News
Consumer group: State Farm bungled California reinsurance
Consumer Watchdog is challenging State Farm's California premium increase request.
A Los Angeles-based advocacy group alleges that California's State Farm General unnecessarily bought hundreds of millions of dollars of excess reinsurance from its parent company, State Farm Mutual Automobile Insurance Co. over the past decade, but got little back in return, the Los Angeles Times reported this week.
Consumer Watchdog is accusing State Farm, the Golden State's largest home insurer, of boosting its parent company's profits at the expense of policyholders while reporting financial distress and the need for a 30% rate hike.
State Farm declined to comment on the allegations, saying it was "not appropriate" to do so while the rate filing is being reviewed by the state Department of Insurance, the Times said.
Consumer Watchdog, which is challenging the rate increase, calculated that State Farm General bought a total of $2.2 billion worth of homeowners' reinsurance from multiple parties between 2014 to 2023. It got back $400 million to cover claims, recovering a little less than 20% of what it paid for in reinsurance. The group estimates that about two-thirds of the total purchase came from State Farm Mutual.
Consumer Watchdog analyzed 10 years of reinsurance data filed by the second, third and fourth biggest California home insurers by market share: CSAA Insurance Exchange; California Automobile Ins. Co., a subsidiary of Mercury General; and Fire Insurance Exchange, a member of Farmers Insurance Group.
Financial Results
GEICO performance offsets Q3'24 losses at Berkshire Hathaway's primary & reinsurance units
Net underwriting earnings across Berkshire Hathaway’s insurance and reinsurance operations declined to $750 million in the third quarter of 2024, as the strong performance at GEICO more than offset underwriting losses at both the firm’s primary insurance and reinsurance businesses.
The net underwriting result of Berkshire Hathaway’s re/insurance businesses fell 69% year-on-year from the $2.4 billion seen in Q3 2023, as losses and loss adjustment expenses and underwriting expenses spiked at Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group.
Pre-tax, underwriting earnings across the re/insurance businesses decreased from $3 billion last year to $1.034 billion this third quarter.
However, for the first nine months of the year, both pre-tax and net underwriting earnings across the re/insurance segments improved year-on-year, to $7.2 billion and $5.6 billion, respectively, compared with $5.8 billion and $4.6 billion, respectively, in 9M 2023.
Predict & Prevent
Frontdoor, Inc. Expands Agreement With Moen to 7 Additional States | Morningstar
Frontdoor, Inc. (NASDAQ: FTDR), the nation’s leading provider of home warranties, today announced it is expanding its exclusive agreement with Moen to install Moen Flo Smart Water Monitor and Shutoff, a water shut-off valve, in seven new states for customers who purchase Flo as part of certain marketing programs with home insurance providers. Leak detection and shut-off valves are now required by selected insurance providers in certain states. The Moen Flo device is designed to monitor water use, detect even small leaks, and will automatically shut off water to the home if a catastrophic leak is identified.
Under the new agreement, effective November 1, Frontdoor will provide installations in Arizona, Utah, Idaho, Oregon, Texas, Georgia and South Carolina. This is in addition to an agreement signed earlier this year to perform installations in California.
“We are delighted to expand our agreement with Moen beyond California,” said Frontdoor, Inc. Chief Revenue Officer Kathy Collins. “This is a great opportunity to leverage our network of independent contractors and drive our on-demand revenue model.”
“The goal of this agreement is to reduce insurance claims related to catastrophic water damage from residential leaks. The Moen device offers a digitally driven and proactive approach to leak detection, with the ability to help reduce water damage claim frequency by as much as 96%*,” said Jeff Barnes, vice president of business development for Moen Smart Water. “The expansion of our relationship with Frontdoor allows us to bring a full Water Protection Service, including Flo installation – to even more homeowners.
Research
Auto policy switch rates set new monthly record in Q3
J.D. Power predicts policy shopping rates could continue to grow in Q4.
Regionally, those in the southeast policy shopped the most in Q3 with 14.4%, with those in the northeast shopping the least at 11%.
After seeing a new record high rate in Q2 2024, the third quarter of 2024 began with a large drop in auto policy shopping in July. However, policy shopping rebounded in August and September, with September hitting a new monthly high shopping rate of 13.8%, according to J.D. Power's Q3 2024 LIST Report.
