Commentary/Opinion
Florida homeowners' insurance market shows signs of recovery
The Florida homeowners insurance market has shown signs of recovery since major legislative reforms were introduced two years ago, according to industry executives.
Privilege Underwriters Reciprocal Exchange President Dave Logan noted that while challenges persist, conditions are improving. Don Matz, CEO of Orange Insurance Exchange, described the shift as “the difference between night and day,” with new insurers entering a market that previously faced multiple insolvencies.
Among the new entrants are several reciprocal insurance exchanges, member-owned entities with a unique structure.
A report from AM Best revealed that in these exchanges, a separate attorney-in-fact manages operations, and funds collected go into a pool from which claims and expenses are paid. Matz explained that, in a three-party reciprocal, members insure each other in a shared pool, which can generate dividends through a subscriber savings account if there is an underwriting profit.
Research
Your Car’s Safety Tech Could Lower the Risk of Accidents but Raise the Cost of Claims
Most modern cars come equipped with advanced safety technology. Features like lane departure warnings, forward collision mitigation and blind spot detection are becoming standard, and automakers have even committed to making automated emergency braking an essential component of all new cars by 2029.
From a safety perspective, this is all great news. After all, research shows that advanced driver assistance systems (ADAS) can reduce crash risk by as much as 50 percent.
But all the technology making your car safer also makes it more expensive to repair — which could mean larger, more drawn-out insurance claims. With claims industry experts pointing to vehicle complexity as a factor behind rising insurance rates, it’s important to understand how the technology in your vehicle — or one that you plan to buy — could impact the cost of coverage.
What is ADAS?
ADAS — advanced driver assistance systems — are systems that assist drivers in operating a vehicle with the goal of reducing human error through human-machine interaction. Examples of safety system ADAS you may have in your vehicle include:
Forward collision warnings
Automated emergency braking
Lane departure warnings or prevention
Parking sensors
Blind spot monitoring
Many of these systems are standard or widely available as optional equipment on most new vehicles sold in the U.S. By 2029, automated front emergency braking will be standard equipment required for all new vehicles.
California's ongoing crisis made these home insurers scale back
Homeowners in California are up against an insurance crisis that shows no signs of easing.
Some homeowners have been lucky enough to hang onto their coverage, even as the list of insurers that are non-renewing policies and limiting new business in the state grows.
However, insureds have had to weather ever-rising rates; with hundreds of thousands of Californians predicted to see another increase before the end of 2024.
According to BankRate, the major factors driving the Golden State's insurance crisis are wildfires, inflation, the high cost of reinsurance and state regulations; specifically Proposition 103.
Proposition 103 requires insurers to submit rate increases over 7% for approval by the California Department of Insurance. This process can be complicated and costly for insurers, with the average approval process taking around six months. The bill was passed in 1988 with the intention of protecting consumers from arbitrary, unjust insurance rate hikes.
The slideshow above looks more closely at some of the changes and pullbacks major insurers have made in California in response to the ongoing home insurance crisis.
Climate/Change/Sustainability/ESG
AI adoption in insurance grows amid rising extreme weather risks
As losses from extreme weather increase, insurers are rapidly adopting AI risk assessment models, with one in four now using AI for convective storms and 18% for wildfires, according to a recent survey by ZestyAI.
ZestyAI’s survey, which collected responses from 200 senior insurance leaders, explores how the industry is responding to the challenges posed by extreme weather.
The research revealed that stochastic models are the most popular approach for assessing storm risks, with 45% of respondents citing them as their preferred tool. For wildfires, 54% favour traditional actuarial models based on historical data.
FEMA: Over 72,000 NFIP flood insurance claims filed in Florida from recent hurricanes
The latest data reported by the U.S. Federal Emergency Management Agency (FEMA) states that across hurricanes Debby, Helene and the most recent Milton, more than 72,000 National Flood Insurance Program (NFIP) claims have been filed so far.
One month after hurricane Helene, FEMA reported that more than 54,000 claims had been filed by NFIP policyholders for that specific storm.
