News
NFIP paid out nearly $4B in Hurricane Ian flood claims
National Flood Insurance Program claims related to Hurricane Ian have totaled $3.9 billion, according to the Federal Emergency Management Agency, which reported that around 95% of the approximately 48,000 claims in Florida and the Carolinas have been closed as of May 2, 2023.
Of that total, $445 million went to replace damaged contents, according to FEMA. The average payment was more than $104,000.
“Flooding is the most common and most reoccurring natural disaster. Yet, damage caused by flooding is rarely covered by most homeowners and renters’ insurance,” David Maurstad, assistant administrator for the Federal Insurance Directorate and senior executive of the NFIP, said in a release. “Flood insurance remains the best defense against this threat, enabling policyholders to protect their property and more quickly jumpstart their road to recovery.”
Inflation, Social and Otherwise, Continues to Demand Sharper Underwriting on the Part of Insurers
Key financial results for private U.S. property and casualty (P&C) insurers significantly worsened in 2022 from a year earlier, according to preliminary results from data analytics firm Verisk and the American Property Casualty Insurance Association (APCIA).
The industry experienced a $26.9 billion net underwriting loss in 2022 — more than six times the $3.8 billion underwriting loss in 2021.
The underwriting loss was the largest the industry has seen since 2011.
Net income fell to $41.2 billion in 2022, compared to $62.1 billion a year earlier, equaling a 33.6% decline. In 2022, incurred losses and loss adjustment expenses grew 14.1%, while earned premiums grew 8.3%. The combined ratio — a key measure of profitability for insurers — deteriorated as well, from 99.6% in 2021 to 102.7% in 2022.
Where Homeowners Insurance Rates Are Rising the Fastest in 2023
Homeowners insurance provides financial protection to pay for losses or property damage if an unexpected, covered problem occurs involving your home or belongings. You agree to pay the insurance company a premium each year in exchange for this coverage, and your rates can fluctuate from year to year.
Homeowners insurance rates across the U.S. have been trending upward for more than five years — increasing by a cumulative 19.1% since 2018. The newest ValuePenguin study highlights how the home insurance landscape has changed since 2018, including a look at what changed in the first two-and-a-half months of 2023.
Buffett’s Berkshire posts $35.5B profit, buys back more stock
Warren Buffett’s Berkshire Hathaway Inc. posted a $35.5 billion first-quarter profit on Saturday, reflecting gains from stocks such as Apple Inc., while higher investment income and a rebound at car insurer Geico bolstered operating results.
Berkshire also sped up repurchases of its own stock, buying back $4.4 billion, while paring its investments in other stocks such as Chevron Corp., which is still a major holding.
Results were released ahead of Berkshire’s annual shareholder meeting in Omaha, part of a weekend that draws tens of thousands of people to the city.
Mr. Buffett, 92, has run Berkshire since 1965, transforming it from a struggling textile company into a conglomerate with dozens of businesses including Geico, the BNSF railroad, Berkshire Hathaway Energy, and manufacturing and retail units including See’s Candies and Dairy Queen ice cream.
Every fifth car sold worldwide this year will be electric
EVs will account for nearly a fifth of global automobile sales in 2023 (this figure was 4% in 2020) a report by the International Energy Agency (IEA) notes. EV sales are set to grow by 35% this year to reach 14 million units in 2023.
They will account for nearly a fifth of global automobile sales in 2023—it was 4% in 2020—a report by International Energy Agency (IEA), a Paris-based autonomous intergovernmental organization, has said.
“The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo. By 2030, they will avoid the need for at least five million barrels a day of oil. Cars are just the first wave: electric buses and trucks will follow soon,” said Fatih Birol, IEA executive director.
InsurTech/M&A/Finance/Collaboration
UVeye's 'MRI for cars' system lands startup $100M from GM, CarMax
UVeye, a six-year-old startup from Tel Aviv, has raised $100 million in a funding round that included capital from GM and Carmax.
UVeye’s automated vehicle inspection technology may have started out as a system to detect security threats, but the six-year-old Israeli startup has found deep interest and investment from the automotive sector. The company, which uses a combination of computer vision and machine learning to create a system that can quickly and accurately inspect vehicles, has raised $100 million in a Series D funding round led by Hanaco VC, a venture capital firm based in New York and Tel Aviv. Existing investors GM Ventures, CarMax, W.R. Berkley Corporation, F.I.T. Ventures L.P. and Israeli institutional investors also participated in the round that has pushed its valuation to about $800 million, according to a source who spoke to TechCrunch on condition of anonymity.