Overall, the policy shopping rate dropped slightly from 13.3% in Q2 to 13.2% in Q3, but J.D. Power predicts this rate in Q4 could be as high as 13.8%, largely driven by customers searching for lower premiums.
In the LIST Report, J.D. Power found that a "mismatch" between the miles traveled by vehicles and the lagging issuance of violations has dampened profitability efforts in the auto sector. Hurdles for insurers in this sector include the adoption of automatic traffic enforcement which limits the use of this information for rating and underwriting purposes, as well as poor record management of violation information for drivers who move to another state.
2024 In Review
Climate Change Reshapes Insurance Industry’s Approach to Risk | Insurance Innovation Reporter
Insurers and InsurTechs Collaborate on innovative solutions in response to more extreme weather events.
The insurance industry is rapidly evolving its strategies to address the growing challenges of climate change, with a focus on leveraging technology, improving risk assessment, and developing innovative products. This was a key theme that emerged from panel discussions and conversations with industry leaders at InsureTech Connect 2024 (ITC).
Focusing on Actionable Solutions
Industry leaders at a panel session during Tokio Marine Day at ITC emphasized the need to move beyond debating the existence of climate change and instead concentrate on practical measures to mitigate its impacts. Bill Keogh, Operating Partner at EOS Venture Partners (London, U.K.), noted, “Climate volatility is a very real thing that we have to deal with… what we can control are things like understanding wealth and how wealth is moving around the country.” The demographics of population change have impacted financial severity of claims for recent hurricanes like Helene and Milton, as well as other severe weather events.
FRISS Expands U.S. Market Presence: CEO Jeroen Morrenhof | Insurance Innovation Reporter
The provider of AI-driven solutions to detect fraud and automate mechanisms of trust for the insurance industry, discusses a key hire and a strategic partnership with a major industry vendor.
The provider of AI-driven solutions to detect fraud and automate mechanisms of trust for the insurance industry, discusses a key hire and a strategic partnership with a major industry vendor.
FRISS (U.S. offices in Mason, Ohio), a provider of AI-driven solutions to detect fraud and automate mechanisms of trust for the insurance industry, has announced two significant milestones in its plan for U.S. market expansion: the appointment of Yogesh Sapre as FRISS’s President for the Americas, and the formation of a strategic partnership with Verisk (Jersey City, N.J.).
Tom Benton recently discussed these developments with Jeroen Morrenhof, CEO, FRISS, at the InsureTech Connect 2024 conference in Las Vegas (ITC Vegas 2024).
“America is a key market for us,” said Morrenhof. “Having the ability to actually have somebody here on the ground who understands and is responsible for this whole region is very important for us.” Sapre, an insurance industry veteran whom Morrenhof described as having “been around the block for a long time,” joined FRISS earlier this year to lead the company’s operations in the Americas.
The appointment comes as FRISS continues to expand its client base in North America, with over 50 customers already on board. However, Morrenhof sees this as just the beginning, noting that the company is “still scratching the surface” of U.S. market potential.
InsurTech/M&A/Finance💰/Collaboration
Kirmac Collision Partners with Tractable - CollisionWeek
Kirmac Collision & Autoglass, the Canadian based MSO with 20 locations across Metro Vancouver, B.C., is using Tractable’s artificial intelligence (AI) solution to digitally engage customers to streamline the vehicle repair process. The solution is currently deployed across all locations and Kirmac’s centralized customer service center.
Kirmac, along with its sister brand Reborn Autobody, have been using Tractable for the last nine months to digitally engage their customers by providing self-service visual damage quotes in minutes. By providing customers with instant quotes online, Kirmac has been able to reduce its effort to serve customers who are inquiring about repair costs.
Delos Insurance Solutions Secures $9M in Series A Funding
The wildfire-focused MGA will use the funding to drive faster expansion to other states and development of new products.
Delos Insurance Solutions (San Francisco), a technology-powered insurance provider that uses wildfire science and satellite imagery expertise to solve homeowners’ wildfire insurance availability issues, has raised $9 million through a Series A funding round. The round was led by HSBC Asset Management and included IA Capital Group, Blue Bear Capital and Generation Space along with several angel investors.
