and-after imagery for comparison. This enables insurers, emergency managers, and government agencies to assess the storm's impact with greater efficiency. The collection spans more than 33,000 square kilometers—approximately 20% of Florida—helping response and recovery needs. Across this collection, nearly 4.43 million structures were analyzed for damage.
Research
S&P Reveals Top 50 Largest P/C Insurers
As the third-fastest growing company on a list of the world’s top 50 largest insurance companies, State Farm Mutual Automobile Insurance Co. continued to rank No. 1, according to research S&P Global Market Intelligence.
State Farm recorded nearly $87.6 billion in direct premiums earned in 2023, an increase of 18.3% over the prior year. The Bloomington, Illinois-based personal insurer was also at the top of the rankings a year ago, according to a report from S&P Global Market Intelligence
Triple-I: Top 10 states for dog bite claims in 2023
It's hard to put into words just how valuable dogs are to human wellness.
Among the benefits of owning a dog: They combat loneliness, encourage happiness, reduce stress, support good health, boost exercise and lower blood pressure. Dogs are even more indispensable to vulnerable human populations such as seniors, veterans and people living with one or more disabilities.
However, a stressed, neglected or sick dog can be dangerous, and dog bites have far-reaching repercussions beyond the initial event.
In 2023, the most recent year for which there is complete data, there were just over 19,000 dog bite claims in the U.S., with an average cost per claim of $58,545 and a total claim value of $1.1 billion, according to the Triple-I and State Farm.
InsurTech/M&A/Finance💰/Collaboration
ZestyAI Teams Up With Donegal Insurance on Property Cover
The latest partnership news from ZestyAI for you;
ZestyAI, the leading provider of climate and property risk analytics solutions powered by Artificial Intelligence (AI), announced today its partnership with Donegal Insurance Group® on a project that utilizes its new Roof Age solution for Donegal’s existing Personal Lines book of business.
Through the project, Donegal, a Pennsylvania-based regional insurance carrier, leveraged ZestyAI’s Roof Age solution to populate Homeowner policy renewals where roof age was absent. ZestyAI’s Roof Age solution pinpoints the age of a roof using data from both building permits and historical imagery going back 20-plus years. This unique approach allows the company to determine the validated age of each roof with over 90 percent accuracy and nearly 100 percent coverage across the contiguous US.
“Accurate roof age information is critical for properly assessing and pricing risk,” said Hank Narvaez, Vice President of Personal Lines Product Development at Donegal. “ZestyAI’s Roof Age solution was a clear choice for us due to its solid coverage length of historical imagery. By leveraging both building permit data and aerial imagery, we gain added confidence in our underwriting and rating decisions.”
Mobility
Enterprise Mobility Recaps FY 2024 Performance - Rental Operations - Auto Rental News
In FY24, Enterprise Mobility continued to evaluate the many ways technology can be leveraged to enhance team member and customer experiences, including ways to reduce friction in the travel journey, better inform decision making, and help employees serve customers.
Enterprise may be synonymous with rental cars, but the latest reach of the company now spans far more: fleet management, flexible vehicle hire, carsharing, vanpooling, car sales, truck rental, vehicle subscriptions, luxury rentals, and technology solutions.
In October 2023, the mobility portfolio aligned under a new corporate brand — Enterprise Mobility — to reflect, connect and promote its full line of companies and services.
One year later, this focus on developing its mobility portfolio, along with strong global growth, helped drive record revenue of more than $38 billion for Enterprise Mobility, including its subsidiaries and affiliate Enterprise Fleet Management, in fiscal year 2024 (FY24).
Chrissy Taylor, president and CEO of Enterprise Mobility, summed up company achievements in a recent news release. “We have worked diligently to connect customers with mobility solutions that meet their needs while offering the customer service that has defined our brands for generations.”
Recommended Events
Global Insurance Forum 2024 - presented by the IIS, November 17-19 | Miami, Florida
Important deadline coming up!
Hotel booking deadline extended! Register by Oct. 25 at 11:59 p.m. EDT to ensure your on-site accommodations.
Global Insurance Forum 2024. Presented by the International Insurance Society
Celebrate excellence and explore the impact of insurance innovation at the Hyatt Regency Miami on Nov. 17-19.
The Global Insurance Forum comprises a diverse audience of c-suite leaders dedicated to driving positive change and advancing the global good. Seize the opportunity to connect with your international colleagues and discuss the issues facing insurers and the world at large.
Insurance Digitalization
The US’s ‘digital verification divide’ is widening; biometrics can help | Biometric Update
Think tank report draws on data from ID.me
The digitization of government in the United States is ongoing but closing the so-called digital verification divide poses major challenges, according to a new report.
Based in Washington D.C., the Progressive Policy Institute has reviewed major roadblocks to digitization of government, giving a clear-eyed assessment, while explaining how following NIST’s digital identity guidelines will help overcome obstacles.
The report observes how the digital identity verification divide has been widening, owing in part to “misguided opposition” to biometrics in the digital verification process. This in turn has been slowing down digitization.
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