Commentary/Opinion
Viewpoint: As Insurance Losses Outpace Premiums, State Regulators Play a Critical Role
Along with the rising cost of living in many facets of families’ daily lives, property insurance availability and affordability continue to be a challenge across the U.S. Inflation has been persistently increasing repair, labor and medical costs.
And legal system abuse is plaguing the marketplace for consumers in every state. In a challenging time like this, it’s more important than ever to have state regulators aligned and focused on how to work together to empower consumers and improve the marketplace.
State regulators play a critical role in the health of state insurance marketplaces by monitoring solvency and market conduct, the twin pillars of state regulation. Insurance rates are heavily regulated by state insurance departments to make certain rates and profits are not excessive and that insurers maintain enough capital to pay claims. During times of inflation, insurers share regulators’ desire to protect consumers from higher costs. One of the best ways to do that is to foster healthy insurance markets that promote competition and drive innovation.
David A. Sampson President and CEO of the American Property Casualty Insurance Association (APCIA)
How the Industry Is Navigating a Volatile Auto Insurance MarketHow the Industry Is Navigating a Volatile Auto Insurance Market
The personal auto insurance industry continued to experience challenges in 2024. With a sustained rise in claims frequency and severity, and inflationary loss costs caused by increasing repair costs and medical expenses, the personal auto insurance market has been driving on a bumpy road for several years.
“Challenges over the past few years have included economic and environmental trends, such as labor shortages and increasing repair costs, as well as increasingly severe accidents and escalating medical expenses," says Karen Eckert, senior vice president, personal insurance agent distribution, Travelers. “In addition, as vehicles become more technologically advanced, they become more costly to repair."
With more than 20% of vehicles involved in collisions now considered total write-offs, insurers are losing money, despite passing along price increases to their customers, according to J.D. Power. The impact of these challenges has been felt nationally by both carriers and consumers.
“Economic challenges, such as post-pandemic inflation, have strained both insurers and consumers, leading to depleted savings and increased credit usage," says Casey Kempton, president, property & casualty personal lines, Nationwide. “Rising insurance costs are causing some consumers to reduce their coverage or suspend their policies temporarily. Additionally, the industry is grappling with an increase in severe weather events. While this impacts property lines more directly, it strains carrier resources and pressures auto results."
Financial Results
2024 More of the Same in Commercial Auto Segment After $5B Net Loss in 2023
After the U.S. commercial auto insurance segment sustained a $5 billion net loss in 2023, a new AM Best report indicates further deterioration in the first half of 2024.
Despite targeted underwriting initiatives, including raising premiums to match the rising costs of claims, the commercial auto insurance segment continues to lag in comparison to other property/casualty lines when it comes to profitability.
In the report, “Different Year, Same Story: Deteriorating Commercial Auto Results,” AM Best said frequency and severity of accidents involving commercial automobiles are being negatively affected by distracted driving and the shortage of experienced commercial drivers.
US commercial lines sector stays resilient amid emerging risks – AM Best
Stable profitability driven by discipline and tech-driven innovations
AM Best has maintained its stable market segment outlook for the US commercial lines insurance sector for 2025, citing strong underwriting performance and improved investment returns that continue to support operating profitability.
The segment has demonstrated reserve adequacy, though it varies by line of business, and insurers have maintained discipline in risk selection, terms, and capacity deployment.
However, the industry faces challenges, including elevated casualty claims influenced by social inflation and high property claims costs. Additional risks stem from domestic and geopolitical developments following the US presidential election.
Alan Murray, director at AM Best, commented that the sector is expected to remain profitable overall despite these challenges, benefiting from sound risk-adjusted capitalization levels among most insurers.
“Our expectation is that the US commercial lines segment will remain profitable in the aggregate and will be resilient in the face of near- and longer-term challenges,” Murray said.
According to the report, commercial lines insurers delivered favorable underwriting results through the third quarter of 2024, with combined ratios averaging in the mid-90s over the past three years. Moderate pricing gains and premium growth linked to the US economy have supported these outcomes.
