News
$13.8M settlement reached in Progressive total loss class action
Plaintiffs claimed a valuation adjustment allowed the insurer to “thumb the scale” when paying claims.
Four Progressive subsidiaries have agreed to pay a $13.8 million settlement in a New York class action suit accusing them of undervaluing total loss vehicle claims. The defendants include Progressive Casualty Company, Progressive Advanced Insurance Company, Progressive Max Insurance Company and Progressive Specialty Insurance.
The original suit was filed in the Southern District of New York in October 2021. It alleges that the insurers determined the actual cash value of totaled vehicle claims using reports prepared by Mitchell International, Inc. Mitchell’s valuations allegedly included a “projected sold adjustment” deduction, which is described as an adjustment based on consumer purchasing behavior, which includes those who negotiate a different price than that at which the vehicle is listed.
The suit explains: “These valuation reports purport to contain values for comparable vehicles recently sold or for sale in the claimant’s geographic area. The reports also contain a purported valuation for the loss vehicle based upon advertisements for comparable vehicles listed in the report. The report then adjusts the advertised prices of those comparable vehicles to account for differences in equipment, mileage, and vehicle configuration.”
Plaintiffs claim this adjustment allowed Progressive to “thumb the scale” when calculating claim payouts. and the suit calls the use of the projected sold adjustment “deceptive” and contrary to appraisal standards.
Tariffs/Insurance
Fact Sheet: President Donald J. Trump Adjusts Imports of Automobiles and Automobile Parts into the United States
COUNTERING TRADE PRACTICES THAT THREATEN TO IMPAIR U.S. NATIONAL SECURITY: Today, President Donald J. Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to impose a 25% tariff on imports of automobiles and certain automobile parts, addressing a critical threat to U.S. national security.
President Trump is taking action to protect America’s automobile industry, which is vital to national security and has been undermined by excessive imports threatening America’s domestic industrial base and supply chains.
- The 25% tariff will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary.
- Importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content. USMCA-compliant automobile parts will remain tariff-free until the Secretary of Commerce, in consultation with U.S. Customs and Border Protection (CBP), establishes a process to apply tariffs to their non-U.S. content.
- The President is exercising his authority under Section 232 of the Trade Expansion Act of 1962 to adjust imports to protect our national security.
- This statute provides the President with authority to adjust imports being brought into the United States in quantities or under circumstances that threaten to impair national security.
New Trump tariffs could add billions to claims costs
Analysts warn of supply chain shocks, rate pressure, and underwriting uncertainty. New Trump tariffs could add billions to claims costs
New US automobile tariffs, along with additional proposed tariffs targeting key trading partners, could increase costs and introduce further volatility across property, auto, life, and health insurance lines, according to industry analysts.
AM Best director Ann Modica said the imposition of tariffs may generate uncertainty that affects both underwriting and investment strategies.
Broader geopolitical tensions and potential supply chain disruptions are also likely outcomes. Modica noted that these developments could influence asset markets, capital flows, and investor behavior, contributing to greater market volatility throughout 2025.
The US is considering a 25% tariff on imports from Canada and Mexico, in addition to higher tariffs on Chinese goods. These measures are expected to negatively impact the insurance sector, with particular implications for homeowners’ and personal auto insurance.
Robert Passmore (pictured), vice president of the personal lines department at the American Property Casualty Insurance Association (APCIA), said the industry is still recovering from elevated inflation and pandemic-related cost increases.
He noted that in the absence of alternative sources for vehicle parts and building materials, insurers may face significant cost pressures once the tariffs are enacted.
Insurers see trade disputes as growing risk, Goldman Sachs survey finds
Tariffs and trade disputes have emerged as a key concern for insurers, according to Goldman Sachs Asset Management’s (GSAM) latest annual survey of industry executives.
Nearly one-third (32%) of chief investment officers and chief financial officers cited trade tensions as a significant macroeconomic risk, ranking it fifth among top concerns. The issue did not appear in last year’s survey, highlighting a shift in sentiment amid ongoing economic uncertainty.
