Research
America’s Aging Dams and Other Infrastructure is an Urgent Insurance Coverage Issue | McGuireWoods LLP
Natural disasters are becoming more frequent, more severe, and more destructive. No part of the United States is entirely immune from some combination of tornadoes, fires, droughts, earthquakes, freeze events, and hurricanes.
Indeed, 2024’s “extraordinary” hurricane season saw Hurricanes Helene and Milton devastate swaths of the Southeastern United States from Florida to North Carolina.[1] This trend has continued in the early days of 2025 with wildfires in California and winter storms in the South and along the East Coast causing devastation, supply chain disruptions, and, reportedly, tens of billions of dollars in insured losses.
Natural disasters themselves can cause deaths and untold property damage. But an increasing component of casualty risk stems not only from severe weather itself, but also from the ability of America’s vast system of aging infrastructure to respond to that severe weather. Perhaps no single type of vital infrastructure illustrates this dynamic better than the nation’s dams.
The National Inventory of Dams estimates that there are over 92,000 dams nationwide.[2] They are, on average, 63 years old.[3] While 71% of these dams are state-regulated and another 5% are federally regulated, a large portion of the remaining 24%—over 22,000 dams—are privately owned and regulated.[4] Notably, 77% of all dams nationwide are “High Hazard Potential Dams,” a designation that indicates that a dam failure would create a high potential for human loss and could include property damage.[5]
News
AAA still exists, and they've made a new deal with ChargePoint
Best known for offering roadside assistance plans and TripTik travel maps in the days before GPS, the American Automobile Association (AAA) is still popular, claiming more than 60 million members in the US and Canada – and now, those members will be able to get preferred pricing at ChargePoint stations.
Established in 1902 by nine motor clubs with fewer than 1,500 members, AAA today boasts more than 60 million members. For their money, AAA members get discounts on auto insurance, hotel stays, and financial services.
“AAA’s first priority is serving our members,” said Bob Huffman, Director of Roadside Programs & Benefits for AAA. “By working with ChargePoint, we are able to provide resources and services to our clubs and service providers, so they are able to best assist our members when they need us most.”
This newest arrangement with ChargePoint offers yet another benefit for AAA road-trippers, but the initial press release is somewhat light on details. It explains only that deal covers Level 2 AC charging as well as Level 3 DC fast-charging stations AAA and CAA (Canadian Automobile Association) members in need of charging infrastructure can find more information at this link.
Telematics, Driving & Insurance
Why Would Tesla Be Comfortable Entering Insurance?
Tesla driving forward with its insurance plans shouldn’t really come as a surprise. Its ecosystem-based business model—often incorrectly referred to as “vertical integration”—and CEO are both highly consumptive.
This model is predicated on increasing the knowledge of your customer and acting on it in the best interests of Tesla and its customers.
When broken down further, this move is one I’ve been anticipating in the auto space for some time. Moving from car ownership-based models to lease, lease/purchase and even car-share models sees car manufacturers competing on loans and payment schemes.
Creating cars that are connected and data-driven made them software businesses as well. So it’s logical they evolve beyond manufacturers to become customer-centred providers of personalised transportation.
The next step in this process is to own and control as much of the lifecycle as they possibly can—which includes insurance.
The advantage was always gaining greater control over repair expenses and decisions regarding total vehicle losses, ensuring repairs adhere to its standards while potentially reducing costs.
The critical question is: Why is insurance something Tesla feels comfortable entering? It’s risky, capital intensive and complex. That doesn’t sound particularly attractive.
Well, the sad truth is, there’s lots of reasons. Firstly, insurers aren’t built around customers, so they struggle to build more integrated, adaptive and intelligent products and services. Therefore, it makes sense for car manufacturers to sideline the insurer and do it themselves. EIS has customers changing this in areas like Payment Protection, but wider examples are few and far between.