Insurance industry "supercycle" likely to continue into 2025: ALIRT - Reinsurance News
The US property and casualty (P&C) insurance industry is experiencing a prolonged period of robust financial strength, with no clear end in sight. According to insurance research firm ALIRT, both commercial and personal lines are seeing record-high composite scores, indicating exceptional financial health.
“We see no reason why this current supercycle cannot continue well into 2025, if not beyond, ALIRT analysts highlighted in its recent US P&C Industry Review. “The industry is in a super defensive position – even as it continues to rake in profits,” they added.
This “supercycle,” a term used to describe an extended period of strong market conditions, is driven by several factors. On the personal lines side, significant losses in recent years, particularly in auto and homeowners, have forced insurers to implement substantial rate increases.
This is coupled with a retreat from high-risk areas and stricter underwriting practices in response to escalating weather-related losses and inflationary pressures.
Analysts stated: “As regards the personal lines sector, the sizeable auto and homeowners losses in 2022 and 2023 were simply not sustainable. A personal lines crisis loomed as homeowners insurers especially, facing mounting weather-related losses in what appears to be a new climate change-impacted era (coupled with a several-year spike in inflation and reinsurance market retrenchment), began to exit or seriously restrict exposures in ever wider swaths of the country.
“Those carriers that opted to stick it out increasingly demanded substantial rate increases which, in a growing number of jurisdictions, are now being granted. A similar dynamic has been occurring in personal auto, the industry’s largest line of business, with targeted underwriting initiatives combined with rate increases having their intended effect.”
Embedded Insurance
Watches of Switzerland Group and Zillion Partner to Offer an Embedded Insurance Benefit to Clients at Point of Sale
Clients can enjoy instant watch and jewelry coverage before leaving the showroom
Watches of Switzerland Group, a business built on delivering world-class client experiences, has partnered with leading embedded insurance provider Zillion to offer a valuable client benefit at point of sale. Watches of Switzerland clients can now enjoy instant coverage for their watch and jewelry purchases with one-click on mobile, and without applications, appraisals or app downloads. The frictionless benefit enables an elevated client experience and exceeds the expectations of discerning consumers.
Focused on how it makes clients feel throughout every interaction with its brands, Watches of Switzerland has a reputation for unsurpassed excellence and unparalleled service. The company has partnered with Zillion to further enhance client care by offering a peace of mind coverage benefit with concierge service.
“Exceptional client experiences are at the heart of everything we do,” says Lorcan McCabe, Regional Director of Watches of Switzerland. “Zillion’s innovative product and white glove service aligns with our commitment to providing best in class services to our clients. It also complements how we strive to go above and beyond, even before our client walks through the door of one of our showrooms.”
“Uniquely differentiated, Watches of Switzerland is the gold standard for client experience,” says Adam Black, Zillion’s Managing Director. “Zillion is dedicated to the highest service standards while providing an immediate benefit at point of sale. This combination marries well with Watches of Switzerland’s focus on delight, and we are humbled to be partnered with a company that cares so deeply about its clients.”
Allianz Partners and Uber launch vehicle interruption cover in UK | Insurance Business UK
Coverage for gig drivers' income during vehicle downtime
Allianz Partners and Uber have partnered to introduce Vehicle Interruption Cover (VIC), a digital insurance product designed to protect the income of Uber drivers in the UK when their vehicles are off the road.
The offering, developed with the support of insurtech broker Indeez, is available to Uber drivers enrolled in the Uber Pro programme and accessed via a subscription through the Uber driver app.
VIC is part of the Partners Protection Programme, a suite of financial protections available to Uber drivers through Allianz Partners and Uber. The programme includes benefits such as workplace accident and injury cover, sick pay, and maternity and paternity support.
Jean-Marc Pailhol, chief officer global strategic partnerships and board member at Allianz Partners, described the new product as an essential addition to the offerings provided in collaboration with Uber.
Research
2024 U.S. Claims Digital Experience Study | J.D. Power
Auto and home insurers have spent the past year adding dozens of new features and refinements to their mobile apps, such as automatic collision reporting capabilities, enhanced image upload and body shop selection tools.
According to the J.D. Power 2024 U.S. Claims Digital Experience Study,SM released today, these investments are resulting in significantly higher customer satisfaction scores. Overall satisfaction with the digital insurance claims process is 871 (on a 1,000-point scale), up 17 points from 2023.
