Research
Have We Reached 'Peak Auto'? | Insurance Thought Leadership
[Ed. Note: Excellent, surprising article and underlying report]
Amid all the turmoil in the auto market, as we move in fits and starts toward electric and even autonomous vehicles, here's a new wrinkle: Data suggest that car sales have peaked.
The auto world is in upheaval. It's making great progress on radically new technologies in electric and autonomous vehicles, but that progress is unsteady, and there is lots of uncertainty ahead on regulation, incentives, and tariffs as the second Trump administration takes shape.
In the midst of that upheaval, a key fact often gets overlooked: that much of the industrialized world — the U.S., Europe, Japan, and South Korea — appears to have reached "peak auto." In other words, the total of new car sales has crested and will decline from here, at least for years.
That change, highlighted in a recent report by a global group of auto executives, reflects significant changes in who's driving, how much they're driving, and the age of the cars they're driving.
I think the report is worth a look.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
November New Light-Vehicle Sales Exceed Projections
New light-vehicle sales in November 2024 beat expectations with a monthly SAAR of 16.5 million units, the highest since May 2021 according to the National Automobile Dealers Association (NADA). November’s SAAR also increased 6.7% from November 2023, with its raw volume total of 1.360 million units up 10.1% year over year.
According to Wards Intelligence, retail volume represented 1.19 million units of November’s total, an increase of 7.4% based on daily selling rates. Daily selling rate comparisons are helpful here because November.
US corporate bankruptcies just below 14-year high as November filings surge
A jump in US corporate bankruptcy filings in November will likely push the 2024 total to a new 14-year high.
There were 69 bankruptcy filings by public and certain private companies in November, according to the latest data from S&P Global Market Intelligence. This marks the second-most bankruptcies filed in one month since early 2021.
Notable filings
The four bankruptcies in November — each with liabilities exceeding $1 billion at the time of filing — were Chapter 11 reorganizations by H-Food Holdings LLC, Spirit Airlines Inc., Wellpath Holdings Inc. and Franchise Group Inc.
US Insurance Distribution Technology Market Report 2024, Featuring GoHealth, Brown & Brown, Goosehead Insurance, Porch Group, Clover Health Investments, MediaAlpha, Oscar Health and Hippo Holdings - ResearchAndMarkets.com | Business Wire
The US insurance distribution market was valued at US$210.37 billion in 2023 and is expected to reach US$337.26 billion by 2029. On the other hand, the US insurance distribution technology market in 2023 was valued at US$20.44 billion. The market is projected to reach US$50.70 billion by 2029.
The US region offers strong growth potential to the insurance distribution technology market. Insurance technology firms have been showing significant growth in the areas of auto, homeownership, and cyber insurance. Such strong growth would stimulate traditional insurers to either acquire technology capabilities or partner with InsurTech companies. With an increasing demand for innovative products and services from millennials, such collaboration would become a critical imperative. Due to such collaborations, traditional insurers would benefit from faster results in establishing a tech culture.
The US insurance distribution market is expected to grow at a CAGR of 8.24%. Whereas, the US insurance distribution technology market is set to grow at a CAGR of 16.4% during the forecast period of 2024-2029
News
California approves double digit premium increases for State Farm second year in a row
State Farm was approved to raise auto insurance rates in California by an average of 17.7% starting at the end of January, according to the San Francisco Chronicle.
About 4 million customers will be impacted by the rate increase approved by the California Department of Insurance, the article says.
The insurance company, and the largest insurer in the state, increased rates by 21% in February.
“The company told regulators that the 21% rate hike was not enough to cover increased costs caused by lingering supply chain issues from the COVID-19 pandemic and labor shortages, which it says have driven up the cost of auto repairs and car values,” the newspaper says.
Other insurance companies including GEICO, Nationwide, and AAA have filed for large rate increases, according to the newspaper.
The Los Angeles Times reports that Allstate received a rate increase of 30% on average in February after temporarily pausing the sell of new auto insurance in the state late last year.
Allstate CEO and President Tom Wilson threatened to drop insurance customers in California, New York, and New Jersey in November 2023 if he didn’t receive a double-digit rate increase in all three states.
Days after making the statement, Allstate announced that the states would approve the requested increases.
