Commentary/Opinion
Unprofitable Insurance—Tail Effect Hits Auto Lines | Insurance Innovation Reporter
Carriers must balance profitability with growth and market share capture strategies, but thus far, there are no signs of such a reversal—and the tail effect is just beginning to unfold.
Since 2020 the world has seen more change, disruption and surprises than any period in recent memory—and the U.S. personal auto and property insurance market is no exception. Declining auto claims and associated consequences are now in focus.
The P&C industry has endured catastrophes, runaway inflation, highs and lows of post/pre-Covid-era accident frequency and crushing supply chain blows driving insurer loss costs to new heights. Through all of this, auto insurance lines are recovering and are on track to achieve a, 98.4 combined ratio in 2024 per S&P forecasts. A far cry from the height of the insurance crisis peak years posting an inferior auto combined ratio of 104.9 in 2023 and a dreadful ratio of 112.2 in 2022. As premiums catch up a number of underwriting actions are now reshaping insurance products and consumer responses. One such change in consumer behavior, among several, is a decrease in auto damages being claimed.
Innovative strategies to recruit the next generation of insurance talent
Many young professionals remain unaware of the plentiful opportunities within the insurance industry.
To attract new, diverse talent, insurance carriers and agents must prioritize strategies aimed at engaging this dynamic generation and capitalize on opportunities to educate them on the many career paths insurance offers beyond underwriting, claims and sales.
As the workforce evolves, organizations in the property and casualty (P&C) insurance industry face a unique challenge: attracting and retaining Gen Z talent. Born between the mid-1990s and early 2010s, Gen Z brings fresh perspectives, digital fluency and a desire for meaningful work. However, many young professionals remain unaware of the plentiful opportunities within the insurance industry.
At its core, insurance is about helping people. Roles require empathy and problem-solving skills, making a real impact when clients face tough situations. It’s also rapidly evolving. Many companies are using AI, machine learning and big data to improve their services and transform their organizations.
To attract new, diverse talent, insurance carriers and agents must prioritize strategies aimed at engaging this dynamic generation and capitalize on opportunities to educate them on the many career paths insurance offers beyond underwriting, claims and sales.
6 Ways to Modernize Mobile Apps for Policyholders
Insurers must evolve mobile apps to meet policyholder demands and boost engagement in an increasingly digital world.
In an era in which smartphones have become essential tools in daily lives, there has been a surge in the preference for mobile channels — particularly mobile apps. Whether for checking the weather, reading news, scrolling social media, ordering food or managing an insurance policy, there's an app for nearly everything.
Consider this: 97% of Americans now own a smartphone. The average smartphone user spends four hours on their device daily, and nearly 90% of that time is spent using mobile apps.
Mobile apps are typically designed with a mobile-first focus, optimizing the screen size, menus and overall user experience for the device. Developers can seamlessly integrate device-specific features like the camera, push notifications and geolocation services, which are particularly useful for auto and property insurance policyholders. This allows for an interactive policyholder experience and instant access to actions like capturing photos of damage, uploading claims documents, receiving essential updates or reminders and accessing location-based services such as nearby gas prices.
Today, mobile apps are the primary delivery channel for many financial services providers, including banks and brokerages. Yet among insurance carriers, the degree of sophistication and access to fundamental mobile apps and features varies significantly. Insurance carriers can improve customer engagement, satisfaction and retention by addressing these gaps.
News
Thanksgiving Travel Expected to Exceed Pre-Pandemic Levels: AAA
A projected 79.9 million U.S. travelers will head 50 miles or more from home over the Thanksgiving holiday travel period, an increase of 1.7 million compared to last year and 2 million more than in 2019, according to the American Automobile Association (AAA).
The annual forecast now includes the Tuesday before and the Monday after Thanksgiving Day to capture the true flow of holiday travelers.
