News
State Farm Wins Dismissal of Homeowners’ Class Action Over Use of Xactimate Software
A federal judge has dismissed a proposed class action filed on behalf of Pennsylvania homeowners who believe that State Farm undervalued their property damage claims in its use of the Xactimate software that is popular with insurers.
The lead plaintiffs, Jamie and Becky Belotti sustained a fire loss at their home in Duryea, Pennsylvania. Their complaint contains counts for bad faith, fraud and deceptive business practices, breach of contract, bad faith, and unfair trade practices. They sought relief as a class action.
The homeowners maintained that State Farm wrongfully treated their home damage repair as “new construction” when it should have used Verisk Analytics’ Xactimate numbers for “repair/reconstruction” and the difference led to an alleged underpayment.
The plaintiffs did not contest that State Farm failed to pay for the cost of repair and replacement of its losses with similar construction. Rather the plaintiffs’ concerns related to the insurer’s alleged failure to use a specific method of computation concerning its assessment of their losses.
California Insurance Commissioner Ricardo Lara in support of Assembly Bill 75
California Department of Insurance Commissioner Ricardo Lara Friday announced his strong support of Assembly Bill 75, a consumer protection measure that aims to require insurance companies to notify homeowners at least 30 days in advance before taking or obtaining aerial images of their property.
The bill, which is authored by California Assemblywoman Lisa Calderon, would also grant homeowners the right to request and obtain copies of any aerial images used by their insurer.
"No homeowner today should be unaware that their property is being photographed or have no way to access the images insurers use to make coverage decisions," said Commissioner Lara. "AB 75 will increase transparency, protect privacy, and give consumers a fair chance to dispute inaccurate or outdated images that could wrongly impact their insurance coverage."
Consumer complaints and media reports have documented a sharp increase in insurance companies using aerial imagery to inspect homes and deny coverage.
The California Department of Insurance says that the Wall Street Journal recently reported that the insurance companies are photographing "nearly every building in the country", often without the owner's knowledge, and using A.I. powered data mapping, satellite imagery, and predictive models to identify properties for non-renewal.
Financial Results
2024 a strong year for insurance carrier earnings despite pricing shifts and rising peril losses: Howden Re
In 2024, global insurance carriers experienced a year of improved underwriting performance and capital recovery, which contrasted with growing concerns around reserving volatility and widening loss gaps, according to a recent analysis by Howden Re.
One of the report’s central themes is the stabilisation of pricing following a period of significant increases.
While renewal volumes at the key January 1st, 2025, renewals saw an uptick, they remained below the levels of the previous year, indicating a change in market dynamics.
“It is now clear that pricing is no longer that tail wind that it was, carriers are achieving growth through increased exposure, although exposure remains low compared to long term averages,” said Michelle To, Head of Business Intelligence, Howden Re.
This trend, however, varies significantly across different lines of business, with premium growth now outpacing pricing in liability lines, for example. The report also highlighted the importance of disciplined underwriting as prices stabilise.
Tariffs/Insurance
US Import Tariffs Will Reset the Automotive Value Chain | S&P Global
Article Summary
As the President said that he expects no end to the US import tariffs, S&P Global Mobility expects persistent tariffs at a high level and few exclusions.
By the numbers:
- In 2024, US light vehicle sales reached 16.03 million units; 8.7 million (54%) were produced in the US and 46% were imported.
- About 46% of US light-vehicle sales could be directly impacted by tariffs on vehicle imports, based on S&P Global Mobility estimates of 2024 volume.
- In 2024, by country: the US saw the most imports from Mexico, followed by South Korea, Japan and Canada. Â
- By automaker: Volvo, Mazda, Volkswagen and Hyundai Motor (including Genesis and Kia), imported at least 60% of their respective US sales in 2024.
- By automaker: In 2024, Ford, General Motors, Toyota, Honda and Stellantis produced the most vehicles in the US. Combined, these five automakers accounted for 67% of US light-vehicle production in 2024.
