News
9% hike in home insurance rates, falling home values, and upside down mortgages ahead in 2023
New Insurify report: Climate change, mortgage woes stress homeowners
Home market volatility will likely continue in 2023, as home insurance rates continue to rise, home values drop, and an alarming number of new mortgages are already underwater, according to the 2023 Insuring the American Homeowner report by Insurify, America’s top-rated insurance comparison platform.
“This may induce homeowners to shop around with multiple companies for a policy. While this is a great way to find a better price, homeowners may find their current carrier is not alone in raising rates.”
“The cost of individual policies is rising. Homeowners may notice an increase of hundreds of dollars for one year to the next,” Shawn Powers, Insurify’s Vice President of Insurance Sales said. “This may induce homeowners to shop around with multiple companies for a policy. While this is a great way to find a better price, homeowners may find their current carrier is not alone in raising rates."
[Ed. Note: HIGHLY RECOMMENDED] The Five Forces Influencing Insurance Shopping
The pace of change in the P&C industry has been increasing for years. Once considered a staid industry, largely rooted in past ways, internal forces within the industry have been motivating change at an ever-increasing pace. More recently, external factors have increased the scale and speed of change in the industry.
In this complimentary report, we explore five forces and trends that are creating a very different insurance shopping environment than what we saw just a few years ago.
J.D. Power’s Q4 2022 Loyalty Indicator and Shopping Trends (LIST) report showed auto insurance shopping was up to 12.1% across all regions of the United States, and the rate of customers who were switching carriers was 4.1% — up from 3.8% in Q3 2022, and 3.5% a year prior in Q4 2021.
Following this bump in shopping J.D. Power has released information detailing the five main forces currently driving customers to check out their auto policy options.
- Inflation is driving rates, and rates are driving shopping
- UBI is taking a larger role in shopping
- Insurers are targeting the most profitable customers
- Insurers are pulling back as more consumers are shopping
- Less satisfying claims experiences are influencing more consumers to shop
Zurich becomes second company to pull out of UN climate pact
Zurich Insurance Ltd. said Wednesday it has withdrawn from the United Nation’s Net-Zero Insurance Alliance.
In a brief statement announcing its withdrawal, the Swiss insurer said: “After establishing a standardized methodology for measuring and disclosing greenhouse gas emissions associated to insurance and reinsurance underwriting portfolios, we want to focus our resources to support our customers with their transition. We continue to remain fully committed to our sustainability ambitions and to supporting the net-zero transition.”
Zurich gave no further reason for its withdrawal.
Members of NZIA, which includes about 30 large European and Asian insurers and reinsurers, pledge to transition greenhouse gas emissions from their underwriting portfolios to “net-zero emissions by 2050 consistent with a maximum temperature rise of 1.5 (degrees Celsius) above pre-industrial levels by 2100 in order to contribute to the implementation of the COP21 Paris Agreement.”
Climate activists, which over the past several years have increased pressure on insurers, have urged regulators to make clear that antitrust laws should not be a barrier to achieving emissions targets.
The announcement came less than a week after Munich Re Ltd. said it had left the group over antitrust concerns.
A.M. BEST TV: Entrepreneurs Say Insurtech Slowdown Tightens Focus on Business Purpose
Entrepreneurs Say Insurtech Slowdown Tightens Focus on Business Purpose
Attendees to the *InsurTech Spring Conference** in New York City said interest and investments in the insurtech space has dipped, with more mergers and acquisitions and exits likely.
Insurance sector primed for wider use of AI
Artificial intelligence, all the rage in popular culture, is not a new fad in the insurance market, where it quietly powers operations that make businesses run more efficiently, at lower costs and with fewer errors.
Still, AI is in its infancy and its rapid development means insurers, brokers and their customers should see the technology continue to broaden throughout customer service, claims handling and sales, experts agree.
Thanks to the viral popularity of ChatGPT, an AI chatbot developed by OpenAI that allows users to perform tasks that range from frivolous to serious, AI is suddenly mainstream. But having a chatbot write a poem about a pet is not the same as having it handle claims or steer buyers to coverage, which is why AI in insurance is being carefully implemented in select areas of commercial and personal lines.
“Six months ago, nobody was talking about this,” said John Cottongim, New York-based chief technology officer at Roots Automation, which provides tech services to the insurance industry. “We are in the toddler phase of the capabilities” of AI, he said. “It’s going to be a wild ride over the next 10 years.”
U.S. Warns 143,000 VW SUVs Owners to Keep Front Passenger Seats Empty
WASHINGTON –– Owners of 143,000 recalled Volkswagen Atlas vehicles should not let people sit in front passenger seats until the occupant-detection systems in these vehicles have been fixed, the U.S. National Highway Traffic Safety Administration (NHTSA) said on Tuesday.
The recall covers 2018-2021 model year Atlas and 2020 model year Atlas Cross Sport vehicles, and relates to potential faulty occupant-detection systems in front passenger seats.
The passenger occupant-detection system may experience a fault in the wiring, which could deactivate the front passenger air bag even when the seat is occupied. A deactivated air bag will not deploy in the event of a crash, increasing the risk of injury to the front seat passenger, NHTSA said.