“Thanksgiving is the busiest holiday for travel, and this year we’re expecting to set new records across the board, from driving to flying and cruising,” said Stacey Barber, vice president of AAA Travel. “Americans reconnect with family and friends over Thanksgiving, and travel is a big part of that. AAA continues to see travel demand soar post-pandemic with our members looking for new adventures and memorable vacations.”
USAA hikes California home insurance rates
USAA Casualty Insurance Co. implemented an average homeowners insurance rate increase of 25.9% in California as of Dec. 1, 2024, with some policyholders facing hikes as high as 48.5%, according to filings reported by AM Best.
The rate changes are part of broader adjustments across USAA Group's subsidiaries.
Between mid-November 2024 and February 2025, homeowners in California insured through United Services Automobile Association, USAA General Indemnity Co., and Garrison Property and Casualty will also see rate increases.
USAA General Indemnity enacted a 30.6% average rate hike in mid-November, while Garrison’s 25.5% increase will take effect at the beginning of 2025. United Services Automobile Association will raise rates by an average of 16.8%, effective mid-February.
USAA Casualty attributed the increases to adjustments in base rates and pending litigation tied to wildfire risks. The company noted that it relies on an underwriting model informed by wildfire data from the United States Forestry Service and a private vendor.
Research
Personal auto insurers struggle with lengthy rate approval processes
Achieving rate adequacy has become increasingly challenging for personal auto insurers as rate filing approval processes have grown more cumbersome over the past decade, according to a study by the Insurance Research Council (IRC).
The study highlighted a 40% increase in the average time required to approve rate filings between 2010 and 2023.
According to a report from AM Best, the IRC’s analysis, which examined rate filing measures across the United States and Canada, found that insurers submitted approximately 10,200 filings annually, a figure that has remained relatively consistent.
However, delays in the approval process have coincided with a 10-point increase in the frequency of rate filings being returned with smaller approved rate changes than originally requested. Additionally, the gap between requested and approved rates widened by two points, while the number of withdrawn filings rose by 40% over the study period.
InsurTech/M&A/Finance💰/Collaboration
Protech, Mitchell and Opus IVS agree to work together on ADAS solutions | Repairer Driven News
Protech Automotive Solutions recently announced it will integrate its ADAS ID solutions with Mitchell and Opus IVS, according to a Protech press release.
ADAS ID is the first AI and machine-learning technology that uses data, such as collision estimates, diagnostic pre-scans and up-to-date OEM guidelines, the release says. Its algorithm minds the data points from vehicle scans, then creates ADAS repair recommendations that identify safety features needing proper restoration to factory specifications.
“With ADAS ID3, Protech offers one of the only ADAS-identification solutions that leverages three specific inputs: pre-scan, collision repair estimate and OE procedures, thus providing a higher level of accuracy than a simple VIN decode. This ensures our customers receive a more accurate list of recommended ADAS calibrations,” Don Mikrut, vice president of Protech, said in the release.
“Through our strategic partnerships with Mitchell and Opus IVS, we’re leveraging AI-powered diagnostic pre-scans to reach more repairers and transform the traditionally time-consuming, manual process of identifying OEM-recommended calibrations into a quick, data-backed scan. Our technology goes beyond simple VIN-based identification, ensuring that collision repairs are performed with unmatched accuracy and safety.”
Climate/Resilience/Sustainability
Thousands of US communities forgo federal flood insurance - Insurance News | InsuranceNewsNet
Catastrophic inland flooding in North Carolina, South Carolina, and Tennessee has made headlines across the country in recent months. Severe flooding in areas not typically associated with flood problems may have Americans wondering if they should buy federal flood insurance.
But National Flood Insurance Program (NFIP) coverage may not be available to everyone who wants it, Insurify reports.
Nationally, 2,279 communities don't participate in the voluntary program that provides insurance against flood damage, according to the Federal Emergency Management Agency, or FEMA, and most homeowners policies won't cover flood damage. Property owners in non-participating municipalities can't buy federally backed flood insurance.
