Commentary/Opinion
February ITL Focus: Cyber | Insurance Thought Leadership
Watching cyber insurance mature over the past decade has been fascinating, with attacks and counterattacks reminiscent of the old Spy vs. Spy cartoons in Mad magazine – just at high speed, with serious stakes and with a clear delineation between the good guys and the bad guys.
Cyber insurance began with a stark realization – not just that it was needed but that existing policies might cover a major risk that insurers very much didn’t want to be covering. At the same time that carriers started offering cyber policies, they were rewriting general liability policies to make very clear that cyber attacks weren’t covered.
Early attacks focused on stealing Social Security numbers, credit card information and other data that the bad guys could use to impersonate people. But credit card companies responded with, among other measures, faster response to fraudulent purchases and with secure chips in credit cards.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
News
Insurers not getting in the game this Sunday
[Ed. Note: In 1967 the average Super Bowl ad cost $37,500. This year a 30-second spot runs around $8M each. As an insurance carrier insider and going back 10 years or so, executive leaders would often banter about the soaring costs of advertising spend and what would happen if there was a pause for say, a month, quarter or in this case skipping the Super Bowl?
When GEICO famously spent over $1B per year, essentially advertising just auto insurance, it became known as the highest amount for advertising any one "single product" in any industry. So what will happen to those insurers opting to trim marketing spend and forgo SB LIX?] - Alan Demers
State Farm’s decision to pull its 2025 Super Bowl ad was prompted by the wildfires that continue to impact the Los Angeles area, but the company’s absence from Sunday’s game is in line with current trends in insurance marketing, Sportico reported.
In fact, no insurance firm is slated to appear in between plays, according to the sports business website.
“Not having ads with Jake from State Farm, Flo from Progressive or the Geico Gecko during the game might seem unusual, but it reflects an ongoing trend of declining ad spend from the biggest insurers in the U.S.,” Sportico said.
Research
New study finds AEB has improved, cuts rear-end crashes by half
Automatic emergency braking (AEB) continues to improve as it cuts rear-end crashes in half, according to a recent study by the Partnership for Analytics Research in Traffic Safety (PARTS).
PARTS is a partnership between automakers and the National Highway Traffic Safety Administration (NHTSA). Participants voluntarily share safety-related data for collaborative safety analysis. The not-for-profit organization MITRE operates PARTS.
The AEB effectiveness study paired auto manufacturer equipment with police crash report data from 16 states over nearly eight years to cover 98 million vehicles and 21.2 million crashes. MITRE says it’s the largest and most comprehensive study of advanced driver assistance systems (ADAS) to date.
67% of executives more stressed in 2025: Sentry survey finds
A new survey released by Sentry, a leading business insurer, paints a revealing picture of what's keeping executives up at night in 2025. While nearly half (47%) of business leaders are optimistic their companies will thrive this year, a majority (67%) admit they're feeling more stressed compared to last year.
What's interesting is how outside forces—like economic uncertainty or litigation risks—are shaping internal decisions.
Top c-suite concerns: Nearly half (47%) of executives cite economic uncertainty as their biggest worry, along with supply chain challenges (44%), rising healthcare costs (41%), labor shortages (38%), and inflation (36%) . The survey of 1,000 business owners, CEOs, CFOs, and CROs at U.S. companies, conducted by Wakefield Research on behalf of Sentry, revealed that small businesses are the most confident about the year ahead. Nearly half (48%) of leaders at companies with 10–249 employees believe their company will thrive in 2025, compared to just 33% of leaders at companies with more than 1,000 employees.
A similar contrast appears in executive stress levels. Heading into 2025, 82% of executives at larger companies report higher stress levels, compared to 68% of executives at smaller businesses.
Telematics, Driving & Insurance
Tesla offers 10% insurance discount if you drive more using its 'Full Self-Driving' system
Tesla is starting to offer insurance discounts for people who drive more using its “supervised Full Self-Driving” suite of advanced driver assist features.
For years, Tesla has been claiming that its “Full Self-Driving”(FSD) suite of advanced driver-assist features is “safer than human driving.”
The company faced a lot of pushback on that front – primarily due to the lack of data to support the claim.
The only data Tesla has been sharing is through its quarterly “safety report”, which has been heavily criticized for being misrepresenting through too heavily weighing highway driving versus city driving and for comparing Tesla’s fleet to the much older broader US car fleet.
