Nearly 15% of Drivers Allow Insurance to Lapse. Insurers shift focus from customer acquisition to profitability - generally raising rates  May 18th 2023

TransUnion: Nearly 15% of drivers allow insurance coverage to lapse

Along with detailing how much risk is on the roads nowadays, perhaps TransUnion poured a little cold water on the strategy employed by some dealerships when they can help vehicle buyers look for a better rate on their car insurance during the financing and delivery processes at the store.

TransUnion’s latest quarterly Insurance Personal Lines Trends and Perspectives Report indicated auto and property insurance shopping rates continued to climb during the first quarter of 2023. The rates rose 7% and 10%, respectively, year-over-year.

However, as shopping has increased, TransUnion noticed the number of consumers switching carriers is beginning to decrease, indicating that premiums are rising among virtually all insurers.

TransUnion said its research found nearly 15% of consumers owned or used a vehicle without valid coverage or had allowed their coverage to lapse within the past six months. This was likely among higher-risk consumers (with a credit-based insurance score between 300 and 500), as that segment’s year-over-year percent change in shopping dropped into negative territory, despite the overall increase in auto insurance shopping.

“Insurers have shifted their focus from customer acquisition to profitability and are generally raising their rates,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business. “As consumers have found it more difficult to find a lower premium through online shopping, they are changing behaviors in response.”

Zurich Insurance Group breaks down quarterly numbers

Results season continues with the turn of Zurich Insurance Group to give the lowdown on its quarterly performance.

According to Zurich’s earnings report for the three months ended March 31, here are the numbers, which are the insurer’s first financial results under IFRS (International Financial Reporting Standards) 1

Of the P&C GWP, $5.99 billion came from Europe, Middle East, and Africa; $4.86 billion, North America; $885 million, Asia-Pacific; and $780 million, Latin America. All regions posted growth, as well as in terms of insurance revenue.

Property insurance price surge leads rate hikes

Average annual commercial insurance premium increases accelerated to 8.8% during the first quarter of 2023, up from 8% during the previous quarter, with commercial property rate hikes far outpacing other lines, according to a report Wednesday from the Council of Insurance Agents & Brokers.

By account size, the Council’s quarterly report showed large accounts with the greatest increase at 11.4%, followed by medium-sized accounts at 9% and small accounts at 6.2% during what was the 22nd consecutive quarter of increased premiums for all account sizes.

Property and cyber were singled out in the report for seeing tumult and calming, respectively. Commercial property premiums increased 20.4% on average in the first quarter, “which is by far the highest out of all lines” and compares with 16% in the prior quarter, said the report. Respondents cited inflation and natural catastrophe losses as the main drivers of the sharp increase.

LexisNexis report: Total loss claims, damage severity rose in 2022

Total loss ratios worsened during the first nine months of 2022, with 27% of collision claims deemed total losses, LexisNexis said in its newly-released auto insurance trends report.

The white paper also found that bodily injury and property damage severity increased 35% since 2019, while collision severity spiked by about 40% during the same period.

“Overall, claims severity has been rising ever since people returned to the roads in 2020,” LexisNexis said. “At that time, insurers saw an uptick in speeding, car part shortages, labor shortages and total losses.

“These factors all influence claims severity. As we drill down further, we see how bodily injury (BI), property damage (PD) and collision severity (CO) patterns played out last year in the wake of the current insurance climate.”

How Nationwide evolved from a P&C insurer

For nearly 100 years, Nationwide has firmly established itself as one of the country’s foremost property and casualty (P&C) insurers.

But it’s now breaking the mold of what it has been known for. By rapidly growing its corporate solutions arm in the past few years, Nationwide can now bill itself as a full-spectrum financial services provider.

Its diverse financial services business was a significant driver of Nationwide’s performance in 2022, helping the company buffer inflation and other economic headwinds. The Columbus-based firm reported a record $57 billion in sales last year. Its net operating income was $1.4 billion.

JJ Perez (pictured), president of financial corporate solutions at Nationwide, credits the tremendous growth of his team to years of forward-looking and planning.

“Nationwide’s financial services business took off in 1997 or 1998, when we took that component of our business public. At that point, our P&C business was much bigger than the financial services business,” he told Insurance Business.

“Fast forward, and now the financial services business is bigger than our property and casualty business.”

How to prepare an insurance call center ahead of a storm

In 2021 alone, climate disasters resulted in losses of over $100 billion causing significant distress to American families. And, if your organization isn't properly prepared to face the storm, your heavily impacted customers will not have the support during one of the most difficult moments of their lives.

During a natural disaster, insurance companies need to be prepared to facilitate exceptional service with increased claim submissions– particularly for automotive and home insurance. This can be extremely challenging as many organizations do not have access to additional highly trained staff on demand.

However, by building in flex capacity in tandem with an established First Notice of Loss (FNOL) team, you can equip your call center to handle the increased demand with standout customer service.

Sarah Blair SVP Customer Engagement Operations, Solera

Rise in safety systems for automobile industry triggers product recall rise

Today’s latest cars are complex engineering achievements with something like 30,000 component parts, many of which make up the systems related to vehicle and passenger safety. From airbags to anti-lock brakes, some of these systems have been effective enough to be designated as required safety equipment by regulators. With new hi-tech safety features being developed at a rapid pace, the number of safety systems recognised by regulators is only set to increase with a possible? knock-on effect for the frequency of product recalls says Andy Kyle – Product Recall Underwriter for Hiscox London Market.

“We’re seeing the rapid deployment of new and advanced safety devices in the automobile industry, many of which have already or soon will be likely to join the list of regulators’ designated required safety equipment. In turn, this is creating an uptick in the number of recalls as the safety systems grow in both number and complexity, and car brands become obliged by regulators to issue public recalls where previously a recall may not have been necessary.”

Self-driving trucks pose trucking insurance questions

More and more companies are piloting heavy-duty autonomous vehicles (AVs), and as they hit the road, the trucking industry inches closer to disruption – and so does the insurance industry.

Insurance cost ranked seventh on the American Transportation Research Institute's (ATRI) 18th annual Top Industry Issues report for motor carriers, and Stephen Ritzler, team lead of trucking and logistics at CoverWallet, said the emergence of autonomous trucks could spark rising rates with every sized carrier, even if it is primarily the larger fleets utilizing the technology.

“This is going to be an evolving rate scenario that's going to play out over the course of the next five to 10 years,” he said.

Luckily, both the insurance and trucking industries have time to adjust.

Kevin Abramson at CoverWhale said the industry is years – if not decades – away from seeing the true impact on insurance pricing. He said carriers will likely see a spike in insurance rates to start while the insurance industry determines the effects of having AVs on the road. But if AVs prove to be as safe as anticipated because they remove human error, from a sleepy driver to a distracted driver, he said they should drive the cost of insurance down across the trucking industry over time.