Withn 3 years carriers will be confronting commercial liability risks associated with immersive virtual environments known as the ‘metaverse’  March 21st 2023

Insurers urged to prepare for 'metaverse' liability

Most insurers are concerned about existing digital liability risks, but in as few as three years, they may be confronting commercial liability risks associated with immersive virtual environments known as the ‘metaverse,’ a Geneva Association (GA) survey of liability insurance experts has found.

According to our survey, most attention [of liability insurers] is currently concentrated on relatively mature technologies such as cloud computing and AI, and the associated significant potential for accumulated liability exposures,” said the March 2023 Geneva Association report.

But reinsurers also need to stay alert to more nascent developments such as the metaverse, which though still highly uncertain could develop rapidly and have far-reaching liability implications.

Understanding the liability landscape has become complicated enough as it is with the rise of social media and e-commerce platforms – the development of fully immersive virtual environments would only add to the complexity.

US P&C Q4'22 earnings recap – Auto losses deal heavy blow to Allstate

While the final quarter of 2022 was rough for many property and casualty insurers, The Allstate Corp. particularly took it on the chin.

An S&P Global Market Intelligence analysis shows that the insurer reported a loss before taxes of $420 million, a huge reversal from net income before taxes of $1.39 billion the previous year, while operating EPS swung to a loss of $1.36 per share from a positive $2.75 a year ago. Also, the insurer's combined ratio shot up to 109.1% from 98.9% a year earlier.

Allstate was one of two companies to record net losses in an analysis of fourth-quarter 2022 results for select public P&C and multiline insurers trading.

Credit rating downgrades mostly in commercial property

Commercial property insurers accounted for more than half the credit rating downgrades of commercial lines insurers last year, rating agency A.M. Best Co. Inc. said in a report Friday.

Rising storm frequency and severity, inflationary pressures and supply-chain factors continue to pose challenges for property insurers, Oldwick, New Jersey-based Best said.

Insurers have responded with significant rate increases and higher deductibles, among other actions, Best said.

Insurance: The Biggest Gap You’ve Never Heard of in the Climate Technology Movement

The insurance industry is set to play a pivotal role in accelerating the deployment of climate technology on a global basis that it is not currently prepared for.

Insurers are currently dealing with dynamic changes in existing markets associated with traditional industries. A paradigm shift toward climate-smart coverage, occurring simultaneously, makes it exceptionally challenging to devote, attract, and retain the human capital that is needed to develop comprehensive and innovative insurance products to accelerate climate technology.

Historically, in parallel sectors such as oil, gas, and chemicals, investors and operators have successfully transferred risks from the capital markets into the insurance markets, positioning the insurance industry as the critical ultimate facilitator of financing. While this has existed for decades in the old economy, the new economy is grappling with a fragmented market for innovative insurance solutions that support the adoption of climate technology.

“This will be an incredibly capital-intensive energy transition,” points out Aaron Ratner, Managing Partner of venture capital firm Vectr Carbon Partners, and Co-Founder of specialty climate insurance platform Climate Risk Partners. “Over the next few decades, and possibly a lot longer, the speed and scale at which capital and projects need to be efficiently deployed will create risks for investors, developers and operators. The insurance industry will need to evolve to play a critical role catalyzing a successful outcome.”

NOAA: Nearly half of U.S. at risk of spring flooding

Although the heavy rain and snow to hit the west coast in recent weeks may ease drought conditions there, California could see dangerous flooding this spring, NOAA experts said this week.

And that state won’t be alone.

Roughly 44% of the U.S. is at risk of spring flooding, Ed Clark, director of the National Oceanic and Atmospheric Administration’s National Water Center, told reporters recently. The eastern U.S. faces flood risk due in part to a swollen Mississippi River, and the western U.S. could see waters rise as historic snowpack in the Sierra Nevada Mountains begins to melt. This could spell trouble in Californian in particular, where the soil is already waterlogged from winter’s atmospheric rivers.

The Midwest also saw record snowfall in recent months, according to meteorologists.

Flooding is the most common and expensive natural disaster in the U.S., according to NOAA. However a recent survey conducted on behalf of Erie Insurance found that only a small percentage of homeowners recognize the danger of flooding to their properties and families.

“There are several things homeowners can do to prevent water damage, like redirecting water away from their homes, sealing roofs and making sure plumbing systems are well maintained, Erie Insurance Vice President of Product Management Michelle Tennant said in a press release about the organization’s recent flood survey. “But they should also talk with their insurance agent to make sure they’re covered in the unfortunate event that damage does occur.”

DeSantis Turns Heads with Comment that Citizens Insurance ‘Not Solvent;’ Board Approves Cat Bond

Florida Gov. Ron DeSantis raised some questions Friday when he suggested that Citizens Property Insurance Corp., the state-created insurer, has “not been solvent” and may be unable to pay all claims from a major hurricane.

The head-scratching comments came just hours before the Citizens board of governors voted to spend more than $170 million over the next three years on $500 million in reinsurance bonds – over the objections of the board’s chairman.

DeSantis made his statement at a news conference in Fort Myers, which took the brunt of Hurricane Ian last September, and where many homeowners are now complaining that they’ve received little or no payouts on their insurance claims.

A news reporter asked DeSantis if he would consider changing Citizens’ eligibility requirements for homeowners. Some residents have said they can’t be fully covered by Citizens because the corporation limits coverage to $700,000 per home in most parts of the state. Others said they can’t be accepted by Citizens until their Hurricane Ian damage is repaired, but repairs have been delayed while claims with their existing carrier have been delayed or unpaid.

Lawsuit: Insurer underpaid millions by deducting labor depreciation from claims

An insurance company is being sued by customers who claim they were unpaid on claims because the carrier deducted labor depreciation from their payouts.

Illinois residents Betty and Daniel Grawe filed a class action complaint against Trumbull Insurance Co. last month, claiming it shortchanged them on a property damage claim from May 2021. Details of the claim were not disclosed in the legal filing.

The allegations being made in the lawsuit are similar to complaints within the auto repair sector, where a number of lawsuits have claimed policyholders are being undercompensated.

The lawsuit represents “hundreds or thousands of victims geographically dispersed” throughout 15 states who’ve been collectively underpaid more than $5 million by Trumbull, lawyers said.

“The relatively small amounts of damage suffered by most members of the proposed class make filing separate lawsuits by individual members economically impractical,” the lawsuit says.

“[The] plaintiff’s claims are typical of the claims of the class members, as they are all similarly affected by the defendant’s customs and practices concerning the withholding of labor.”

3 Emerging Risks to Watch: Generative AI, Deceptive Design, Bidirectional EVs

Innovative technologies can be transformational for businesses, industries and our way of life, but they also represent risks. Advances in new areas of tech, such as artificial intelligence (AI), are creating unforeseen threats that insurers must grapple with or risk new exposures. However, three emerging risks rise above the rest as issues the insurance industry should monitor closely.

Generative AI: A New Day Dawns … for Cyber Risk

Barely a day seems to go by without a story heralding a new milestone for Generative AI — the machine learning technique that can create original content such as images, text, video and computer code, from simple text prompts.

In January 2023 alone, we learned that Generative AI has been used to design homes, act as a defense attorney, and imitate human voices. Market researchers see Generative AI apps, such as OpenAI’s popular ChatGPT, creating plenty of revenue — potentially $109 billion by 2030. But the same creative power that has captivated our attention has also raised potential concerns.