Volkswagen said it is currently developing a remedy, which it expects to be ready likely in late 2023. VW in late 2020 introduced a new cable to address potential issues with the system.
InsurTech/M&A/Finance/Collaboration
What are the two most powerful drivers of M&A in 2023?
Dealmakers are approaching insurance mergers and acquisitions (M&As) with cautious optimism, as they pursue promising opportunities amid high economic uncertainty.
Inflation and rising interest rates are the two biggest factors affecting dealmaking this year, according to Deloitte’s 2023 insurance M&A outlook.
While M&A will continue, deals will happen with less frequency and at lower prices compared to previous years.
Barry Chen (pictured), principal – M&A market leader at Deloitte, said that last year’s slowdown has carried over into 2023.
Top insurtech startup funding rounds in March 2023
There were more than 30 funding events in the insurtech sector between March 1 and March 31, 2023, according to a review by Digital Insurance. What follows is a selection of these, focusing on those in the P&C and life insurance sectors that are part of the venture-capital financing model. (Other funding events, such as private-equity infusions, are included in the overall count.)
A portion of the data was sourced from Crunchbase. Other information, including quotes from investing VCs, comes from company announcements
Orion180 Group Inc. Raises Additional $42.5 Million of Capital
Orion180, a technology-focused holding company and provider of insurance solutions founded in 2016 with the stated aim of enhancing the way agents and consumers purchase and manage insurance, reports that it has closed on an inaugural $42.5 million senior secured credit facility led by Regions Bank (Birmingham, Ala.).
The company reports that the senior secured credit facility will add to the capital base of both of Orion180’s carriers: Orion180 Insurance Co., an excess-and-surplus lines insurance carrier that underwrites non-admitted homeowners’ insurance in the Southeast, and Orion180 Select Insurance Co., formed to provide insurance solutions on an admitted basis throughout the Southeast and Midwest. Orion180 Insurance Co., formed in 2022, had $20 million of equity capital prior to the new capital investment.
“This significant new investment into Orion180 enables us to build on our market presence as an insurance firm that provides outstanding customer experience, competitive product offerings and strong agent relationships,” says Kenneth Gregg, founder and CEO, Orion180. “The new capital supports Orion180’s business strategy, which has already yielded positive revenue and customer growth.”
Guidewire Welcomes AWS, Celonis, Google Cloud, and Hubio Into its PartnerConnect Solution Alliance Program
Guidewire (NYSE: GWRE) announced that Google Cloud (BigQuery, Analytics Hub), Celonis, Hubio, and Amazon Web Services (AWS) have joined the Guidewire PartnerConnect Solution Alliance Program as new data partners. These partners leverage Guidewire Cloud Data Access (CDA) to help insurers accelerate enterprise-wide data integration use cases for reporting, data warehousing, process mining, and analytics.
“We are excited to be taking our long-standing Guidewire partnership to the next level; leveraging Guidewire Cloud's native data integration capabilities, we are expanding support of one of the industry's first Statistical Reporting as a Service to all North American reporting jurisdictions”
“We have made a conscious decision to focus on data partners as we grow our already comprehensive PartnerConnect Solution ecosystem,” said Will Murphy, Vice President, Global Solution Alliances, Guidewire. “We are excited to welcome AWS, Celonis, Hubio, and Google Cloud, who will help our customers gain the flexibility to move, analyze, and integrate their core system data with third-party platforms and applications of their choosing. This will make it even easier for insurers running on Guidewire Cloud to speed up their time to value and insight.”
InsurTech New York and Aftermath of SVB
Last week’s InsurTech NY conference took place against the backdrop of the recent collapse of Silicon Valley Bank (SVB), which has reverberated fears among the venture capital community.
And while there were sparks of cheerfulness among attendees, a careful reading of the room – and some additional acumen – would lead any careful observer to conclude that rationalism has superseded optimism.
Commentaries from participants in the conference were largely in line with expectations laid out in our previous reporting, as the fallout of InsurTech’s top venture debt lender will likely mean an acceleration in the increasingly challenging headwinds for the sector.
In December, this publication wrote that raising venture debt had become increasingly popular among InsurTechs, as sky-high private InsurTech valuations cratered amid a combination of pulled IPOs and punishing market conditions for the public cohorts.
And in the aftermath of SVB, sources have said that the dwindling of available debt could push companies to crowd an already hard equity market, leading to more supply and demand imbalances.
Now, it is understood that this sentiment has largely remained unchanged, even after North Carolina-based First Citizens agreed to buy SVB’s assets, after a run on deposits wiped out the bank.
Surround Insurance and GO Announce Partnership
Surround Insurance, a national independent insurance agency catering to first-time insurance buyers, is announcing a strategic partnership with GO, the U.S. leader providing the most affordable alternative to traditional car ownership. Together, they have developed an innovative Bring Your Own Insurance (BYOI) program for GO customers.
The BYOI program allows GO customers to receive expert advice on their insurance needs and explore comprehensive coverage options tailored to their requirements. The partnership empowers customers to make informed decisions about their car insurance, ultimately providing them with better protection and peace of mind.