Claims
'A logistical nightmare': Why insurers can't predict final claim costs anymore
There's just so much to wrap your hands around,' warns president
The claims handling industry is facing an omnishambles of challenges. Skyrocketing building costs and massive delays in reconstruction have created a perfect storm – making it nearly impossible to predict final costs and driving insurers out of their wits.
“There’s just so much to wrap your hands around,” Peter Schifrin (pictured), president of SGD, told Insurance Business. “The huge surge in claims and the ability to service all of those policyholders effectively … this is such a different event. Instead of being able to go out there and know that you’re going to easily be able to adjust that claim and come up with a number and pay proper indemnity, with this huge surge and the huge delay in rebuilding it’s very hard to predict what the costs are going to end up being.”
And what makes this crisis even more difficult is the reality that many homeowners will find themselves underinsured, unable to fully cover the costs of rebuilding.
“There are going to be a lot of people who are going to find themselves without enough coverage, and we’re not really even sure how the market is going to respond to that, or how the legislature is,” Schifrin said. “So it’s going to be a long time period of challenge to try to figure out the endpoint.”
Los Angeles Wildfires
LA Fire-Related Capital Hit Prompts State Farm Emergency Rate Request
State Farm General Insurance revealed that it has asked the California Department of Insurance to approve an “interim emergency” homeowners insurance rate hike, citing declining capital and a potential downgrade as reasons.
State Farm General Insurance Company, the State Farm provider of homeowners insurance in California, is seeking interim emergency rate increases averaging 22 percent for non-tenant homeowners insurance and 15 percent for tenants to try to shore up its financial condition as it works to pay out claims related to the 2025 California wildfires.
“Although reinsurance will assist us in paying what we owe to customers, the costs of these fires will further deplete capital,” the company said, referring to the fact that a 40 percent drop in capital in 2023 prompted AM Best to downgrade the company’s previous financial strength rating of “A” (fair) down to a “B (excellent)” in March 2024, and its long-term issuer credit rating to “bb+” (fair) from “a” (excellent).
State Farm shares $6.85 billion loss estimate from wildfires
According to a report by S&P, State Farm General’s initial wildfire loss estimates has reached $6.85 billion, prior to consideration of reinsurance.
Earlier this month, State Farm General said that it received more than 8,700 (Fire only) claims.
The bulk of the losses are from the company’s non-tenant homeowners’ policies, which the insurer estimates comprises 5,346 claims with the average cost per claim at $1.1 million. State Farm General estimated losses on its rental dwelling contracts at $586.7 million.
In a press release, State Farm has shared that its subsidiary, State Farm General, asked the California Department of Insurance to immediately approve interim rate increases, including 22% average for homeowners.
Mercury Expects to Lose $1.6B to $2B from LA Wildfires
Although Mercury Insurance Group expects gross losses from the 2025 California wildfires in the $1.6 billion-$2.0 billion range, potential subrogation and reinsurance recoveries will drop the ultimate bill down to $325 million or less, the company believes.
“We believe there is strong video and other evidence that shows utility equipment caused the Eaton fire,” said Ted Stalick, senior vice president and chief financial officer, during an earnings conference call.
AIG chief sees global disaster losses over $200 billion in 2025 | Insurance Business America
"This could recalibrate the entire industry"
American International Group Inc. expects global catastrophe-related insured losses to surpass $200 billion in 2025 after the Los Angeles wildfires brought unusually high losses early in the year.
The estimate is based on the assumption that the California fires have caused $50 billion of insured losses, and the average annual natural catastrophe losses in the past eight years, Chief Executive Officer Peter Zaffino said on a call with analysts detailing fourth-quarter earnings Wednesday. The CEO also cited an “active but not abnormal” scenario for the wind season.
“The California wildfires alone would make the first quarter of 2025 the second-most costly first quarter for natural catastrophes on record,” Zaffino told analysts. “This could recalibrate the entire industry.”