According to a Bankrate report, the cost of full coverage car insurance increased by 26% nationwide this year.
It says the average annual car insurance coverage rose to $2,543, a $529 increase over last year. In the past three years, the annual cost of full coverage increased by 52% from $1,674.
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Climate/Resilience/Sustainability
Insurance Costs and Climate
[Ed. Note: Although climate and weather related losses receive much deserved attention as a contributor to rate increases, it is important to note that the combination along with inflationary price increases on everything in the repair, replace realm is significant. Prior to the insurance crisis, insurance-to-value was a hidden factor as home prices soared and premiums lagged. Yes, weather losses are a major factor, but not a new or just a 2023/24 factor.]
Costs Pile Up As Climate Change Adds $600 Billion In Insurance Losses
Human-caused climate change has accounted for a third of weather-related insurance claims made this century, the bill is rising quickly, and insurers are underestimating climate risks, new research has warned.
Global warming has led to losses totaling about $600 billion over the last two decades, and climate-related insurance losses have jumped from 31% to 38% in the last decade, according to the report from the Insure Our Future network, which represents dozens of non-profit organizations.
In its analysis of 28 major global property and casualty insurers, Insure Our Future found that "climate-attributed losses" totaled $475-720 billion between 2002 and 2022. The researchers determined that in 2022 alone, $52 billion in losses out of a $132 billion weather-related total were attributable to climate change.
Moreover, the report found that the $10.6 billion in climate-attributed losses estimated by 28 major insurers in 2023 rivaled the $11.3 billion in premiums those firms underwrote for corporate fossil fuel clients that same year.
"The impact of climate change is not just a present and future problem—it has already been driving up risks and causing major losses throughout this century," said researcher Ilan Noy of Victoria University of Wellington, New Zealand, commenting on the report. The research, Noy said, ought to make reinsurers—the firms that insure the insurance companies—update their understanding of climate risk.
Severe weather drives insured losses above USD 100 billion for 5th consecutive year, says Swiss Re Institute - Insurance-Canada.ca - Where Insurance & Technology Meet
- Estimated insured losses from natural catastrophes on track to exceed USD 135 billion in 2024
- Hurricane Helene and Hurricane Milton severely impacted the US, resulting in estimated insured losses approaching USD 50 billion
- Major floods hit Europe and the Middle East, causing estimated insured losses of close to USD 13 billion as of today
With 1.54°C above the pre-industrial average, 2024 is set to become the hottest year on record. A warming climate favours the occurrence of many of the natural catastrophes observed in 2024. Europe, in particular, has experienced intense flooding in 2024, resulting in the second-highest insured losses from floods in the region ever, according to Swiss Re Institute’s estimates. The US has been affected by two major hurricanes and a high frequency of severe thunderstorms, making up at least two thirds of 2024’s global insured losses of more than USD 135 billion as of today’s estimates.
Claims
Survey: How Communication Affects Satisfaction in Auto Claims Process
Drivers who have had their car declared a total loss are noticeably impacted by how carriers communicate them.
That’s according to survey of U.S. policyholders that shows drivers’ emotional state and their overall satisfaction with their carrier are affected by the quality of communications—or in some cases, the quantity.
CCC 'Moments of Truth' Reveal Junctures Important to Business Success in Repair Claim Journey - Autobody News
A recent CIECA webinar took a deeper dive into CCC's study of the "Moments of Truth" that drive repair customer satisfaction.
Some moments in a claims and repair journey are key when it comes to businesses’ success in delivering customer satisfaction.
The Collision Industry Electronic Commerce Association (CIECA) recently hosted a webinar on CCC Intelligent Solutions’ “Moments of Truth” report, which brings forth findings regarding customer experience within the claims and repair journey.
The moments of truth concept in this instance, explained Maryling Yu, vice president of marketing at CCC, revolves around the practice of stringing together moments in a customer service journey. Some are more important than others, she explained, and they have to go well in order for a company have a good outcome. Outcomes of other moments don’t matter so much.
“Winning a moment of truth leads to a good outcome,” she said. “Losing a moment of truth can lead you to a not-so-good outcome.”
