Deterioration in personal auto primarily responsible for $34.9B underwriting loss in 2022 - AM Best  March 13th 2023

Best’s Market Segment Report: Volatile Weather, Rising Personal Auto Losses Drag on U.S. P/C Insurers’ 2022 Results

Weather-related losses persisted for the U.S. property/casualty (P/C) insurance segment in 2022, pressuring financial results in a year that also included a 40-year high for inflation and the second costliest catastrophe event on record, according to a new AM Best report. Trends within personal auto space provided the biggest drag on the overall U.S. P/C segment’s results, despite auto insurers’ best efforts to contend with rising severity, supply chain issues and increased medical costs.

Pricing momentum achieved by P/C companies in 2021 carried into 2022, but personal auto and homeowners’ results and the volatility that weakened the economy contributed to an estimated four-point year-over-year deterioration in the overall segment’s reported combined ratio, from 100.0 to 104.0. The personal lines segment incurred an estimated underwriting loss $34.9 billion for 2022, nearly tripling the prior-year level and driving a five-year high underwriting loss for the overall industry. The deterioration in the personal auto line was primarily responsible for the much larger underwriting loss in 2022, which was also reflected in the rise within this segment’s combined ratio to 108.2 from 102.7 in 2021.

SVB’s Lobby Groups Fought Proposal To Bolster Deposit Insurance

In the months before Silicon Valley Bank’s collapse, the bank’s lobbying groups fought a proposal requiring financial institutions to increase payments into the Deposit Insurance Fund that protects depositors from bank failures, according to federal records reviewed by The Lever.

As lawmakers now face calls to expand deposit insurance to stave off a wider bank run, the battle shows why that insurance has remained limited — and why any new initiative to require banks to pay for more such insurance could face obstacles in Washington. Put simply: Powerful banking interests and their allies in Congress have made clear they oppose measures that would force banks to pay higher premiums in order to fund depositors’ insurance.

On Sunday, federal regulators announced an emergency action that “fully protects all depositors” at the bank, and they pledged that “any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks.”

Aon chairwoman calls for courageous leadership amid insurance’s decisive moment

Insurance companies need to innovate to survive, but they need to so with fewer resources while facing rapidly evolving customer needs and economic headwinds.

This decisive moment in the industry’s history calls for leaders to be courageous and emotionally intelligent, according to Marguerite Soeteman-Reijnen chairman of the executive board of Aon Holdings BV, the statutory shareholder and parent company of over 400 Aon companies.

She delivered this message during her a keynote address at the Insurtech Insights Europe 2023 summit in London last week.

“Innovation is about meeting unmet needs,” she said, speaking to an audience of insurance and insurtech leaders. “However, what we notice is in our business, we are asked to do more with less. Infinite growth at a finite limit is simply impossible.”

Soetman-Reijnen will step down as chairman on April 1, 2023 after 33 years in the company, Aon announced on Thursday (March 9)

PLRB's Bryan Falchuk focuses on opportunity and growth

In early December, the Property & Liability Resource Bureau, (PLRB) named Bryan Falchuk the company’s president and chief executive officer.

Falchuk has extensive experience both within and outside of the insurance industry, serving as the founder and managing partner of Insurance Evolution Partners; authoring “The Future of Insurance” book series; speaking at numerous industry events, webcasts and podcasts; and holding senior roles with multiple insurance and insurtech companies. He has also faced and overcome adversity on a personal level, and enjoys participating in activities that contribute to his health and wellness, such as running and cycling.

He recently shared with Claims and PC360 what he sees ahead for PLRB and the insurance industry in general.

(An edited version of this interview appears in the March/April issue of Claims Magazine.)

What’s fueling innovation in insurance?

The pace of innovation in insurance and the inevitable question this gives rise to – whether insurance is innovating fast enough – were two topics very much under the microscope at Insurtech Insights Europe 2023.

Offering a deep-dive perspective into the complexities of these topics during a keynote discussion on ‘Co-operation: Driving resilience in the digital insurance ecosystem’, was Swiss Re’s group chief digital and transformation officer, Pravina Ladva. And during her address, she highlighted how the answer to this question has shifted in the last five years, propelled by changes in our wider societies.

The ‘new normal’ for miles driven

As companies have developed more formal work-from-home policies, we’re settling into expectations around what should be the ‘new normal’ around how people travel, according to an industry observer.

Looking at data from earlier this year, Nathan Shipley, executive director for The NPD Group’s automotive aftermarket practice, saw that more people chose to drive and take road trips over flying due to airline issues, ranging from delays and cancellations to high costs due to high demand. People invested in camping equipment and bought trailers and recreational vehicles. That helped keep miles travelled up.

But how companies implement work-from-home policies will end up being the biggest impact-maker, Shipley said. And barring some future event that keeps people home, it seems we have reached some stability in this area.

According to AIA Canada’s Outlook Study 2022, kilometers travelled in 2021 matched 2019 levels. However, Q1 2022 was below the same period in 2019, leaving the year off the pace to match or even exceed pre-pandemic levels. The study attributed this to high gas prices.

Will passenger car popularity rebound?

The shine might be coming off pickup trucks for consumers.

It seems consumers are becoming less interested in pickups and moving more towards cars — to the point where car purchases could surpass trucks, suggested an industry observer.

Things that are most interesting to consumers these days are fuel prices and overall efficiency, said Daniel Ross, senior automotive analyst at Canadian Black Book.

Even when it comes to electric vehicles, these things matter to consumers. So as EV sales grow, consumers will be looking at how much range they’ll get from a single charge.