Commentary/Opinion
Modernizing Life & Annuities for Millennials | Insurance Thought Leadership
Rather than viewing annuities as products that are simply “sold, not bought,” the industry must evolve to take advantage of a historic opportunity.
The life insurance and annuities (L&A) industry stands on the precipice of a massive generational wealth transfer, so the millennial market represents an unprecedented opportunity for growth. But the insurance industry — burdened by legacy technology and human intensive and inefficient processes — has traditionally been ill-equipped to capture this burgeoning market.
Rather than viewing annuities as products that are simply “sold, not bought,” the industry must focus on evolving to meet the needs of today’s consumers. Historically, a lack of strong education and transparency around these products has required agents to serve as the primary source of information. However, as we adopt more technology-driven, self-serve solutions — similar to those in banking and wealth management — we can empower consumers with the tools they need to make informed decisions independently.
To get there, we must work toward the development of industry best practices and standards that enable more interoperability across the L&A value chain. This shift is not about incremental improvements, but about fundamental transformation — enabling carriers to launch products faster, streamline operations, and deliver superior customer experiences.
Brad Medd is the chief technology officer at Zinnia
Online Car Auctions | Repairable & Used Cars - Copart
From our humble beginnings in 1982 as a single salvage yard in Vallejo, Calif. we’ve had recycling as the center of our business model. Vehicles offer a lot to be recovered, reused and repurposed. Let’s talk about where Copart fits in to the circular economy.
What is the Circular Economy? The circular economy refers to industries that require fewer inputs to create outputs and thus have less of an impact on the environment and consume fewer raw materials. Sustainable businesses belong to circular economies.
How Does Copart Work with the Circular Economy? Copart connects buyers and sellers of all kinds of vehicles in all kinds of conditions. But for a simple example, let’s talk about electric vehicles, or more specifically how Copart helps recycle electric vehicles.
Businesses harvest raw materials that then go to make all the different pieces that EV manufacturers assemble into completed automobiles. This part is no different than the regular economy.
For this example, let’s say the electric vehicle gets involved in an accident. If the insurance company decides the cost to repair it is higher than the vehicle is worth, they’ll have its title branded as salvage and then contact Copart.
Mark Cuban labels home insurance crisis biggest threat to housing affordability
Home insurance in places that have constantly suffered from natural disasters will be the top issue in housing affordability in the next four years, according to billionaire entrepreneur and investor Mark Cuban.
Writing on his Bluesky page, Cuban said that as buyers in the housing market continue to prioritize low interest rates in eyeing their new home, home insurance should also be a major factor for consideration.
“Home insurance in areas hit by repetitive disasters is going to be the number one housing affordability issue over the next four years. And possibly going into the midterms. More so than interest rates,” he said on the platform, emphasizing Florida’s possible predicament.
Bankrate Insurance Analyst Shannon Martin supported his idea, telling CNBC that it was “an accurate statement” as many other insurance experts agree.
Financial institutions often require homeowners to have coverage when legally owning a home, insuring them for damages to the house, related structures, personal property and liability. Individual factors can hike up the costs in such areas, with houses that have a higher likelihood of requiring claims to repair damages to weather events needing to pay more money.
Bankrate noted that Florida residents pay an average of $5,527 every year for $300,000 in dwelling coverage. As those living in disaster-prone areas would see more expensive coverages, Martin said that insurance companies were understanding extreme weather risks better.
“More insurance companies have been using technology and AI to get into predict-and-prevent mode instead of a reactive mode. They’re starting to be able to pinpoint what homes are really at the higher risk, narrow it down,” said Martin.
Experts also highlighted the potential for tariffs on materials entering the US from abroad under the incoming Trump administration to spike building costs.
Legal System Abuse/Social Inflation
Will the US social inflation crisis have a contagion effect?
The global liability insurance landscape is undergoing seismic shifts, driven by increasing trends in social inflation, particularly in the United States.
Social inflation refers to the rising costs of insurance claims due to factors like litigation funding, plaintiff-friendly legal environments, and large jury awards, often termed “nuclear verdicts.”
While this phenomenon has been predominantly a US issue, emerging trends in other regions, such as Europe, signal that its effects could transcend borders and have implications for insurers.
“Collective actions are already becoming more prevalent in some European countries, as consumer groups start using collective redress frameworks and legislative change to chastise companies and fund remedial work, while consumer protection agencies have already brought claims in areas like water quality and pharma,” said Arne Holzheuer (pictured below), a global practice group head for liability in the chief claims office at Allianz Commercial.
Holzheuer noted a record number of class actions were filed in Europe last year (133), up 10% from 2022, with the UK, Netherlands, Germany, and Portugal accounting for over three-quarters of these. Product liability, consumer, and personal injury were the largest sources of litigation.
