ICYMI --- InsurTech: Not Dead but Different  March 20th 2023

ICYMI --- InsurTech: Not Dead but Different

SUMMARY Some InsurTechs will struggle, and there will even be some fatalities, but the majority of InsurTechs are making the necessary adjustments and operating successfully

It is generally recognized by insurers and investors that InsurTechs, and the broader tech-enabled startup community, is and has been a highly valued contributor to innovation, employment and the economy overall. Today’s federal government intervention in the Silicon Valley Bank, who plan to make the SVB depositors whole, including startups, VCs and investors, is strong and encouraging evidence of that recognition. Despite this unnerving development, numerous InsurTechs have assured investors, employees and customers that the demise of SVB will have no direct impact.

To be clear, some InsurTechs will struggle, and there will even be some fatalities, but the majority of InsurTechs are making the necessary adjustments and operating successfully while basically sheltering in place and preparing for the next exciting phase in the evolution of this critical “movement” which is very much alive yet quite different.

Co-authored by Stephen Applebaum and Alan Demers

complete article available at link to InsurTech Consulting above

GEICO slashes ad spend by nearly 40% in 2022

The four largest personal lines property and casualty insurers lowered their advertising spend in 2022, in part to offset the rising costs associated with elevated claims.

GEICO Corp. reported a year-over-year decrease of roughly 38% in total advertising expenditure during 2022, the highest among the Big 4 auto insurers, according to analysis of regulatory data by S&P Global Market Intelligence.

The Berkshire Hathaway Inc. company reported $1.28 billion in total advertising expenditures in 2022, roughly $800 million less than it spent in the prior year. The insurer's substantial decrease in ad spending allowed The Progressive Corp. to become the largest spender among the group in 2022.

New Orleans Police Department taps civilians amid an officer shortage : NPR

Many police departments accept they may never get the number of officers they used to have. The New Orleans PD is "retooling" for a new reality that includes handing some duties to civilians.

During the George Floyd protests of 2020, many people called for the defunding of traditional police. That didn't happen, for the most part. But almost three years on, some police departments are shrinking anyway.

A new criminology study of 14 large police departments found most have had an "excess" loss of sworn, full-time officers since 2020, a trend verified in core-city agencies such as the New Orleans Police Department.

In 2010, NOPD had about 1,500 officers; a decade later, it was at about 1,200. Since 2020, the department is down by another 20% to 944. Despite doubled recruiting efforts, the department continues to shrink.

"Citizens still call 911, their call is still dispatched. However, it is dispatched to our agents," says Ethan Cheramie, founder of a company called On Scene Services (OSS). It employs unarmed, former police officers who go to the scenes of wrecks to take information and provide reports.

"Our agents respond in a timely, efficient manner, to let everybody get on with their day," Cheramie says. OSS has had two cars responding to crashes in New Orleans for the past five years, and with the worsening officer shortage, the city has just signed an expanded contract for seven OSS cars — enough, Cheramie figures, to free up the equivalent of 15 fulltime officers for other duties.

Has Insurance Become Too On-Demand?

The "customer-centric" concept isn't wrong, but anything “centric” requires a balance. Has the pendulum swung past the point of effectiveness? 

Many new entrepreneurs or those in the gig economy consider on-demand insurance the greatest invention since sliced bread. And insurtech companies couldn’t be happier. Here’s why: In the wake of society relying more on smartphones, apps or other popular technologies, consumers now expect buying insurance to involve a similar user experience as when shopping on Amazon. 

Thus, on-demand insurance was born when technology and insurance merged. Consumers can shop and purchase policies online without the help of an insurance broker or agent. For example, with only a few clicks on their smartphone, a new founder can acquire a general liability or an errors and omissions policy lickety-split.

Many insurtechs provide on-demand insurance in some form, like Thimble with its short-term policies for freelancers. Others, like Pie Insurance, narrow the scope by focusing on pay-as-you-go workers’ compensation coverage, while Metromile provides pay-as-you-go auto insurance.

Justin Kozak, EVP, Founder Shield

To the Moon and Back: Space Tourism and Insurance

Space tourism, or human space travel for recreational purposes, is in its early days. For insurers, this means it’s an emerging business that most aren’t ready to tackle yet.

Neil Stevens, senior vice president of aviation and space at Marsh, told Reuters in a June 2021 article that “the aviation, aircraft insurance market, and the like, are less keen to take on risks that involve spacecraft.” He added that whether space tourism trips fall under aviation or space insurance is a “million dollar question.”

While some insurance solutions are now in their early stages – travel insurance company Battleface is one company that has underwritten a space tourism product – many insurers are still hesitant.

However, Michelle Peters, director of research and education at space entertainment and tourism company Zero-G, has a solution for insurers who want to learn about this emerging area of risk: Take a flight with Zero-G.

The company says on its website that it aims to make the adventure of space accessible to the public. Its zero gravity flights, which take place on a modified Boeing 727-200 called G-FORCE ONE, offer individuals the opportunity to experience weightlessness without leaving earth through the use of a hydraulic system.

Insurtech NEXT finds few small businesses using insurance

What is needed for a "dream insurtech" that appeals to underinsured small and medium sized business owners (SMBs)?

Insurtechs should aim to make it easier and more efficient to buy insurance, stated Richard Clarke, chief insurance officer at Colonial Surety. "If an insurtech put together digital explanations of coverages and easy-to-grasp claims examples – if you could use the technology so it would have relevance to a broad range of smaller types of businesses," he said, SMBs would find it easier to get insurance. Clarke added that he hasn't seen this happen yet.

"I don't know that insurtechs perceive that they can make money doing that, but that's certainly in the future," he said. "That's a definite possibility."

Insurance Companies Are Quietly Fleeing California

The words “California” and “crisis” seem to go together as the state bounds from one intractable problem to another. The recent spate of flood-level storms in Northern California brought attention to the Golden State’s ailing levees. As an “atmospheric river” pummeled the low-lying Sacramento region, a nearly endless parade of trucks carrying rubble raced to shore up an aged system.

It would never dawn on the state’s political leadership to invest in infrastructure improvements before near-catastrophic failures stressed levees to the breaking point. Nor would it occur to them to invest in water infrastructure. Shortly before the storms, which brought nearly as much rain in three weeks as California had experienced in a year, the state was already facing another weather-related crisis: a mega-drought that led to water rationing. Such a problem had long been predicted, yet until recently the state didn’t move urgently to approve new desalination plants or improve infrastructure.