InsurTech/M&A/Finance💰/Collaboration
Plenty of Investor Interest in Insurance Despite Drop in Deal Volume, Says PwC
Deal volume is down but the total value of the deals that were made is up, according an analysis by PwC of mergers and acquisitions in the insurance sector.
The look at M&A activity showed total deal value within the insurance sector of $30 billion from 209 deals for the six-month period ending May 15. This compares to a value of $20 billion on 297 deals for the prior six-month period ending November 15, 2024.
Commentary/Opinion
'Tough decisions' on the way as California grapples with insurance crisis
Nearly six months after a series of devastating wildfires, California’s property insurance crisis is far from stabilized.
Many market participants are focused on the next climate-fueled disaster – be it more wildfires or an earthquake. The Golden State’s property insurance market simply cannot continue without major reforms, experts say.
“The home insurance market is in a state of crisis,” reads a new report from Deep Sky, a Canadian carbon removal project developer. “The highest risk areas of California have effectively become uninsurable and will soon become unaffordable. … Without significant policy intervention, these properties will eventually become worthless.”
The report, titled “Wildfires 2025,” shows insurers abandoning homeowners in the highest-risk areas, with over 150,000 households now uninsured in California's most fire-prone regions alone. Home insurance premiums have shot up 42% in those areas.
In January, 14 separate wildfires destroyed more than 18,000 homes and structures, and burned over 57,000 acres from San Diego to Los Angeles. The Eaton and Palisades fires were the second- and third-most destructive wildfires in California’s history, respectively.
An AM Best special report shows a $1.1 billion net underwriting loss in the first quarter for the U.S. property and casualty insurance industry, compared to a $9.4 billion net underwriting gain in Q1 2024. The loss was mainly due to the California wildfires, AM Best concluded.
The wildfires cost insurers dearly, a short-term issue leading to an emergency 17% rate hike granted to State Farm. In exchange, the carrier committed to refraining from a new round of nonrenewals through the end of 2025. State Farm Mutual agreed to make a $400 million capital infusion into State Farm. [READ ON(https://insurancenewsnet.com/innarticle/tough-decisions-on-the-way-as-california-grapples-with-insurance-crisis)
Legal System Abuse/Social Inflation
Chamber Pushes for Reform as Foreign Investors Exploit U.S. Legal System Through Litigation Funding - Risk & Insurance : Risk & Insurance
Congressional bills aim to close tax advantages and increase transparency in $16 billion third-party litigation funding industry.
Comprehensive reforms are needed to address how third-party litigation funding (TPLF) operates within the federal tax and court system, according to the U.S. Chamber of Commerce Institute for Legal Reform (ILR), citing national security concerns and unfair competitive advantages for foreign investors.
Current tax loopholes allow foreign funders to profit from American lawsuits while avoiding U.S. taxes, ILR contends in a recent blog post outlining calls for reform.
“TPLF brings up some big questions about transparency, fairness, and even national security,” according to ILR. “Furthermore, the way the federal tax system currently treats these high-paying ‘investments’ only makes things worse, creating a loophole that lets foreign funders avoid paying U.S. taxes on their litigation profits—all while contributing to out-of-control tort costs and potentially endangering national interests. It’s time for Congress to step in and fix this mess.”
Growing Investment in Legal Disputes Creates Market Distortions
TPLF has evolved into a significant financial sector, with investors paying for lawsuits in exchange for shares of settlements or judgments. The industry’s rapid expansion demonstrates its growing influence on the American legal landscape, ILR noted.
According to a Westfleet Advisors report, 42 funders held approximately $16 billion in litigation assets under management in U.S. commercial litigation during 2024 alone, representing just a subset of the broader TPLF market, the blog reported.
Major mass tort cases illustrate the scale of this investment activity. High-profile litigation including Roundup claims against Bayer AG and talc lawsuits against Johnson & Johnson has attracted substantial backing from investment funds, ILR noted, including funding from Fortress Investment Group, which is predominantly owned by an Abu Dhabi sovereign wealth fund.