“We did close the survey approximately six weeks ago,” said Michael Siegel, global head of insurance asset management and liquidity solutions at GSAM. “I think if we surveyed right now… the number would be significantly higher.”
Trade policy and economic uncertainty
Since returning to office in January, President Donald Trump has introduced and modified tariffs on major trade partners, including China, Canada, and Mexico. A Wall Street Journal report on March 23 suggested the administration planned to narrow the scope of new tariffs set to take effect in April, opting for a more targeted approach. The uncertainty surrounding trade policy has contributed to market volatility, adding to insurers’ concerns over portfolio stability.
AI in Insurance
Acknowledging the transformative impact of AI on insurance operations
Can generative AI (GenAI) deliver real value in general insurance today? That was the question under discussion during a ‘power lunch’ discussion at the 2025 Insurtech Insights Europe conference where Guidewire’s Laura Drabik spoke to Tom Wilde, CEO of Indico Data and Terry Buechner, global insurance core systems lead at AWS about the practical application of AI in insurance.
Contextualising where AI is adding value and where it’s in danger of becoming overhyped, Wilde noted that last year about 25 million people globally identified as software engineers. When GenAI arrived, it essentially enabled anybody able to type at a computer to become a programmer. That’s the scale of the disruption, he said, and it’s what is so profound about the advancement of AI.
“I think the challenge is how can you control that? Because you wouldn’t, as an insurance company, declare overnight that everybody is allowed to write software to change pricing models,” he said. As a result, the question for the market is how to make sure that this technology is pointing in the right direction, which means ensuring that the right controls are in place around it.
InsurTech/M&A/Finance💰/Collaboration
Xceedance Invests in L&H-Focused AI Company Friendly
The firms say they will collaborate on underwriting-, claims-, and risk management- related innovations that will benefit their clients globally.
Xceedance (Boston), a global provider of insurance-focused consulting, technology, operations, and data solutions, announced that it has made a strategic investment in Friendly (San Francisco), an artificial intelligence (AI) company focused on life & health (L&H) underwriting, claims management, and risk assessment processes.
Friendly’s flagship platform transforms complex medical and third-party data into structured, AI-ready insights, for life, disability, long-term care (LTC), critical illness (CI), casualty, and reinsurance underwriters assessing risk, according to a joint statement from Xceedance and Friendly.
Xceedance characterizes the investment as underscoring its commitment to supporting L&H and reinsurance clients with cutting-edge technologies that address evolving market needs. By aligning with Friendly, Xceedance says it will help accelerate the deployment of AI solutions that improve operational efficiency and decision-making for global insurers.
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Commentary/Opinion
Rising Uncertainty: Risk & Opportunity for Insurance Resilience | Insurance Innovation Reporter
Now more than ever, it is urgent that insurers be more resilient and innovative, and that they transition to a predict and prevent defensive posture.
Until recently it was said that the only constant was change—now the only constant is uncertainty.
Uncertainty is at a generational high in almost every aspect of our lives; socially, financially, politically, and technologically. One of the most serious consequences of this uncertainty is its impact on risk assessment across all lines of insurance. However, it also represents a major opportunity for insurers.
Risk is defined as the odds or probabilities that future events can be estimated. The model of risk transfer is centuries old and thrives on predicting when and how much known exposures are likely to happen and the costs involved. Thus, not all risks are insurable such as moral hazards where the incentives are misaligned. Risk transfer is further disrupted when doses of uncertainty distort predictive models.
Alan Demers and Stephen Applebaum as featured in Insurance Innovation Reporter
Research
Personal Auto Insurance Affordability is Better Than in the Mid-2000s, Even with Recent Increases, IRC Study Reveals
The affordability of personal auto insurance is estimated to have deteriorated from 2021 through 2024 as insurance companies increase premiums to offset inflationary loss pressures, according to an updated study from the Insurance Research Council (IRC), an affiliate of The Institutes. Despite this recent deterioration, auto insurance is more affordable than in the mid-2000s.