Trump’s Tariffs Threaten to Endanger the Cheap American Car
Car prices have already climbed out of reach for many Americans. The search for a cheap car is poised to get even tougher.
President Donald Trump’s tariffs on automobile imports set to take effect next week are expected to drive up costs across the industry, raising sticker prices by thousands of dollars. The effects could be particularly pronounced at the low end of the market, with many of the least-expensive models from the likes of General Motors Co., Ford Motor Co., Kia Motors and Hyundai Motor Co. being built outside the U.S.
Trump's tariffs won't just raise car prices, but auto insurance rates, experts say
Chicago — Steve Walter's family has been fixing cars on Chicago's North Side for 70 years.
"I'm fourth generation," Walter said. "My grandfather worked on pre-war Italian race cars."Â
Walter's mechanics replace metal more often than they repair it, so he's bracing for the impact of President Trump's newly announced 25% tariffs on all vehicles and auto parts imported into the U.S., set to take effect April 2.Â
"Those tariffs are going to increase the average repair order," Walter said.
He also believes that the tariffs will drive up auto insurance premiums.
"They're going to go up," he said.
The president's 25% tariffs on all steel and aluminum imports took effect earlier this month, but Mr. Trump gave automakers a one-month exemption after speaking to leaders of the Big Three automakers: Ford, General Motors and Stellantis. In early March, Mr. Trump also instituted, and then paused until April 2, 25% tariffs on imports from Mexico and Canada that are covered under a 2020 trade agreement.Â
The cost of repairs for a five-year-old car averaged between $5,073 and $6,274 last year, according to numbers from CCC Intelligent Solutions, and Walter expects that to rise.Â
Walter showed CBS News a fender that cost approximately $200. He says that with the tariffs, "maybe in six months to a year, we'll see, you know, this fender being $250."
Nearly all of the replacement parts on the shelves inside Fred Billeh's Discount Auto Warehouse in Chicago came from the countries facing new tariffs. He estimates his warehouse carries "millions" of parts.
Billeh's prices increased in 2019 after Mr. Trump imposed tariffs in his first term. He said the added cost gets passed "to the customers, to the consumer."
The Insurance Information Institute had already forecast premium increases this year of about 7%, and that was before the new tariffs.
Bob Passmore, vice president of the American Property Casualty Insurance Association, a trade group that represents insurance companies, says that the impact of the tariffs will create a "ripple" effect, with tariffs today being felt in 12 to 18 months.
"If you're increasing costs here, eventually, it's going to show up in your premium bill," Passmore said. "…It's pretty simple."
InsurTech/M&A/Financeđź’°/Collaboration
Mitsui Sumitomo to buy 15% of Berkley
W.R. Berkely Corp. said Friday that Japanese insurer Mitsui Sumitomo Insurance Co. Ltd. has agreed to buy 15% of the Greenwich, Connecticut-based insurer through an agreement with the Berkley family.
The specialty insurer, founded by Executive Chairman William R. Berkley in 1967, is the second-largest surplus lines insurer in the United States, according to Business Insurance’s most recent ranking. Last year, the company reported $14.21 billion in gross written premium.
Under the terms of the deal, Mitsui Sumitomo has entered into an agreement with a company owned by members of the Berkley family and related trusts to buy shares through the open market or private transactions.
Selective adds Ting fire prevention tech to homeowners' offering
Selective is now offering Whisker Labs’ Ting fire prevention technology to eligible homeowners’ policyholders as part of its value-added services.
The Ting device plugs into a wall outlet and monitors electrical activity to detect hazards that could lead to fires, alerting homeowners and guiding them through necessary repairs.
The service is available at no cost to policyholders in 13 states, including New Jersey, Ohio, and Arizona.
With this move, Selective joins other insurers using Ting to help reduce fire risk and enhance safety. According to Whisker Labs, Ting has already been installed in over one million homes and prevented more than 16,000 potential fires.