Quantifying Social Inflation: How Swiss Re Developed an Index
Swiss Re Institute (SRI) made a significant contribution to the literature on social inflation and its impacts on insurers, reinsurers and their customers with the calculation of a new measure—a social inflation index. (Related article: U.S. Nuclear Verdicts Break Records; Social Inflation Up to 7% in 2023: Swiss Re)
How did they do it?
Below, we set forth some of the calculations details from Swiss Re Institute’s sigma report, titled “Litigation costs drive claims inflation: indexing liability loss trends.”
InsurTech/M&A/Finance💰/Collaboration
Aviva reaches agreement to acquire Direct Line
According to Bloomberg, Aviva reached a preliminary agreement to buy Direct Line Group for £3.6 billion ($4.6 billion). Late last month, Direct Line rejected a £3.3 billion ($4.2 billion) acquisition proposal from Aviva.
In a statement to shareholders, the board of Direct Line noted that it remains confident in Direct Line’s prospects as a standalone company and continues to have conviction in the capabilities of the newly established leadership team to deliver the announced strategy. The board added that it had carefully considered the proposal with its advisers and consulted with Direct Line shareholders during the offer period and had concluded the proposal is at a value that it would be minded to recommend to Direct Line shareholders should there be a firm intention to make an offer.
If the deal goes through, the merged group would have about a fifth of the motor insurance market.
Where Angels Fear to Tread: Delos’ Focus on Wildfire-Stressed California | Insurance Innovation Reporter
Founded by Californian aerospace engineers the homeowners’ InsurTech MGA writes $40 billion in TIV profitably with above 90 percent renewal rates in the challenging California market, using satellite imagery, AI and sophisticated risk modeling.
Homeowners’ InsurTech MGA Delos Insurance Solutions boasts that it has the best wildfire risk model in the industry. Founded in San Francisco in 2017 by a team of aerospace engineers from California, the company focuses on wildfire-stressed areas of the state, even as other underwriters are moving out of the state—Delos’ use of satellite imagery and artificial intelligence has identified 65 percent of homes represent a low/medium risk within territories deemed too risky by the rest of the insurance market.
Anthony O'Donnell, Executive Editor, Insurance Innovation Reporter
Climate/Resilience/Sustainability
Triple Threat Targets More Than 30,000 U.S. Homes: CoreLogic
Year-round extreme risk from three natural disasters threatens more than 33,000 homes in the U.S., according to the latest analysis by CoreLogic.
Hurricane wind, wildfire and inland flood are the most common combination of perils, research showed.
Natural disasters, under-insurance and geographic vulnerabilities add additional layers of concern.
The homes at extreme risk homes are spread across 20 metropolitan areas and have a current risk score greater or equal to 71 for three separate perils.
Sola raises $3.7m in seed round to provide affordable natural disaster insurance
Insurtech company Sola has closed its seed round, bringing total funding to $3.7 million, furthering its mission of providing affordable, reliable natural disaster insurance to homeowners and businesses.
Sola aims to tackle the challenges of a volatile home insurance market, where rising premiums and denied coverage have left many homeowners frustrated.
Wesley Pergament, Co-Founder and CEO of Sola, said, “At Sola, we are building a lifeline for homeowners who have incredibly high premiums and deductibles.”
He added, “With our new wind and hail product, we’re tackling these challenges head-on and delivering much needed relief to more homeowners.”
Curators' Corner: Alan Demers and Stephen Applebaum
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2025 PREDICTIONS
Insurance industry remains a mixed bag in 2025 – Amwins
The insurance market is expected to remain a mixed bag in 2025, with some sectors experiencing transformation and growth, while others remain challenged.
According to Amwins’ annual State of the Market report released Thursday, the excess a surplus (E&S) insurance sector experienced “notable” growth over the past six years, and the use of advanced technologies continue to grow. Meanwhile, the transportation and the cybersecurity sectors continue to face significant challengers. The healthcare sector is seeing signs of recovery, while the energy sector remains stable.
AI adoption on the rise
The professional lines market is entering a period of transformation as carriers adapt to new opportunities and challenges. As growth and innovation stay top of mind, we’re seeing notable trends emerge
Markets are also increasing their investments in advanced technologies, such as artificial intelligence and application programming interfaces, in order to streamline online portals and improve user experiences.
The report said that there is a notable growth trend in adapting enhanced offerings with additional security and preventative options, with some markets even tapping into independent revenue streams from these services. Insurers are seeing opportunities in niche markets, including telemedicine and real estate development.
Personal Insurance Marketplace Outlook 2025: Strategies for value creation
Companies can leverage strategic partnerships with digital insurance brokers to stave off rising personal insurance rates in 2025.
As we approach 2025, rising insurance rates and economic pressures demand innovative solutions. Strategic partnerships, like those highlighted in VIU by HUB’s Personal Insurance Marketplace Outlook, empower businesses to navigate challenges, deliver value, and support customers and employees facing increasing personal insurance costs.