Looking at long-term trends, personal auto insurance affordability improved over the past two decades, according to an IRC study.
Auto Insurance Affordability: Countrywide Trends and State Comparisons looks at the average auto insurance expenditure as a percent of median income, which ranges from a low of 0.93% in North Dakota to a high of 2.67% in Louisiana.
In 2022, the most recent year for which data are available, average expenditures were $1,127, and median household income was $74,580. Thus, U.S. households spent 1.51% of their income per vehicle on auto insurance, a slight increase from the previous year.
Looking at long-term trends, auto insurance affordability improved over the past two decades. Between 2000 and 2022, median household income grew somewhat faster than auto insurance expenditures, causing the expenditure share of income to decline from 1.64% in 2000 to 1.51% in 2022. In other words, auto insurance was somewhat more affordable in 2022 than in 2000.
Mercury Insurance Explains How Uninsured Drivers Affect Insurance Costs and How You Can Protect Yourself
A greater number of Americans are getting behind the wheel without auto insurance, raising costs for all drivers across the country.
From 2019 to 2022, the percentage of uninsured motorists grew from 11% to 14% according to the Insurance Research Council, which translates to approximately 1 in 7 drivers in the U.S. According to Bankrate, the average cost of full coverage car insurance is roughly $205 per month as of November 2024.
The increasing frequency of uninsured drivers strains insurance companies financially. When insurers are forced to cover the costs of accidents caused by these drivers, expenses increase. The burden of these increased costs is then passed on to the consumer, meaning that responsible, insured drivers have to shoulder the burden.
In recent years, policyholders collectively paid $16 billion for uninsured and underinsured motorist coverage, per Answer Financial.
"The reality is we all bear the burden for motorists who drive without auto insurance and it's tough on both the insurer and insured," said Kevin Quinn, Vice President of Auto Claims for Mercury Insurance. "We understand that affordability is a problem, but driving without insurance not only creates a significant liability for the driver, it also exacerbates the affordability problem for everyone."
Here are some key factors that explain how uninsured drivers affect insurance rates:
Increased risk for insurers: When a significant number of drivers are uninsured, it raises the risk for insurance companies, as they may need to pay out more in claims for accidents involving uninsured motorists.
Higher premiums for insured drivers: To offset the increased risk, insurance companies raise premiums for all insured drivers, even if they have a clean driving record.
Impact of uninsured motorist coverage: While most states require uninsured motorist coverage, which protects insured drivers in accidents with uninsured motorists, frequent claims against uninsured drivers can still lead to higher premiums for everyone.
Individual impact of driving without insurance: If an individual is caught driving without insurance, their future insurance rates will likely be significantly higher because they are considered a high-risk driver.
Auto insurance affordability under scrutiny in new report
Personal auto insurance remains more affordable than it was in the mid-2000s, despite recent premium increases driven by inflationary pressures, according to a study from the Insurance Research Council (IRC), an affiliate of The Institutes.
The study, Auto Insurance Affordability: Countrywide Trends and State Comparisons, found that from 2000 to 2022, the cost of auto insurance as a percentage of median household income declined overall, indicating improved affordability over the long term. However, more recent data suggest that affordability has worsened from 2021 through 2024.
In 2022, the most recent year for which data is available, US households spent an average of $1,127 per vehicle on auto insurance, representing 1.51% of the median household income of $74,580. This marked a slight increase from the previous year. State-by-state variations were significant, with North Dakota having the lowest expenditure share at 0.93%, while Louisiana had the highest at 2.67%.
Dale Porfilio, president of the IRC and chief insurance officer at the Insurance Information Institute (Triple-I), noted that affordability is projected to decline further in 2023 and 2024. The share of household income spent on auto insurance is expected to increase to approximately 1.6% in 2023 and 1.7% in 2024. While this represents a notable rise from the low of 1.4% in 2021, it remains below the peak of 1.9% recorded in 2003.
