Commentary/Opinion
July 2025 ITL FOCUS: IoT | Insurance Thought Leadership
Behavioral economists have done numerous studies showing that “free” is magic. Even if something has a tiny cost, people still do a calculation of some sort that weighs that cost against the benefits. Even if they decide to proceed, there may be some sort of hesitation and delay. When there’s no cost, well, what the heck? Why not?
The IoT is heading toward “free” for some aspects of homeowners insurance, in the process accelerating the industry’s move toward a Predict & Prevent model and away from the traditional approach of helping make people whole after a loss.
The Ting, from Whisker Labs, has become the poster child for Predict & Prevent, as insurers have distributed it free – that magic concept – to homeowners to detect electrical faults and prevent fires. Some 1.2 million are installed in the U.S., and that number is increasing roughly 50,000 a month.
Water leak sensors may have just hit the tipping point, too.
They’ve been trickier than sensors for electrical faults both because they are typically deployed throughout a home and because action has to be taken quickly once a leak is detected; by contrast, a sensor detecting an electrical fault can usually summon an electrician well in advance of any fire.
My burst of optimism stems from this month’s interview with Nga Phan, head of product at bolt, who says they have a program that has proved out the economics of having insurers provide leak sensors for free to homeowners.
She says bolt’s program has shown that its inexpensive set of sensors can reduce the frequency of water damage events by 40% and severity by as much as 28%. Because water leak risks account for 40% of the premium for a typical homeowners policy, she says, the Predict & Prevent approach justifies a significant reduction in costs for the homeowner, while improving profitability for insurers.
The bolt sensors have been deployed in 25,000 homes, which, to me, still isn’t a full-blown rollout, but Phan says she’s confident that the results are rock solid and will hold up as more insurers come on board.
In any case, there are lots of signs pointing toward the sort of progress bolt is seeing. For instance, HSB (one of the companies, along with Chubb, that I’ve viewed as pioneers on deploying water sensors) recently announced a partnership with Flume. Flume, rather than deploying the sort of hockey puck-sized sensors that bolt and others use, monitors water flow to a house and alerts the policyholder if there’s an anomaly suggesting a leak.
News
Best’s Special Report: Bermuda Remains the Largest Offshore Life/Annuity Reinsurance Domicile
Bermuda continues to maintain its role as a driving force in offshore reinsurance, accounting for more than 40% of total ceded reserves for U.S. life-annuity writers in 2024, according to a new AM Best report.
The newly issued Best’s Special Report, titled “Bermuda Remains the Largest Offshore Life/Annuity Reinsurance Domicile,” also notes that the island nation accounted for over 60% of reserves ceded for L/A transactions effective in 2023 and 2024. However, the growth in ceded reserves from U.S. L/A insurers slowed to 6.4% in 2024, compared with over 10% growth in each of the previous three years.
“Bermuda has a long history of reinsurance regulator accessibility, along with solid networks of legal, actuarial and accounting expertise,” said Jason Hopper, associate director, AM Best. “Capital efficiency tends to be cited as the primary business rationale for using offshore reinsurance.”
The report cites the aging U.S. population and higher interest rates as drivers in the strong annuity growth over the past two plus years. While the growth tapered off in 2024, it is expected to continue, and more companies may look to reinsurers to manage growth and capital levels. Affiliated offshore reinsurance can provide country- risk diversification and capital-efficiency, which supports balance sheet growth. Yet it can also provide accounting and tax benefits. “However, cross-border reinsurance introduces operational complexity and opaqueness, which may complicate analysis,” said Jacob Conner, associate analyst, AM Best.
Today's Headline
Record 61.6 Million Americans to Drive During July 4th Week - CollisionWeek
Road travel increases 2.2% as holiday driving reaches all-time high
A record 61.6 million Americans will travel by car during the July 4th holiday period, representing a 2.2% increase over last year and the highest volume on record, according to AAA projections.
The automotive organization expects 72.2 million people total to travel at least 50 miles from home between June 28 and July 6, with road trips accounting for 85% of all holiday travel. The driving figure represents an additional 1.3 million road travelers compared to 2024.
“Following Memorial Day’s record forecast, AAA is seeing strong demand for road trips and air travel over Independence Day week,” said Stacey Barber, Vice President of AAA Travel. “With the holiday falling on a Friday, travelers have the option of making it a long weekend or taking the entire week to make memories with family and friends.”
Telematics, Driving & Insurance
Milliman AccuRate Fleet, telematics risk scores for insurers and fleet managers, now approved in 40 states across the US
Milliman, Inc., a leading global consulting and actuarial firm, is pleased to announce that Milliman AccuRate Fleet® telematics risk scores have been approved in 40 states across the U.S. This milestone marks a significant advancement in the integration of telematics data into fleet insurance underwriting and risk management.