$1.39 billion of InsurTech investment in Q1 as the sector resets at “more normal levels” and a “new era” begins
After its broad-based reset in 2022, new funding for the global InsurTech sector rose to $1.39 billion during the first quarter of 2023, up 37.6% from $1.01 billion in Q4, 2022, its lowest quarterly total since Q1, 2020.
Average deal size was up 25.3%, but deal count remained steady. Mega-round funding accounted for only 12.9% of the total, the lowest since the 2020 Q1 dip, according to the latest Global InsurTech Report from Gallagher Re, the global reinsurance broker.
AI in Insurance
How My View of ChatGPT Changed
The tone of articles about ChatGPT has rapidly shifted from "amazing but not always accurate or high-quality" to "this is significant progress."
KEY TAKEAWAYS:
- The discussion has moved to how much analytical work and task automation are possible – and if it is feasible beyond simple repetitive tasks.
- Concerns have heightened about AI’s potential to replace humans and eliminate jobs.
- If it becomes impossible to tell if a person has created an image, email, letter or video, then the potential for fraud skyrockets, and determining liability in claims becomes more difficult.
Mark Breading, Partner, SMA
6 Words to Focus Your AI Innovation Strategy
Is it time for insurers to go big on ChatGPT? The short answer is no. The right approach is: Think Big, Start Small and Learn Fast.
KEY TAKEAWAYS: -In the midst of all the enthusiasm, it's right to imagine your full range of strategic innovation options in the context of your company’s particular markets, strategy and key business drivers. - But don't fall in love with the one or two you think are the best. Instead, break them down into smaller pieces and run those opportunities through a rigorous screening and experimental process
- Test with inexpensive, rapid prototypes (not pilots) and be extremely disciplined about which should be dropped, which merit continued exploration and which should move into the pilot phase.
Chunka Mui , best-selling author
Exclusive: Bessemer Venture Partners is committing $1 billion to invest in A.I. startups
“The number one thing that was on every partner's mind in each of their respective categories...from health care to cyber to frontier tech, was how A.I. is impacting their areas,” partner Talia Goldberg told me yesterday. It was an unusual moment of unanimity within the VC firm, she says:
“Very rarely is it…so clear and so obvious across our firm that this is so hugely important,” she says. It “became almost a no-brainer decision for us internally.”
“A.I. is here, it is massive,” Goldberg says. She notes that the speed at which A.I. is and will affect virtually every sector the firm is investing in is exciting, and also cited things like model performance improvements and falling costs as reasons for Bessemer’s timing
Executive Viewpoint: Realizing the Benefits of Predictive Models, AI for Cat Claims
Executive Summary Nearly three-quarters of Westfield's storm claims are now processed via a desktop adjusting model, reports Head of Natural Catastrophe Claims Jeff Hastings. Here, Hastings reviews the carrier's use of virtual estimating tools, digital claims processing, predictive models, catastrophe models and AI to deliver needed resources to respond to customers impacted by storm events. The insurance industry is experiencing rapid technological advancements, regulatory changes and evolving customer expectations. At the same time, increased claims litigation and insurance fraud continue to require insurers to examine claims more carefully, which can increase processing times and lower customer satisfaction.
AI could replace equivalent of 300 million jobs
Artificial intelligence (AI) could replace the equivalent of 300 million full-time jobs, a report by investment bank Goldman Sachs says. It could replace a quarter of work tasks in the US and Europe but may also mean new jobs and a productivity boom. And it could eventually increase the total annual value of goods and services produced globally by 7%. Generative AI, able to create content indistinguishable from human work, is "a major advancement", the report says.
How AI Is Redefining The Future Of Insurance
When Hurricane Ian made landfall in Florida late last year, it went on to wreak havoc.
With sustained winds of up to 240 km/h, it was the joint fifth most powerful storm ever to hit the US – and the country’s third costliest weather disaster in history – resulting in estimated losses of $112 billion.
To insurers, this kind of natural catastrophe presents not just a financial challenge, but also a practical one. How do you expedite claims and help people as fast as possible?
For Brit Insurance, the answer came courtesy of AI. Its rapid damage assessment tool, nicknamed ‘Golden Eye’, uses a machine learning algorithm to assess post-disaster aerial imagery and group properties by level of damage. This enables claims to be triaged before they are even reported. Brit had many policyholders who were affected by Hurricane Ian. When the tropical cyclone dissipated on 30th September, the company was able to make its first payment just eight days later.
“We could never have been able to do that with humans,” says Sheel Sawhney, Brit’s Head of Claims and Operations. “It has been transformative for us.”
Events
Panel: Handling Claims Is a Collaborative Function
A panel of insurance claims experts interviewed at RIMS' Riskworld conference in Atlanta, said some insurers have introduced apprenticeship-type programs to help develop new claims professionals.