Often, non-participating communities are rural, and many have very small populations. Other communities may seem to have little to no risk of flooding, though some may be unaware of the true risk in their area.
Communities that don't participate in the NFIP often "have horrible, inadequate flood maps," Chad Berginnis, executive director of the Association of State Floodplain Managers, or ASFPM, told Insurify. "FEMA's limited mapping budget goes to areas with risk, and your areas of higher risk are going to be bigger. In smaller communities, you're going to have old, approximate flood data."
A lack of good data and floodplain maps is a widespread problem for communities, Berginnis said.
"We have 3.5 million miles of streams, rivers, and coastlines in the country. We've mapped 1.2 million miles of them. We've only mapped a third of our floodplains."
2024 Atlantic Hurricane Wrap-up Ends With 18 Named Storms
The forecasts of above-average activity anticipated for the 2024 Atlantic hurricane season were on point as 18 named storms were recorded, according to an overview by the National Environmental Satellite, Data and Information Service.
Eleven storms became hurricanes, with five becoming major hurricanes (Category 3 or higher on the Saffir-Simpson Hurricane Wind Scale).
Five hurricanes made landfall in the U.S., with two making landfall as major hurricanes.
Predict & Prevent
Kempton: Insurtech key to Predict/Prevent insurance mindset success
Insurers that want to be successful in 2025 and beyond must lean fully into insurtech and Internet of Things devices. Nationwide’s president of Personal Lines Casey Kempton conveyed that message to attendees of the Insurance Information Institute’s Joint Industry Forum in Miami, Florida on November 20.
While discussing the topic of the shift from a “Repair and Replace” model to one that “Predicts and Prevents” with Kate Horowitz of The Institutes, Kempton relayed to the more than 100 conference attendees that solutions like telematics and Smart Home technology are still maturing. Even so, the mitigation actions that they currently provide will play a pivotal part in not only preventing a claim, but also helping customers rethink the role insurance plays in their lives.
“Customers really value trust, confidence and control,” said Kempton. “They want to know how the insurance company can help them in their attempts to protect their family, do it in a more holistic way and provide them peace of mind.”
Kempton pointed to the various insurtech partnerships that Nationwide has with companies like Resideo, Leakbot and Ting. Those relationships and others make Nationwide uniquely suited to provide their customers with comprehensive SmartHome protection and more control over what’s happening in their homes.
“Nationwide believes that engaging in these technologies and bringing them to our customers gives them the control and confidence they’re looking for.”
Kempton acknowledged there are roadblocks to getting widespread adoption. Issues with privacy and data sharing still loom large in the minds of customers. She feels that agents play an important role in putting their customers’ minds at ease. The easiest way to do that in her mind is to have agents use the devices themselves.
“If agents can actually experience these new technologies and learn firsthand about the benefits they provide, they can go to their customers and educate them on all the things that are happening with smart technologies - including the risks they prevent,” said Kempton.
Editors' Note
Thanksgiving 2024 ‑ Tradition, Origin & Significance
[Ed. note: 'Connected' is observing the Thanksgiving holiday and wish you, family and friends a happy and safe Thanksgiving. 'Connected' will resume next week. See you on December 2, 2024]
Thanksgiving Day is a national holiday in the United States, and, in 2024, falls on Thursday, November 28. In 1621, the Plymouth colonists from England and the Native American Wampanoag people shared an autumn harvest feast that is acknowledged as one of the first Thanksgiving celebrations in the colonies.
For more than two centuries, days of thanksgiving were celebrated by individual colonies and states. It wasn’t until 1863, in the midst of the Civil War, that President Abraham Lincoln proclaimed a national Thanksgiving Day to be held each November. But the holiday is not without controversy. Many Americans—including people of Native American ancestry—believe Thanksgiving celebrations mask the true history of oppression and bloodshed that underlies the relationship between European settlers and Native Americans.