Strategies For A Shrinking Auto Insurance Market (31% smaller by 2035)  April 3rd 2023

Strategies For A Shrinking Auto Insurance Market (31% smaller by 2035)

The increasing popularity of electric vehicles (EVs), autonomous vehicles (AVs) and shared-mobility platforms will shrink the overall personal lines market 31% by 2035, according to a recent analysis by EY-Parthenon, but investment in more advanced telematics and embedded insurance will help carriers stay competitive.

In brief:

• Rapidly evolving mobility trends, telematics and customer expectations are changing the auto insurance business, challenging legacy business models.
• By 2035, these forces will shrink the market by 31%, invite new competition and change how insurance is distributed, underwritten and serviced.
• Carriers that act now to build B2B distribution partnerships, maximize the benefits of telematics and improve customer experiences will be poised to grow.

Violent US storms kill at least 32 people

The death toll from a violent storm that whipped up tornadoes in the southern and midwestern regions of the United States rose to at least 32 over the weekend, according to officials and media reports.

In Memphis, Tennessee, two children and an adult were found dead on Saturday after the storm's heavy winds knocked trees onto several houses, according to the Memphis Police Department.

In Tennessee's McNairy County, officials reported that an additional two people had died, having reported seven deaths earlier on Saturday, according to local media. The Tennessee Department of Health on Sunday reported that there were an additional three weather-related deaths in three more counties, but did not provide more details.

In Owen County, Indiana, the bodies of a couple were found at a campground in McCormick's Creek State Park, according to the state's Department of Natural Resources.

Another 15 deaths from the storm, which generated tornadoes in several areas, were earlier reported in Arkansas, Illinois, Indiana, Delaware, Mississippi and Alabama. Scores of people were injured and many buildings damaged or destroyed.

Triple-I: U.S. Insurers Remain Resilient Despite Economic Challenges

Slow underlying growth and inflation are among the biggest challenges facing U.S. auto, home, and business insurers, according to the Insurance Information Institute’s (Triple-I’s) Q1 2023 Economic Outlook.

“We expect long-term growth to remain below 2% and long-term inflation to remain above 2.5%."

The Outlook’s key takeaways are below:

• Property/casualty (P/C) insurance, a category which includes U.S. carriers who underwrite auto, home, and business coverage, saw its cyclical underlying growth rebound fail to materialize in 2022’s second half as interest rate tightening depressed housing starts, corporate spending, and vehicle expenditures.
• Increases in P/C replacement costs (e.g., vehicle parts, housing construction materials) slowed down over 2022’s last two quarters but are up 40 percent since 2019.
• U.S. Gross Domestic Product (GDP) growth is likely to remain depressed for at least the next two quarters after the Federal Reserve shifted away from its hawkish stand on interest rates; the Fed’s three-year Consumer Price Index (CPI) expectations remain overly optimistic, Triple-I believes.

Opportunity to Bring Value in High-Net-Worth Space

Expertise and relationship-building are especially important when securing insurance coverage for high-net-worth individuals. In the dynamic high-net-worth (HNW) homeowners insurance space, independent agents and brokers can stand out with their advice and guidance.

High-value home insurance is designed for high-net-worth individuals with luxury homes and expensive valuables and assets. Unlike traditional homeowners coverage, high-value policies can offer guaranteed replacement costs, non-depreciated cash settlement options, deductible waivers, broad liability coverage and flexible coverage limits.

“It’s a market that greatly benefits from agents and brokers,” said Ana Robic, division president of Personal Risk Services at Chubb. “The advice and counsel, really, of an independent agent, to ensure that a high-net-worth individual and family has the coverages they need to protect their uniquely valuable possessions. So, it’s a spot in the marketplace that really requires that intermediary.”

Insurance Information Institute Paper Cites Benefits of Group Captives

Group captive insurance companies can provide certain companies a source of value in inflationary times, the Insurance Information Institute (Triple-I) says in a new executive brief.

In the report, Group Captives: An Opportunity To Lower Cost of Risk, the Triple-I notes that group captives can help reduce costs and improve cash flow for certain risks with the added benefit of returning unused loss funds and income to group members through dividends.

The Triple-I noted that group captives recruit safety-conscious companies with better-than-average loss experience. Because each member's premium is based on its own recent loss history, membership in a group captive can often result in lower premiums.

27% of survey respondents OK with texting while driving, distractions cause nearly 3K deaths a year

A recent survey of 2,000 U.S. adults shows that a third find texting while driving acceptable while nine out of 10 respondents said they would speak up if they saw a driver texting.

The online survey was commissioned by Erie Insurance and released as part of Distracted Driving Awareness Month in April.

Twenty-seven percent said they find texting while driving acceptable and 73% unacceptable. Thirty-seven percent said they don’t feel it’s their place to tell a driver what to do, while one in five, or 21%, said they don’t say anything because they text while driving, too.

Automating insurance pricing means tightening corners, not cutting them

Streamlining and automation often get talked about in the same breath, but there’s a big difference between them, albeit some streamlining of pricing processes might accompany an automation project.

Streamlining is essentially simplifying an existing process, typically by removing some unnecessary workflows from the larger effort.

By comparison, we like a quote from Haresh Sippy, chief founder of Tema India, who described automation as “cost cutting by tightening the corners and not cutting them”.

In the context of insurance pricing, that will typically mean connecting disparate systems and data flows more seamlessly, bringing some overall structure and governance to the workflow, enabling scheduling and triggering of activity, and creating reports to monitor progress.a...