"Because AccuRate Fleet’s scores are filed through Milliman Appleseed, insurers can now access pre-filed scores that have been approved by regulators in 80% of the U.S."
Milliman AccuRate Fleet is a usage-based insurance score designed to enable more accurate pricing of fleet exposure and driving behavior risk. After 20 days of driving activity, AccuRate Fleet calculates a risk score between zero and 1000, similar to a credit score. Based on over one billion miles of commercial auto driving data, insurers can leverage AccuRate Fleet’s telematics risk scores for real-time underwriting, customer segmentation and retention, and risk management. And because AccuRate Fleet’s scores are filed through Milliman Appleseed, insurers can now access pre-filed scores that have been approved by regulators in 80% of the U.S.
"We are thrilled to receive approval in 40 states for our AccuRate Fleet telematics risk scores," said Peggy Brinkmann, Principal and Consulting Actuary at Milliman. "This approval is a testament to the reliability and effectiveness of our telematics solutions in transforming fleet insurance underwriting. Our technology not only helps insurers better understand and manage risk but also rewards fleet operators who prioritize safe driving practices."
The AccuRate Fleet platform empowers fleet managers to make informed decisions to improve safety and efficiency while potentially reducing insurance costs. With detailed analytics and reporting capabilities, fleets can gain valuable insights into driver performance, identify areas for improvement, and implement targeted training programs.
Legal System Abuse/Social Inflation
Op-Ed: Stephen Moore: America’s tort tax is hurting consumers. Reform can fix that
The legal profession includes many principled advocates. But the business model embraced by a growing number of trial lawyers — one driven more by contingency fees than justice — has helped turn the courtroom into a profit center, not a forum for fairness.
The tort tax they impose on America is considerable. According to the U.S. Chamber of Commerce’s Institute for Legal Reform, the average family of four has its yearly expenditures increased by nearly $5,000 because of the costs imposed by the trial bar on the productive sectors of the economy.
The pursuit of “jackpot justice” corrupts the judicial system. Yet, because it’s portrayed on TV and in movies as a noble, virtuous undertaking in which the underdogs ultimately vanquish evil, rapacious businesses that have committed some foul deed against an unsuspecting public, we too often think of these massive payouts as justified, even virtuous.
The advent of hidden third-party litigation funding, in which well-heeled individuals and organizations with no fiduciary obligation to the injured party covertly “invest” in lawsuits in exchange for a portion of any settlement or verdict, is exacerbating the issue. By some estimates, hundreds of millions, perhaps billions, are now underwriting often-frivolous lawsuits.
It is the dark money of the legal system. Anonymous third parties fund lawsuits, reap enormous profits, and pay little or nothing in taxes. Usury laws do not apply to them, and the interest rates they charge are often exorbitant. Even when plaintiffs win, they often receive only a fraction of the settlement after their “investors” are repaid.
Climate/Resilience/Sustainability
As Hurricane Season Picks Up, Key Forecasting Tool Access Set to End
US National Hurricane Center (NHC) forecasters accurately predicted Hurricane Erick would explode in intensity as it hit Mexico’s Pacific coastline. Now, key tools that helped inform that outlook will go away by the end of this month, and it’s unclear if a replacement will be available as the Atlantic moves deeper into what’s expected to be an unusually active hurricane season.
The US Navy and National Oceanic and Atmospheric Administration (NOAA) will no longer accept and distribute readings from the long-running Defense Meteorological Satellite Program after June 30, according to a service notice.
By Lauren Rosenthal and Brian K. Sullivan
FEMA, NOAA cuts put insurance coverage at risk, experts say
Budget and staffing cuts to U.S. government disaster-response and climate-monitoring programs – with more gutting proposals on the way – have insurance leaders and consumer advocates warning of grave consequences for the availability, affordability, and stability of insurance coverage across much of the U.S.
The reductions have already targeted the Federal Emergency Management Agency (FEMA) and the National Oceanic and Atmospheric Administration (NOAA)—two agencies that play a behind-the-scenes but foundational role in how property and casualty insurers assess, price, and absorb catastrophic risk.
The budget cuts to those core agencies, including the National Weather Service, have already had fatal consequences. Tornadoes that swept through Kentucky and Missouri in May killed 28 people—many of whom may not have received prompt warnings due to agency understaffing.
FEMA itself has been left “flying blind” due to the budget cuts, according to hurricane meteorologist John Morales. President Trump has floated abolishing the agency altogether and recently fired its director for defending its mission. Strategic planning has been canceled, staff have been laid off en masse, and the agency’s core flood insurance program—the NFIP—may lapse as early as September unless Congress acts.
Industry analysts say scaling back these agencies could force private insurers to take on greater exposure, especially in high-risk flood, fire, and hurricane zones. That could trigger higher premiums, reduced access to coverage, and more pronounced redlining of vulnerable areas.