It was a particularly high level of NFIP claims for any major flood event caused by a named tropical storm, as for comparison FEMA had made 47,000 claims payments for 2022’s hurricane Ian, an event that resulted in over $4.5 billion in losses to the NFIP.
However, that figure of 54,000 NFIP claims for Helene was across the entire footprint of the storm’s flood impacts, which had extended through multiple states from its landfall in Florida right up to the devastating flooding experienced in western North Carolina.
Now, one month after hurricane Milton, FEMA has provided an update but unfortunately has not broken out NFIP claims for that storm specifically.
Instead, FEMA has provided an update on NFIP flood insurance claims filed across three hurricanes that caused some impacts in Florida over the season so far, hurricanes Debby, Helene and Milton.
New insurance company aims to address a concern that leads to 90% of business closures: 'Less waiting, less uncertainty'
New AI-driven insurance platform GridProtect is helping businesses recover quickly from weather-related power grid failures — which are happening with increasing frequency because of the escalating climate crisis.
Since 2000, 80% of major power outages in the United States can be attributed to weather-related events, and the frequency of grid failures is on the rise. Power outages in the U.S. cause $150 billion in losses annually, per FinTech.
Run by Montauk Climate, a leading incubator focusing on climate technology, Adaptive Insurance aims to use GridProtect to provide quick financial assistance to businesses immediately following a power outage. Traditional insurance plans require a 24-hour waiting period for activation.
"Climate and weather events cause $1 billion in damage every three weeks in the U.S.," said Philip Krim, founder and partner at Montauk Climate. "We launched Adaptive to address this immense and growing problem with a novel approach that is both effective and scalable."
Using artificial intelligence and climate data, GridProtect will be able to offer individualized parametric insurance solutions as soon as an outage happens.
Brava Announces Investment from Golden Gate Capital to Accelerate Growth
Brava Roof Tile (“Brava”), the leading independent provider of composite roofing materials in the U.S., today announced an investment from Golden Gate Capital, a San Francisco-based private equity firm. Brava’s management team, including Chief Executive Officer Adam Brantman and Chief Manufacturing Officer Andrew Ahrens, will continue to lead the Company and remain significant shareholders after close. Brava will remain headquartered in Washington, Iowa. Financial terms were not disclosed.
“Brava is a true industry disruptor and the clear supplier of choice for premium composite roofing products”
Founded in 2008, Brava is a leading manufacturer of high-performance, compression-molded roofing tiles that are created from recycled materials and deliver architecturally pleasing, durable and cost-competitive solutions to homeowners. Brava’s durable roofing materials can withstand even the most extreme weather conditions and have best-in-class hail and fire resistance. As a result, homeowners are protected with a safer, longer-lasting roof, better insurance coverage, and lower maintenance costs, when compared to traditional roofing materials.
Building in resilience for an uncertain climatic future
The US is facing a property insurance crisis for many homeowners struggling to access the cover they need. In the face of rising losses from natural catastrophes such as wildfire and flood, premiums have risen significantly while some insurers have withdrawn from the market altogether. It’s why actions such as a more stringent enforcement of building codes and homeowners adapting their homes to better withstand greater climatic risks are critical in the journey towards a sustainable and affordable property insurance market.
Standing alone in the charred devastation of last summer’s fires on the Hawaiian island of Maui which all but destroyed the town of Lahaina, a single house remained almost untouched. At over 100 years old, 271 Front Street became known as the ‘miracle house’ for surviving the wildfires. But it’s a miracle that can be explained by steel and stone, specifically the fire prevention measures the owners installed when undertaking a major renovation a few years prior which included a commercial grade steel roof, as well as stone-based landscaping around its perimeter.
“This house is a powerful symbol of what can be done to protect homes from natural catastrophe risk such as wildfire,” says Hiscox’s Joseph Pennyfather, Binding Authorities Line Underwriter. “And given the US P&C results in recent years, whether it’s retro fitting old houses or ensuring building codes have risk mitigation measures baked in, the sustainability of the household insurance market in the US depends on concerted action to help build in greater resilience to meet the growing challenge of climate change.”
“These factors are combining to force some insurers to reduce their exposure, push up prices, or even withdraw altogether from natural catastrophe exposed risk for home owners,” says Pennyfather.