InsurTech/M&A/Finance💰/Collaboration
Davies to acquire Premier Claims Management to expand North American claims services - Reinsurance News
Davies, a professional services and technology specialist, has announced its acquisition of Premier Claims Management, LLC (PCM), a claims service provider specialising in professional and general liability claims.
Based in Santa Ana, California, PCM’s addition strengthens Davies’ North American (NA) services by expanding its professional and general liability claims capabilities and litigation expertise for the Lloyd’s market.
PCM also brings a comprehensive range of programs for London Market insurers, including handling errors and omissions claims for professionals such as realtors, appraisers, actuaries, and attorneys, further enhancing Davies’ offerings for its clients.
Marilyn Bonetati, founder of PCM, along with more than 40 team members, including 16 experienced coverage attorneys, will join Davies’ North American claims operations under the leadership of Claims Solutions CEO Don Lederer.
Awards
Meet the 2024 PropertyCasualty360 Insurance Luminaries
Insurance leaders often talk about the need to tell the story of their work.
They want people to know who the talented, compassionate professionals are working in insurance; what makes insurance work both challenging and rewarding; and why insurance is essential to economic and fiscal health.
Spotlighting this insurance story drives recruitment, undercuts social inflation, and simplifies policyholder conversations.
Enter the PropertyCasualty360 Insurance Luminaries recognition program, an honor that highlights this industry's mission — to make policyholders whole after a major loss — while holding up the people, programs, products, practices, teams and companies that modernize and humanize the business.
Nominees selected as PropertyCasualty360 Insurance Luminaries shove off dated industry stereotypes and push for fresh thinking around the most impactful issues of our time. Honorees in the program's five categories are selected using a 25-point scoring rubric that takes into account the aim, impact and achievements of each nomination. Judges also look for nominees who embody the spirit of the PropertyCasualty360 Insurance Luminaries program, and who exhibit high ethical and service-driven standards.
2025 PREDICTIONS
How AI and tech will impact insurers in 2025
It has been another interesting year for insurers. Profitability across U.S. property/casualty insurers improved in 2024, mainly driven by substantive rate increases and tighter risk appetite. What didn’t change from the prior year? The ongoing talent crisis across the industry, where the team member turnover rates averaged 13.5%, with voluntary turnover above that average.
A few key trends and developments are expected to define the insurance industry's future. Let’s examine how they will impact business models, customer experiences and employee satisfaction and loyalty.
Here are five predictions for the new year:
Insurers' key to success in 2025 is operational effectiveness. Pricing will no longer be a differentiator in 2025. To increase margins while keeping costs down, insurers will focus on bolstering productivity while offering customization for better client service across their claims and underwriting departments.
The insurance industry will lean on robust upskilling platforms to counteract the increasingly aging workforce. Companies will intensify efforts to close the skills gap. Initiatives will leverage artificial intelligence and digital tools to provide adaptive training and operational resources tailored to modern needs. Successful players will combine these technologies with flexible work arrangements to align with shifting employee expectations. This dual approach will drive competitiveness by balancing workforce transformation with effective talent retention strategies.
Innovation
YASSI™ Expands Real-Time Vehicle Data Platform Adding Pennsylvania
YASSI, a leader in real-time vehicle registration, title, and lien data, announces its expansion into Pennsylvania, providing businesses with seamless access to accurate, real-time data.
With this addition of Pennsylvania, YASSI's single point connection now offers customers access to vehicle records in 40 states. This expansion allows lenders, insurers, auto retailers, and fleet companies to accurately verify liens, titles, and registrations instantly, enhancing customer service and reducing the risk of fraud.
"Adding Pennsylvania is a milestone for YASSI," said Bob Rieger, CEO. "This state is critical for auto and insurance markets, and our platform ensures businesses can operate with confidence using accurate, real-time data directly from the source."
YASSI remains the only enterprise-grade solution offering real-time vehicle data via API and web batch functionality. By bridging gaps in state motor vehicle data systems, YASSI empowers businesses to streamline workflows, improve decision-making, and reduce administrative burdens.
YASSI provides real-time vehicle registration, lien, and title data by connecting directly with state motor vehicle agencies. Our platform enables businesses to make data-driven decisions, reduce risks, and streamline operations with the most accurate and up-to-date data available.