“This flood of foreign money into U.S. lawsuits isn’t just a business story; it’s a national security concern. It opens the door for foreign adversaries to use our legal system for their own profit and benefit. The tax code makes things worse by letting foreign investors treat their lawsuit investment profits as capital gains, which means they don’t normally have to pay U.S. taxes on those earnings,” per IPR’s blog.
AI in Insurance
Fed. AI Moratorium Proposal May Undo State Insurance Regs - Law360 Insurance Authority
A proposed federal moratorium on state regulation of artificial intelligence systems has raised alarms from state insurance regulators and practitioners, who say the broad scope of the moratorium may threaten to undo long-established practices and spread confusion across the industry.
The proposal included in the budget reconciliation bill passed in May by the U.S. House of Representatives would put a 10-year pause on most state enforcement of laws or regulations related to AI, a measure critics fear could suddenly unravel nationwide efforts to clarify or strengthen insurance industry regulations.
Experts shared their concerns with Law360 that the bill's definitions of AI and enforcement actions could potentially ensnare a broad range of regulatory actions by state insurance agencies, including longtime supervisory and enforcement activities, increasing uncertainty for insurers and policyholders alike.
"It is not necessarily clear that we have a crisis such that we need to act this broadly now," said Anthony Crawford of Reed Smith's insurance coverage group. "It's almost as if part of this is a solution looking for a problem."
Research
Despite auto insurers' return to the black, some customers unhappy
After several years of financial bleeding, America’s auto insurers have finally shifted out of the red—and now they are being forced to pivot just as fast to avoid losing their most valuable customers.
According to the just-released J.D. Power 2025 U.S. Auto Insurance Study, insurers have returned to profitability for the first time in years, following an extended period marked by heavy losses, steep premium hikes, and exits from unprofitable markets. But this new era of profitability is accompanied by a tough reality: nearly four in 10 customers are not very satisfied, and many of the highest-value policyholders are ready to bolt.
“Now that insurers are shifting back into growth mode, they really need to focus on cultivating and keeping high-value customers,” said Stephen Crewdson, managing director of insurance business intelligence at J.D. Power. “But among many of those customers, overall satisfaction this year is not particularly high. To shift that perception after the past few years of significant rate increases, insurers need to focus on delivering a tailored, seamless customer experience across all channels.”
- 38% of customers in bottom tier of satisfaction
Customer satisfaction with auto insurers is down slightly overall, falling two points to 644 on a 1,000-point scale. But the more troubling stat is what lies beneath: 38% of all customers are clustered in the bottom tier of satisfaction, meaning they are significantly less likely to renew—and far more likely to shop for a better deal elsewhere.
Gen Z is dropping home insurance in 2025
Young policyholders may view insurance as an “easy cost” to cut when budgets are tight.
Some Gen Z homeowners are reducing coverages as the cost of properties and insurance policies increase.
Already in 2025, the average U.S. consumer spends nearly $25,000 per year on household bills, with the median annual income for U.S. households at $80,610. Meanwhile, U.S. homeowners now pay 17.4% more for new insurance policies as factors like inflation, severe weather and reinsurance costs impact the market.
Recently, PropertyCasualty360 spoke with Kimberly Burdi-Dumas, Vice President of InsureTech with DocuSketch, about the growing trend of young homeowners abandoning insurance coverages in the face of rising costs.
Dumas: Some of the main reasons Gen Z policyholders may be reducing homeowners insurance coverage relates to costs and a lack of education. As it stands today, the cost of housing is continuing to increase and policyholders are likely examining where every penny goes to determine the value.
Due to their age and lack of long-term homeownership experience, Gen Z policyholders may view insurance as an “easy cost” to cut when budgets are tight. As a result, they likely view reducing insurance as a cost savings measure and may not understand the impact of this decision until an extreme weather event hits.
Triple-I: Lightning Caused $1.04B in US Homeowners Claim Payouts in 2024; Frequency Drops 21.5% Year-Over-Year
U.S. insurers paid $1.04 billion in lightning-related homeowners insurance claims in 2024, a 16.5% decrease from the $1.24 billion paid out in 2023, according to the latest figures from the Insurance Information Institute (Triple-I).