Doug Bailey is a journalist and freelance writer who lives outside of Boston
Editors' Note
Happy Independence Day America
[Ed. note: The 4th of July marks the celebration of American independence. Americans take time to gather with family and friends with iconic cookouts and fireworks traditions. This time is also the unofficial halfway point of the insurance industry's calendar year for not only measuring underwriting results but the launch of vacation season.
We wish all Americans and all of our insurance ecoystem colleagues a safe and enjoyable holiday weekend. 'Connected' returns on Monday July 7th]
InsurTech/M&A/Finance💰/Collaboration
More Signs of Life in Insurtech | Insurance Thought Leadership
I'll be quick this week as long as the U.S. seems to already be slipping into a looong Fourth of July weekend. I'm about to start packing my car and don't want to delay anyone else from doing so, too.
I just want to note that the "insurtech spring" possibility that I raised in a commentary in March seems to be well under way, based on recent funding rounds, a high-profile IPO and the continued stock market success of the high-profile, full-stack insurtechs.
While I think my earlier analysis holds up pretty well, the more recent evidence points to some important trends about where insurtechs and, more broadly, innovation in insurance is heading.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Cary, N.C. Courts Insurers, InsurTechs with Talent, Quality of Life | Insurance Innovation Reporter
For Mark Lawson, President of the Cary Chamber of Commerce, the case for Cary, North Carolina, as a potential home for insurance companies and technology vendors comes down to fundamentals.
“It’s pretty simple,” Lawson says. “We’ve got a very strong organic pipeline of talent between our three tier-one research universities, and one of the top community colleges in the country right here. And Cary is a very desirable place to live.”
It’s a concise summary of a broader pitch. As insurance companies and software vendors wrestle with talent shortages and explore new hubs for development and operations, Cary’s business community argues the town offers an alternative to major metropolitan areas. Nestled in North Carolina’s Research Triangle, Cary combines an educated workforce, supportive business climate, and quality of life that have drawn significant names like SAS and MetLife.
A Region Rich in Talent
The draw for many companies, Lawson argues, starts with talent. Cary sits at the center of a region anchored by Duke University, UNC Chapel Hill, and NC State University, producing graduates in fields ranging from engineering and analytics to business and life sciences. Meanwhile, Wake Technical Community College serves as one of the top community colleges in the nation, training students in IT, technical, and vocational disciplines.
“When you think of someone that only needs specialized training or a two-year associate’s degree, Wake Tech is probably, if not the top, one of the top two or three technical colleges in the entire country,” Lawson says.
DB Insurance in talks to buy US auto insurer Fortegra in $1.5 billion deal - KED Global
DB Insurance Co., a leading South Korean non-life insurance company, is in advanced talks to acquire US-based insurer Fortegra in a deal that could be worth asDB Insurance Co., a leading South Korean non-life insurance company, is in advanced talks to acquire US-based insurer Fortegra in a deal that could be worth as much as 2 trillion won ($1.48 billion), people familiar with the matter said on Tuesday.
If the deal is clinched at the estimated price, it would mark the largest-ever overseas acquisition by a Korean insurance company.
Sources said that the non-life insurance unit of DB Group, which also owns DB Securities Co., recently completed due diligence on Fortegra and is now negotiating terms with its owner, New York-listed financial holding company Tiptree.
The concerned parties aim to reach a final agreement by August, with DB seeking to purchase 100% of Fortegra’s equity, according to sources
Fraud
Insurers Use RICO to Fight Fraud in New York | Insurance Innovation Reporter
Insurers are increasingly turning to RICO litigation in New York to dismantle complex fraud rings, recover losses, and deter future abuse of the no-fault insurance system.
New York has long been a battleground for fraud-related litigation, and recent lawsuits invoking the Racketeer Influenced and Corrupt Organizations (RICO) Act highlight the growing use of this federal statute to combat fraudulent schemes. Originally designed to dismantle organized crime, RICO has evolved into a potent weapon against corporate misconduct, insurance fraud, and financial deception.
RICO lawsuits in New York have increasingly targeted industries where fraud is systemic. From healthcare billing schemes to construction accident fraud, plaintiffs are using RICO statutes to pursue treble damages and hold entire networks accountable.
Fraud as Racketeering Activity
Fraud is one of the most commonly alleged predicate offenses in RICO cases. In recent years, New York has become a focal point for RICO litigation initiated by insurance companies targeting fraudulent medical billing and staged accident rings. Insurers allege that organized groups of doctors, clinic owners, and patient recruiters conspire to submit fraudulent no-fault insurance claims, particularly under New York’s generous no-fault auto insurance system.
Pragatee Dhakal is the Director of Claims Solutions at CLARA Analytics
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