“The digital channel has now surpassed traditional phone-based communication as the most satisfying way for insurance customers to submit a new claim,” said Mark Garrett, director of global insurance intelligence at J.D. Power. “After years of slow growth in the usage of digital channels for claims reporting, insurers’ investments into developing these tools and promoting usage have really paid off as more insureds than ever are using them. Auto and home insurers have finally gotten the digital formula right with streamlined reporting tools, proactive updates and well-designed apps. However, the industry still has some work to do when it comes to helping insureds navigate between digital and offline channels, which can sometimes create unnecessary friction in the claims process.”
The U.S. Claims Digital Experience Study, now in its fifth year, evaluates digital experiences among P&C insurance customers throughout the claims process. It examines the functional aspects of desktop, mobile web and mobile apps based on four factors: visual appeal; clarity of the information; navigation; and range of services. The study is conducted in collaboration with Corporate Insight, the leading provider of competitive intelligence and user experience research to the financial services and healthcare industries.
“Property and casualty insurers made an average of 6.75 updates to their mobile apps in 2023, an increase from 5.72 in 2022, many of which augmented the resources provided to policyholders throughout the claims process,” said Michael Ellison, president of Corporate Insight. “The industry is reaching an important tipping point in which digital channels—particularly mobile apps—are the primary conduit to insurance customer engagement. This is particularly important as younger generations tend to be mobile-first. As technology improves, insurers can leverage mobile apps to offer a powerful customer experience at a pivotal juncture in the insurer-insured relationship.”
Statistics
2024 Connected Newsletter Statistics
Over the last several years, 'Connected' Newsletter has curated the latest news, stories and events around the vast P&C Insurance ecosystem. We reach thousands of subscribers and even more through daily posting on LinkedIn. We hear from readers nearly every day and each interaction, just how much they appreciate the "3 minute scan".
We thought you might like a look at some of the stats from all readers and thank all 'Connected' followers - co-curators: Stephen Applebaum & Alan Demers**
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Most popular newsletter article of 2024 to date
SIR (Society of Insurance Research) 2025 Annual Conference |May 4-6, 2025 |Chicago, IL
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Commissioner Lara takes major step to increase insurance availability in wildfire-distressed areas
People
Boyd Group Announces CEO Succession Plan - CollisionWeek
Tim O’Day to be succeeded by Brian Kaner in May 2025.
Boyd Group Services Inc. (TSE: BYD) announced that, effective May 14, 2025, Chief Executive Officer Timothy O’Day will step down from his current role, to be succeeded by Brian Kaner, current President and Chief Operating Officer of Boyd. These changes are planned to be effective as of the date of the Annual General Meeting of Boyd, which is scheduled to occur on May 14.
Tim O’Day will step down from his current role of CEO at the Boyd Group in May 2025.
O’Day joined Gerber Collision & Glass in February of 1998 and, with *Boyd Group’s acquisition of Gerber in 2004, he was appointed Chief Operating Officer of Boyd’s U.S. Operations. In 2008, he was appointed President and Chief Operating Officer for U.S. Operations, and in January, 2017 he was appointed President and Chief Operating Officer for all of Boyd’s operations in both the U.S. and Canada. At the beginning of 2020, he took an expanded role as President and Chief Executive Officer. O’Day has also served on the Board since 2012. Throughout the past twenty years, O’Day has played an integral role in the Boyd Group’s growth and success.
Events
5th Annual InsurTech Spring Conference 2025 - Premier East Coast Event
Join the 5th Annual Insurtech Spring Conference next April, 2025 in NYC. Nearly 1000 attendees with P&C and Life & Health tracks.
InsurTech Conference
Join us at the 6th annual InsurTech Conference held on April 2-3, 2025.
This InsurTech Conference will bring together traditional insurers, InsurTechs, investors, and other solution providers to support the InsurTech community. Presentations will be divided into two content areas: (1) Property and Casualty and (2) Life and Health. Integrated in the event is the largest InsurTech Competition on the East Coast. The Top Ten startups from a pool of 100+ applicants will pitch in front of investors.
Networking for all attendees provided via Brella.