InsurTech/M&A/Finance💰/Collaboration
Openly Announces $193M in Growth Financing Led by Eden Global Partners, Allianz X
Openly, the premium homeowners insurance provider, today announced a $193 million growth financing round led by Eden Global Partners, a merchant bank that specializes in providing long-term capital solutions, and Allianz X, the strategic growth investments arm of Allianz. The round includes participation from existing investors such as Advance Venture Partners, Obvious Ventures, Clocktower Technology Ventures, Point Judith Capital, and others. This additional investment comes just over one year after Openly raised $100 million in Series D funding.
Openly remains dedicated to working exclusively with independent agents to serve homeowners with comprehensive coverage. In 2024, Openly expanded into three additional states bringing its total to 24, and partners with nearly 50,000 independent agents with plans for ongoing expansion.
"Our investors' belief in Openly proves that we made the right decision nearly a decade ago to operate through independent agents to deliver comprehensive coverage based on homeowners' unique needs and circumstances," said Ty Harris, Co-Founder and CEO of Openly. "As we continue to keep our eyes on the future, the partnership with our investors will go a long way in ensuring we're able to maintain our position as an innovator and leader in this space."
Openly's growth financing includes $123 million in equity capital, led by Eden Global Partners, and a $70 million senior note from Allianz X. Participation from Allianz X builds upon a strategic reinsurance partnership between Openly and Allianz Re that has existed since 2023, and was renewed and further expanded in 2024. Eden's investment in Openly follows its initial investment as the Series D lead.
Climate/Resilience/Sustainability
Nobody’s Insurance Rates Are Safe From Climate Change
Asheville, North Carolina, was once widely considered a climate haven thanks to its elevated, inland location and cooler temperatures than much of the Southeast. Then came the catastrophic floods of Hurricane Helene in September 2024.
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It was a stark reminder that nowhere is safe from climate-worsened extreme weather risks: Hurricanes arriving from the Gulf of Mexico and Atlantic seaboard. Hail in the Midwest. Floods in the East. Sea level rise along the coasts. Wildfires in the West, most recently exemplified by the devastating and costly fires around Los Angeles.
And worsening extreme weather translates into more expensive property damages, growing insurance claims, and rising insurance rates. Somebody has to pay for the costs to repair, rebuild, and replace damaged homes and vehicles, but with insurance companies raising rates and dropping customers, the situation is quickly threatening to trigger an insurance crisis.
Despite rapidly rising policy rates, the homeowner’s insurance market lost money in 18 states in 2023. As a recent Senate Budget Committee staff report concluded, climate-worsened extreme weather is “destabilizing insurance markets.”
And the problem extends beyond insurance policy costs.
“If home values fall, governments take in less tax revenue. That means less money for schools and police,” said New York Times climate change reporter Christopher Flavelle on The Daily podcast. “Maybe instead of climate change wrecking communities in the form of a big storm or a wildfire or a flood, maybe even before those things happen, climate change can wreck communities by something as seemingly mundane and even boring as insurance.”
There are no easy solutions to the problem, but there are measures individuals and governments can take to reduce risks and try to avert a widespread insurance crisis.
This article was originally published on YALE Climate Connections and is republished here as part of the global journalist collaboration Covering Climate Now
Financial Results
Arthur J. Gallagher & Co. Announces Fourth Quarter and Full Year 2024 Financial Results
"We had an excellent fourth quarter, to close out a great year!" said J. Patrick Gallagher, Jr., Chairman and CEO. "Our core brokerage and risk management segments combined to deliver our 16th consecutive quarter of double-digit revenue growth, including organic revenue growth of 7%. Our fourth quarter net earnings margin and adjusted EBITDAC margins increased to 13.5% and 31.4%, respectively, and adjusted EBITDAC grew 17%!
"We also completed 20 new mergers in the quarter, bringing our full year total to 48 mergers and $387 million of estimated annualized revenue. And in early December, we announced the acquisition of AssuredPartners, a commercial middle-market retail and specialty broker with $2.9 billion of pro-forma revenue!
"Overall, the global P/C insurance market continues to grow with fourth quarter primary renewal premium increases, both rate and exposure combined, consistent with the past two quarters. Thus far, January 2025 primary renewal premium increases are ticking slightly higher than fourth quarter and are above 5% driven by increases in casualty classes like umbrella and commercial auto. January 1, 2025 reinsurance renewals were orderly and reflected an environment that favored property and specialty reinsurance buyers, while casualty reinsurance programs generally experienced increases.