InsurTech/M&A/Finance💰/Collaboration
Yelp just spent $80M on a site for car repair estimates | TechCrunch
Yelp, which made a name for itself giving restaurant recs, just bought an auto services website.
In the company’s earnings report on Thursday, Yelp revealed that it agreed to buy RepairPal, a site for car repair estimates, for $80 million in cash. The acquisition is expected to close by the end of the year, subject to customary closing conditions.
“We believe RepairPal will accelerate our broader services efforts by expanding our offerings in the multi-billion dollar U.S. auto services advertising vertical,” Jeremy Stoppelman, Yelp’s co-founder and CEO, said in a statement.
While it might not seem like an obvious marriage, RepairPal fits into Yelp’s ambition to become a major home services funnel.
Financial Results
Hannover Re lifts 2024 profit target as 9M net income reaches €1.8bn and losses fall within budget - Reinsurance News
Large European reinsurer Hannover Re has raised its profit target for 2024 on the back of a 30.4% rise in net income to €1.8 billion for the first nine months of the year, as the reinsurance service result increased by more than 36% to €2.1 billion.
Across the group, gross reinsurance revenue rose 6.4% to €19.7 billion in 9M 2024 compared with €18.5 billion a year earlier, and at unchanged exchange rates, growth would have been 7%.
Alongside the rise in the net reinsurance service result (a reflection of the profitability of underwriting activity less business ceded primarily retrocessions and insurance-linked securities) from €1.6 billion, the reinsurance finance result adjusted for exchange rate effects, which is structurally negative, amounted to -€784 million, up from 9M 2023’s -€602 million.
Overall, operating profit increased 33.3% to €2.4 billion from €1.8 billion, and net income rose to the aforementioned €1.8 billion, which also reflects the impact of a positive one-off tax effect of €120 million in the period.
Legal System Abuse/Social Inflation
Lawsuits against insurers declined again this year. Will this year’s hurricanes reverse the trend?
Lawsuits against insurers in Florida have continued to decline in 2024 following reforms enacted two years ago.
Insurers say the declines have reduced costs and helped them to reduce or stabilize rates charged to policyholders.
Attorneys who represent insurance customers counter that the reforms made it more costly for policyholders to challenge insurers and left many with no recourse when their insurer denies or underpays claims.
For the second straight year, the number of lawsuits filed against insurers during the first three quarters declined by 23.8% — from 36,639 to 27,923 — compared to the same period last year, according to data compiled from public records by Guy Carpenter & Company, a global reinsurance brokerage, and released to insurers in late October.
That followed a 23.9% decline between the first three quarters of 2022 and 2023 and a 23.4% decline over the same time span in 2021 and 2022, the data shows. Since 2021, the number of lawsuits filed over the first three quarters declined from 67,788 to 27,923 — a 58.8% decline.
The trend accelerated during the third quarter of 2024: The number of lawsuits filed declined by 30% compared to the third quarter of 2023.
OEMs & Auto Insurance
GM announces new digital consumer app, navigates steps following a collision | Repairer Driven News
GM announced a new digital experience that helps customers navigate what they do following a vehicle collision during a Society of Collision Repair Specialists (SCRS) OEM Collision Repair Technology Summit at SEMA last week.
“I am thrilled to announce today here at SCRS that we have launched GM Collision Assistance, and we are now in the market,” John Eck, GM Collision Assistance head of product, said Thursday. “We have been for a couple of weeks now with a new digital product that helps customers after a collision.”
Eck said Collision Assistance provides additional support to consumers following their OnStar experience, including providing information on GM-certified repair shops. He said the presentation follows one given by Andrew Rose, OnStar Insurance president, during the 2023 OEM Summit. To watch the presentation click here.
“It’s another typical day,” Eck said, describing a scenario. “It’s a nice fall morning. Days are a little darker. The air’s a little crisper. The roads are a little wetter because of a light rain. The car is full with the kids. You’re on your way to take them to school. You’ve got your errands to run; everything’s great. Your favorite song has come on the radio. You tap on the steering wheel, and out of nowhere, bam.”