Swiss Re estimates 2022 insured cat losses at $132B, consistent with 2021  March 24th 2023

Swiss Re estimates 2022 insured cat losses at $132bn

Global reinsurer Swiss Re has estimated that total insured losses from both natural and man-made catastrophes amounted to $132 billion last year, with economic losses thought to be more than double this figure at $284 billion.

The insured total consists of $125 billion of losses from natural disasters and $7 billion from man-made ones, Swiss Re reports, while the economic loss total reflects $275 billion from nat cats and just $9 billion from man-made events.

With Hurricane Ian in Florida, record breaking losses from hailstorms in France, floods in Australia and South Africa, winter storms in Europe and the US as well as droughts in Europe, China and the Americas, 2022 was the second consecutive year in which insured losses from natural catastrophes exceeded the $100 billion mark, Swiss Re notes.

Nevertheless, insured losses were fairly consistent with the 2021 figure of $130 billion of insured losses, while economic losses were in fact lower than the previous year’s $303 billion, according to the estimates.

However, last year’s losses do reaffirm the longer-term trend of a 5-7% average annual increase in insured losses over the past three decades, Swiss Re notes, with the insured and economic total also both sitting well above the 10-year averages of $91 billion and $220 billion, respectively.

US P&C industry suffers $26.5B underwriting loss in 2022

The US property & casualty industry saw a net underwriting loss of $26.5 billion in 2022, according to a new report released by AM Best.

This marks a $21.5 billion decrease from the underwriting loss of the previous year, AM Best said.

The industry took significant hits from personal lines losses and the impact of Hurricane Ian, as combined ratio deteriorated from 99.7% in 2021 to 102.7% in 2022.

Despite an 8.4% growth in net earned premiums and a 21.4% decline in policyholder dividends, the industry saw a 13.9% increase in incurred losses and loss adjustment expenses (LAE), as well as a 6.2% hike in other underwriting expenses.

Additionally, net income slid 31.3% to $42 billion, with tax expenses down 35.2% and realized capital gains down 83.2%. The industry's surplus also declined 6.7% to $951.9 billion from the end of 2021.

Reinsurers' combined ratios remained strong in 2022 but investment losses went up: Gallagher Re

Global reinsurers’ combined ratios deteriorated marginally to 95.7% for FY2022, despite this it remains strong while investment losses went up weighing on the average full-year ROE, which dropped to 10%, a Gallagher Re report revealed.

According to the the Global Reinsurers’ Financial Results for FY2022 report, the reinsurers tracked by Gallagher reported total average growth in P&C premiums of 12.1% for FY2022, with the strongest FY2022 increase coming from the Global Reinsurers (+16.7%).

The double-digit growth in premiums on both a quarterly and annual basis continues to be supported by not only price increases but also higher policy retention and organic growth, the broker pointed out.

Gallagher Re analysts said: “Inflation hit a 40-year high in many global economies in 2022 and continues to have an impact on industry premium trends. Apart from AIG, all companies we track reported a year-on-year increase in premium. Sixteen of the 26 companies in our data set reported double digit premium growth and of those, five reported increases over 20%.

5 Factors Stoking the Fires of Global Unrest, According to a Recent Report by Allianz

Anger over growing social inequality and the cost of living, sinking faith in governments and institutions, and increasingly polarized politics, together with a rise in activism and environmental concerns, are the main factors expected to fuel incidents of strikes, riots and civil commotion (SRCC).

At least, that’s what a new report, Outlook: Strikes, riots and civil commotion – a test of business resilience, from insurer Allianz Global Corporate & Specialty (AGCS) has concluded.

Ongoing incidents of SRCC put political risk and violence as a new entry among the top 10 global risks in the Allianz Risk Barometer 2023.

Civil unrest risks rose in over 50% of countries between 2022 Q2 and Q3, as reported in the Verisk Maplecroft Civil Unrest Index, just as businesses witnessed an increased impact on their operations.

“Incidents of strikes, riots and civil commotion have not only increased in recent years, they are also becoming more intense and catastrophic. These types of events are making our era one of uncertainty,” said Srdjan Todorovic, head of political violence and hostile environment solutions at AGCS.

Chubb demands policyholders reduce methane emissions

Chubb Ltd. said Wednesday it will restrict coverage for oil and gas extraction projects unless policyholders reduce methane emissions, a major greenhouse gas.

The insurer will also stop underwriting projects in areas designated as protected by state, provincial or national governments, effective immediately.

Chubb’s decision comes amid continued pressure from activist investors and environmental groups for insurers to pull back from fossil fuel industries.

The new underwriting criteria require oil and gas producers to implement “evidence-based plans” to cut methane emissions to secure insurance coverage, Chubb said.

At a minimum, oil and gas policyholders must have programs for leak detection and repair and the elimination of non-emergency venting, Chubb said in a statement.

They must also adopt one or more measures proven to reduce emissions from flaring, the insurer said.

A look at Tesla's insurance growth

How fast is Tesla Insurance growing?

At the end of 2022, Tesla’s insurance offering was available in 12 states. In some states, coverage is being offered by Tesla, which acquired insurance carrier Balboa Insurance Company in January 2022, along with its wholly owned subsidiaries Newport Insurance Company and Meritplan Insurance Company. In other states where insurance became available prior to this acquisition, Tesla Insurance programs are being supported by State National (CA, IL, AZ, OH) and Redpoint County Mutual Insurance (TX).

In the table below, we calculated the 2022 direct premiums written for each state where data was available (Texas was the only state where insurance was available for the full year since the program launched in late 2021).

Consumer Watchdog Report: Commissioner Lara Approves Over $1 Billion in Unjustified Auto Insurance Rate Hikes

Insurance Commissioner Lara's approval last week of a $263.7 million rate hike by California's largest insurer, State Farm, marks the latest in a flurry of approvals of unjustified 2023 auto insurance rate hikes by the top 6 auto insurers, collectively totaling over $1 billion. These companies insure approximately 48% of the state's insured vehicles. Hardest hit by the rate hikes are low-income workers who, under some auto insurers' job-based rating plans approved by Lara, will pay up to 25% more than professionals with college degrees.

After months of inaction on the proposed rate hikes, Commissioner Lara rushed to approve them over the objections of Consumer Watchdog who challenged the proposed rates as unjustified under voter-approved Proposition 103. According to Consumer Watchdog's analysis of the rate filings, auto insurance companies are overstating projected losses and inflation trends, causing their proposed rates to be excessive. A recent study by Consumer Federation of America and Center for Justice and Democracy also concludes that commercial insurers are misrepresenting their actual losses by large percentages. See CFA and CJ&D study here.

Why cyber insurers should prepare for a privacy claims wave

A recent storm of privacy class action lawsuits and regulatory actions are hitting hospitals, financial services companies, national retailers, and online service providers. Cyber insurers, attorneys, and forensic firms are suddenly swamped with cyber claims stemming from class action lawsuits and enforcement actions. Once seen as a low-risk cyber coverage area, cyber underwriters and claims teams are now scrambling to address the growing data privacy risks in their books.

In just the past six months there has been a flood of data privacy lawsuits and enforcement actions impacting cyber insurers' policies. Allegations include:

Restaurants sharing customers' online video-watching behavior with social media networks. Online tax services providers sharing data with the Meta Pixel on tax preparations websites. Hospitals and telehealth services sharing patient data with Facebook and other social media networks. Online session replay tools that record site visitors' behavior, prompting plaintiffs' attorneys to allege violations of wiretapping laws.