Announcements
Kin to launch a car insurance offering
Home insurance startup Kin Insurance has filed new personal auto insurance programs in Florida and Texas.
Earlier this month we reported that Kin is getting into the mortgage space with the hiring of a mortgage loan officer. In April of last year we reported that Kin acquired an insurance agency from Porch Group for ~$12 million. Kin has been looking to grow its agency division that offers products from other carriers.
Founded in 2016, Kin has mainly focused on home insurance through the two reciprocals it manages – Kin Interinsurance Network and Kin Interinsurance Nexus Exchange. The reciprocals recently published their financial results.
GEICO to Open New Tampa Campus, Creating More Than 1,000 New Jobs
GEICO announced plans to strengthen its Florida presence with a new campus in Tampa, bringing more than 1,000 new jobs to the region. This strategic expansion advances GEICO’s commitment to modernizing operations and driving long-term growth while maintaining its position as one of the industry’s most customer-centric insurance companies.
"As Florida’s second-largest auto insurer and the third largest in the United States, we are thrilled to expand our footprint in the Sunshine State." Share
“As Florida’s second-largest auto insurer and the third largest in the United States, we are thrilled to expand our footprint in the Sunshine State,” said GEICO Senior Vice President Angela Rinella. “Tampa’s robust talent pool and dynamic business environment make it the ideal location for our newest office, allowing us to better serve our growing customer base with various insurance products while creating significant employment opportunities in the region.”
The expansion will add to GEICO’s substantial Florida workforce, which currently includes nearly 3,800 employees primarily based in Jacksonville and Lakeland with additional offices for its legal staff located throughout the state. The company will soon occupy 190,000 square feet across a three-building campus near Tampa International Airport starting this summer.
The investment in Tampa reinforces the company’s commitment to transforming how it delivers a multitude of insurance products for millions of satisfied customers. GEICO continues to deliver products that create a more seamless, first-class experience for customers, from initial quote through claims settlement.
Climate/Resilience/Sustainability
KB Home Introduces Wildfire-Resilient Neighborhood
KB Home (NYSE: KBH), one of the largest and most trusted homebuilders in the U.S., today unveiled the nation’s first new-home community that meets the home- and neighborhood-level wildfire resilience standards developed by the Insurance Institute for Business & Home Safety (IBHS), an independent nonprofit research organization dedicated to protecting homes and communities against natural disasters.
Utilizing fire-resistant building materials, methods and features based on over a decade of IBHS wildfire research, KB Home’s Dixon Trail community in Escondido, California is designed to IBHS’s highest level of protection against direct flame contact, radiant heat and embers, which helps to meaningfully reduce the likelihood of wildfire spread.
The Dixon Trail community will have 64 beautifully designed homes upon completion. Each home will be built to the Wildfire Prepared Home™ Plus standard and receive a designation certifying that it has met IBHS’s most stringent requirements for homesite-level fire mitigation. Dixon Trail will receive a provisional neighborhood-level designation based on its design, confirming that the community has implemented preventative measures to reduce the likelihood of initial ignitions from an approaching wildfire, protect against embers that could spark spot fires, and slow fire spread if ignitions occur. Dixon Trail is the first applied use of the researched-based, community-level mitigation strategies of structure separation, fire pathway reduction and wildfire-resilient building materials under IBHS’s new Wildfire Prepared Neighborhood standard. Once the neighborhood is completed and has passed an IBHS evaluation, a final Wildfire Prepared Neighborhood designation will be issued.
"With fire becoming an increasingly common threat in the West, it's crucial to reconsider how we construct communities in fire-prone regions," said IBHS CEO Roy Wright. "KB Home is at the forefront, implementing our research-driven wildfire mitigation strategies for both the parcel and neighborhood levels at Dixon Trail."
Recommended Events
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