Delos provides insurance solutions to homeowners in wildfire-stressed areas and reports that it currently writes $40 billion in total insurance value. Its proprietary technology pinpoints properties that do not pose a high risk of loss at a time when traditional insurance carriers are continuing to abandon or increase rates for homeowners living in areas potentially exposed to wildfire.
As wildfires continue to challenge many parts of the country, Delos says it is committed to applying its technology and expertise to broaden access to insurance in a way that people can afford. The funding will help support this aim.
AI in Insurance
[Ed, Note: Highly Recommended] Where’s the Value in AI? - BCG
Only 22% of companies have advanced beyond the proof-of-concept stage with AI, and only 4% are creating substantial value. Our new research reveals important insights about what leaders are doing right.
After all the hype over artificial intelligence (AI), the value is hard to find. CEOs have authorized investments, hired talent, and launched pilots—but only 22% of companies have advanced beyond the proof-of-concept stage to generate some value, and only 4% are creating substantial value, according to new BCG research.
Our new report yields important insights into what AI leaders are doing to drive real value from the technology, where others fall short, where the value is coming from, how individual sectors are performing, and how companies can change their own AI trajectories.
Mobility
85M Electric Vehicles on the Road by End of 2025: Gartner
By the end of 2025, 85 million electric vehicles (EVs) – cars, buses, vans and heavy trucks are expected to be on the road, according to the latest forecast by Gartner, Inc.
“Despite several hurdles affecting the EV market over the past few months, we are projecting the number of EVs in use globally to total 64 million units in 2024 and increase 33 percent in 2025,” said Jonathan Davenport, senior director analyst at Gartner. “Many companies overestimated how quickly the switch to EVs would occur. This caused those companies to delay launching new EV models. The growth in 2025 will be driven primarily by higher EV sales in China (58 percent) and Europe (24 percent), which together are projected to represent 82 percent of total EVs in use worldwide.”
Globally, battery electric vehicles (BEVs) in use are forecast to total almost 62 million units by the end of 2025, an increase of 35 percent from 2024.
Events
Join Us for the Unveiling of the 2024 Global Innovation Awards Winners! Nov. 17-19 | Hyatt Regency Miami
The Global Innovation Awards presented by the International Insurance Society and Insurance Thought Leadership celebrate the transformative power of innovation within the insurance and risk management industry.
These prestigious awards recognize insurers and insurtechs that push boundaries, drive positive change, and contribute to a more sustainable society. Three winners representing three categories — Property & Casualty, Life | Health | Retirement, and Predict & Prevent — will be honored at the Global Insurance Forum on Nov. 18. The Forum runs Nov. 17-19 at the Hyatt Regency Miami in Miami, Florida.
The 2024 Global Innovation Awards program is proudly sponsored by Lloyd’s, the world’s leading marketplace for insurance and reinsurance, reflecting their commitment to sharing risk to create a braver world.
The Israeli Insurtech Annual Event of the Year | Dec. 1 | Tel Aviv
🚀 Invitation to The Israeli Insurtech Annual Event of the Year 🚀
We’re thrilled to announce that The Israeli Insurtech Annual Event of the Year is just around the corner! 🌟
📅 Date: Sunday, December 1st 📍 Location: Microsoft Reactor, Tel Aviv 🕔 Time: Main event begins at 5:00 PM
Join us for an evening filled with innovation, networking, and insights. The highlight of the event will be an inspiring keynote by Daniel Schreiber, CEO of Lemonade. Don't miss this chance to hear from one of the top leaders in the industry!
🎟️ Reserve your spot today: Event Registration on Eventbrite
ELECTION DAY
Tomorrow, November 5, is Election Day!
If you haven’t already voted early or by absentee ballot, be sure to head to the polls and vote in person tomorrow.
Before you head out, visit voiceofamericasinsurers.org/apciavotes to find your polling place or look up information on candidates.
MAKE SURE YOUR VOICE IS HEARD and vote tomorrow for the candidates of your choice.
Bethany Dame, Vice President, Political Engagement & Grassroots, American Property Casualty Insurance Association