The total number of lightning-caused claims also fell significantly, down 21.5% to 55,537 in 2024, the lowest number of claims since before 2017. More than half of all claims came from the top 10 states, with Florida, Texas and California leading the nation.
“Fewer claims and a decline in severity indicate increased awareness, and improved mitigation,” said Triple-I CEO Sean Kevelighan. “Nonetheless, lightning remains a significant threat to property and safety, particularly during storm season.”
Based on national insurance claims data compiled to coincide with National Lightning Safety Awareness Week (June 22-28, 2025), the Triple-I estimated that:
- In 2024, U.S. lightning–caused claims decreased by 21.5% to 55,537 (from 70,787 in 2023), with the top 10 states by number of claims contributing to more than half of the total.
- National claim value decreased 16.5% (from $1.24 billion) to $1.04 billion.
- While the national average cost per claim was $18,641, the average per claim was $38,558 in Texas.
“Lightning remains a costly and unpredictable threat, with ground surges causing nearly half of all claims,” said Michal Brower of State Farm. “These events can cause extensive damage to electrical systems, appliances and even structural issues. The damage underscores the critical need for homeowners to be aware of the risks, invest in protective measures, and stay prepared, especially in high-risk regions where lightning strikes are most frequent and damaging.”
Data Privacy
Cybercriminals breach Aflac as part of hacking spree against US insurance industry | CNN Business
Cybercriminals have breached insurance giant Aflac, potentially stealing Social Security numbers, insurance claims and health information, the company said Friday, the latest in a spree of hacks against the insurance industry.
With billions of dollars in annual revenue and tens of millions of customers, Aflac is the biggest victim yet in the ongoing digital assault on US insurance companies that has the industry on edge and the FBI and private cyber experts scrambling to contain the fallout.
Erie Insurance and Philadelphia Insurance Companies have also reported hacks this month, which in those cases have caused widespread disruptions to IT systems used to serve customers. All three insurance-company hacks are consistent with the techniques of a young and rampant cybercrime group known as Scattered Spider, people familiar the investigation tell CNN.
“This attack, like many insurance companies are currently experiencing, was caused by a sophisticated cybercrime group,” Aflac said in a statement on Friday, without naming Scattered Spider. Aflac said it “stopped the intrusion within hours” after discovering it last week, that no ransomware was deployed, and that it continues to serve its customers.
Erie Insurance Facing 2 Class Actions Claiming Data Breach
Not one but two class action lawsuits have been filed against Erie Insurance even as the insurer continues to investigate its cybersecurity incident.
One lawsuit was filed by an Illinois customer, Neil Plascencia; the other by Amy Haas, a former Erie employee who lives in Wisconsin. Both claim Erie Insurance was negligent in not protecting their personally identifiable information (PII) and each seeks $5 million in damages. MORE
Aflac hit by cyberattack amid broader insurance sector targeting
Company reviewing potential data exposure
Aflac has disclosed a cybersecurity breach affecting its US network, attributing the incident to a cybercrime group engaged in a broader campaign targeting insurance firms.
The breach was discovered on June 12. According to the company, its internal cyber response protocols were enacted immediately, and the intrusion was contained within hours.
Aflac said that its systems were not compromised by ransomware and that business operations – including policy underwriting, claims review, and customer service – remain fully functional.
The insurer noted that the attack was carried out by a sophisticated threat actor and forms part of a wider campaign against the insurance industry. The incident appears to align with a series of intrusions reported in recent weeks by other insurers, including Erie Insurance and Philadelphia Insurance Companies.
These breaches have been linked to a group known as Scattered Spider, which has previously targeted large corporations using advanced social engineering techniques. Google’s Threat Intelligence unit has flagged Scattered Spider as one of the most prolific and capable cybercrime gangs currently operating, with a specific focus on critical sectors such as financial services and insurance.
Mobility
A Roadmap to Modern Transportation Solutions – a Partnership between NLC and Enterprise Mobility - National League of Cities
Enterprise Mobility launched their modernized brand with NLC in Atlanta, GA, but it did not stop there. Over the next year, we partnered to identify real roads to real solutions. This journey took us around the country, and through that, America’s local governments should know: you’ve got a real partner in Enterprise Mobility.