Kay.ai Raises $3M to Eliminate Data Entry Work in Insurance Operations
Kay.ai, the AI co-worker designed to eliminate manual data entry work for insurance brokers and agencies, has raised $3 million in funding. The round was led by Wing VC, with participation from South Park Commons, 101 Weston Labs, and several angel investors.
"The U.S. Bureau of Labor Statistics projects that the insurance industry will face a shortage of nearly 400,000 workers by 2026," said Vishal Rohra, co-founder and CEO of Kay.ai. "Despite this looming talent shortage, brokers and agencies still spend up to 80% of their time on paperwork, weighed down by archaic systems and misaligned incentives. We eliminate that burden and act like a digital co-worker that handles the most tedious tasks so their team can focus on high-value work.”
With AI co-workers, Kay introduces new technology that goes beyond traditional software or legacy RPA tools. These co-workers understand your process, interact with your tools on your behalf, and adapt with your preferences. This unlocks a whole range of workflows across submissions, renewals, and servicing that could not be automated before.
Los Angeles Wildfires
State Farm Has Paid $2.5 Billion in Claims for LA Wildfires
State Farm has reported paying out $2.5 billion for the Los Angeles wildfires in January, more than double what the carrier reported paying out weeks earlier.
“As of March 28, we’ve received more than 12,300 total claims related to the fires and have paid over $2.5 billion to our customers,” State Farm said in a statement on the fires.
“As of March 28, we’ve received more than 12,300 total claims related to the fires and have paid over $2.5 billion to our customers,” State Farm said in a statement on the fires.
Cyber Risk
Cowbell Connectors expands to 30+ integrations to enhance cyber risk assessment
Cowbell, a cyber insurance provider for small and medium-sized enterprises (SMEs), has announced the expansion of its Cowbell Connectors to more than 30 integrations with top security and cloud service providers.
Cowbell Connectors enhance cyber risk assessment and underwriting by leveraging inside-out data, unlike businesses that rely on outside-in or partial internal data. It securely pulls real-time insights from cloud environments, vulnerability scanners, endpoint security solutions, identity management platforms, and compliance tools.
These new integrations complement a multi-layered model that includes outside-in data, dark web intelligence, threat intelligence, loss costs, historical claims, and regulatory compliance. This expansion comes in response to the rise in cyberattacks, with the U.S. among the countries facing high data breach rates.
In 2024, more than 6.85 billion records were breached in the U.S., with the average cost of a data breach reaching $9.36 million. Cowbell expects these figures to rise in 2025, driven by advances in AI and ongoing geopolitical tensions, both contributing to heightened cyber risk.
Canada
How Intact is changing its home insurance productÂ
[Ed.Note: taking a page out of the cable TV industry's "tiered pricing" strategy, Intact is reformulating its property pricing to "peril-by-peril". We would not be surprised to see this model in the the U.S. market where unpredictable extreme weather losses are upending underwriting accuracy]
The carrier is increasing its pricing sophistication
Intact, Canada’s largest insurer, is now pricing its home insurance product “peril-by-peril.”
It’s among several pricing sophistication efforts Intact is employing to maintain profitability, Ken Anderson, executive vice president and chief financial officer of Intact Financial Corporation, said in a National Bank Financial fireside chat.
“We’re now using maps by peril — be it flooding maps, wildfire maps, hail maps — and overlaying those on top of each other as we do our pricing,” Anderson said Wednesday at the Canadian Financial Services Conference in Montreal.
“So, pricing sophistication is certainly an area that we continue to try to push the boundaries on to maintain the competitive advantage there.”
Intact is also investing in actuarial science and machine learning to fine-tune its home insurance pricing, says Anderson.
The company reports making other adjustments to its home insurance policies. “Things like basement limits on basement losses,” he says. “We’ve also tweaked our coverage around roofs for hail, so the depreciated cost of the roof is what the payout is on, as opposed to the new costs of the roof.”