Claims paid for California wildfires reach $6.9bn: Commissioner Lara - Reinsurance News
As of February 5, 2025, $6.94 billion has been paid out to insurance policyholders in Southern California for residential and commercial claims related to the January wildfires.
This figure was provided in the latest update from California Insurance Commissioner Ricardo Lara’s public consumer claims tracking system.
These payouts are helping individuals secure housing and replace personal belongings immediately. The total amount will continue to rise as more people initiate the claims process, which includes rebuilding and debris removal.
Additionally, $73 million has been paid out for auto insurance claims linked to the fires.
A total of 33,717 insurance claims have been filed for home, business, living expenses, and other disaster-related needs, with 5,597 claims filed for auto insurance.
Mercury to 'aggressively pursue subrogation' for Eaton wildfire: CFO Stalick
Executives at California-based insurer Mercury General Corporation said yesterday that the company will “aggressively pursue subrogation”, particularly for the Eaton Fire, as there’s strong evidence utility equipment caused the event.
As part of its 2024 earnings release, Mercury provided an update on the Los Angeles wildfires, announcing a gross loss of $1.6 billion to $2 billion and a net loss from the wildfires of between $155 million and $325 million.
Mercury explained that the net loss range is based on the size of the gross loss, whether it decides to have the wildfires be one or two events for reinsurance purposes, and also subrogation recoverability for the Eaton Fire.
Subrogation describes the right held by most insurers to legally pursue an at-fault third party that caused a loss to an insured, enabling the carrier to recover the amount of the claim paid to the insured for the loss.
“We believe there is strong video and other evidence that shows utility equipment caused the Eaton fire. We estimate the range of recovery to be in the 40% to 70% range,” said Gabe Tirador, Mercury’s Chief Executive Officer (CEO). “In several previous wildfire events caused by utility company equipment we sold our subrogation rights, but we have not determined whether we will do so with the Eaton fire. There is active interest in purchasing the company’s subrogation rights.”
Valentine's Day
The fascinating link between Valentine’s Day and insurance
[Ed. Note: Valentine's Day honors Saint Valentine, a martyr who was executed for defying Emperor Claudius II's ban on marriage. The holiday may have originated from the Roman festival of Lupercalia, which celebrated spring and paired men and women by lottery].
Insurance and Valentine's Day have a deeper connection than you would've thought. Read the blog to find out more!
Did you know love and insurance are intrinsically connected? That Valentine’s Day has a much bigger impact on the insurance industry than anticipated?
Yes, that’s right!
It’s only in recent times due to economic and cultural changes that insurers figured out this connection. Now they’ve enthusiastically hopped on the Valentine’s Day bandwagon due to the high demands they are likely to experience.
Couples Consider Joint Insurance Equivalent to Tying the Knot
Modern couples are always finding new ways of proving their love to each other. And what's the hottest new symbol of commitment? Not roses, not a ring—rather, a shared insurance policy.
As many as 42% of Americans see sharing an insurance policy as a modern equivalent to tying the knot, according to a Nationwide survey of 1,000 U.S. renting couples released this week.
While engagements and moving in together have long been the hallmarks of commitment, the survey found that 29% view sharing an insurance policy just as significant as cohabitation. Further, 35% believe that a joint insurance policy is even more meaningful than saying “I love you" for the first time.
Meanwhile, 40% compare it to sharing a streaming subscription or adopting a pet while 26% believe that merging policies makes breaking up more complicated—further solidifying their commitment.
“Couples today are redefining commitment, and insurance plays a bigger role than ever," said Michael Moore, Nationwide's vice president of business optimization. “A joint policy isn't just about financial benefits—it represents trust, collaboration and long-term planning. This survey underscores the importance of helping couples make informed decisions about their coverage."
Financial security is a driving force behind these decisions. Nearly nine out of 10 couples (89%) agree that discussing insurance is an essential part of financial planning, with key motivators for joint policies including asset protection (73%), financial savings (69%), and a demonstration of trust and commitment (62%).