COMPLETE PRESS RELEASEfull-year-2024-financial-results-302364670.html
Aon Reports Fourth Quarter and Full Year 2024 Results
- We closed the year with another strong quarter of performance and delivered an outstanding full year 2024, with 6% Organic revenue growth, strong margins, double-digit adjusted EPS growth and $2.8 billion of Free Cash Flow, with NFP performing inline or better than our business case
- We are introducing 2025 guidance that positions Aon to continue its long-term track record of delivering mid-single-digit or greater Organic revenue growth, adjusted margin expansion, strong adjusted EPS growth and double-digit Free Cash Flow growth
- Our 2025 Free Cash Flow generation is expected to enable us to execute our capital allocation model, including meeting our leverage objective in Q4'25, investing in organic growth and tuck-in M&A, and returning capital to shareholders, including $1 billion in share repurchases
"We ended 2024 with another quarter of strong performance and outstanding execution across all aspects of our strategy," said Greg Case, CEO. "We generated 6% Organic revenue growth for the fourth quarter and full year, with mid-single digit growth or better across all our solution lines. This top-line strength and continued cost efforts drove strong margins, double-digit EPS growth, and $2.8 billion of free cash flow. As expected, executing our 3x3 Plan creates differentiation in how we serve our clients across Risk Capital and Human Capital, powered by Aon Business Services. As clients navigate increasingly complex market dynamics, demand for our solutions remains strong. We are well-positioned to build on our momentum in 2025 and drive long-term value creation for our colleagues, clients and shareholders."
Payments
2025 Claims Management: A Year of Transformation, Strict Regulations or Business-as-Usual?
Driven by technological advancements, evolving workplace dynamics, and an ever-changing regulatory environment, significant shifts have emerged in how workers’ compensation claims are managed. The pace of change is unlikely to slow, prompting the need for adaptation in claims handling processes.
This change is a contributing factor to the health of the workers’ comp industry, which is showing signs of improved efficiency, stability and improvement. For example, according to a new report from the National Council on Compensation Insurance, lost-time claim frequency declined by 8% in the past year, which is more than twice the rate of the long-term average decline. The report also found that continuous innovation will be pivotal to achieving positive claim results in the face of wage and medical inflation and getting injured workers back to work over the next few years.
Los Angeles Wildfires
State Farm General Insurance Company: Update on California
State Farm General asks the California Department of Insurance to immediately approve interim rate increases, including 22% average for homeowners.
State Farm has served the customers of California for nearly 100 years and our intention is to continue serving them for many more. State Farm helps people recover from the unexpected. That is what we are doing in the wake of the wildfires. As of February 1st, State Farm General (Fire only) has received more than 8,700 claims and has already paid more than $1 billion to customers. State Farm General will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General.
The costs of the January 2025 wildfires will further deplete capital from State Farm General. Capital is necessary so an insurance company can pay for any future claims for the risks it insures. Last year, one rating agency downgraded State Farm General’s financial strength rating due to its capital position. With further capital deterioration as a result of the wildfires, additional downgrades could follow. If that were to happen, customers with a mortgage might not be able to use State Farm General insurance on the collateral backing for their mortgage.
State Farm General asked the California Department of Insurance today to immediately approve interim rate increases to help avert a dire situation for the more than 2.8 million policies issued by State Farm General, including 1 million State Farm General homeowners customers, and the insurance market in the state of California. State Farm General has had an outstanding filed rate increase pending since June 2024. Pending CDI approval, rate changes will be effective upon renewal after May 1, 2025.
From fire to mud: Preparing for rainfall and insurance hurdles amid L.A. wildfires | Perspectives | Reed Smith LLP
The aftermath of the ongoing Los Angeles wildfires has left countless homeowners grappling with devastating losses and innumerable questions related to insurance coverage.
While the immediate focus has been on insurance claims arising from the fire damage, the wildfires’ impact on soil and mud – compounded by impending rainfall and numerous local flood watch alerts – poses additional problems for policyholders. This alert provides an overview of these issues, lessons from past disasters like the Santa Barbara mudslides in 2018 and actionable steps for policyholders to take to prepare for the next phase of recovery.
The impact of wildfires on soil and mud
Wildfires can drastically alter the composition of soil, creating hydrophobic (water-repellent) layers, which can last for months or even years after a wildfire. These layers prevent water absorption, increasing the risk of flooding and mudslides during subsequent rain events. In the Los Angeles area, the combination of steep terrain and wildfire-damaged soil has exacerbated these risks. For instance, the Pacific Coast Highway in Los Angeles has faced multiple closures in recent years due to mudslides following major wildfires, disrupting transportation and highlighting the severe impact of compromised soil stability in wildfire-affected areas. These closures serve as a stark reminder of the cascading effects that wildfires can have on both infrastructure and local communities.
For policyholders with total property losses, this means their land may now be compromised by hydrophobic soil, making rebuilding efforts more complex and expensive. For policyholders whose structures remain standing near the burn scars, ensuring there is sufficient insurance coverage for natural disasters caused by rain is crucial.