Navigating the storm: Reinsurance industry faces volatility  May 22nd 2023

Navigating the storm: Reinsurance industry faces volatility

The reinsurance sector is grappling with a host of negative forces that have led to considerable volatility in the market. As June renewals approach, insurers are seeking ways to weather this storm and adapt to the changing landscape.

Since fall 2022, reinsurance rates have seen a significant increase, and this trend is expected to continue throughout 2023. Recent estimates reveal that property reinsurance rates surged 60% during the Jan. 1 renewals. This tightening of the reinsurance market can be attributed to a confluence of factors, including macroeconomic uncertainties, environmental challenges, consistently high natural catastrophe claims, and capacity constraints. Organizations must adapt to this pivotal moment in the industry.

"Insurers will need to enhance their understanding of evolving cyber risks, develop specialized underwriting methods, and collaborate with technology partners to design comprehensive and effective cyber insurance products."

Marlene Dailey, financial services senior analyst, RSM US LLP

"Tightening in the reinsurance market can be attributed to macroeconomic uncertainties, environmental challenges, consistently high natural catastrophe claims, and capacity constraints. Organizations must adapt to this pivotal moment in the industry."

David Mamane, financial services senior analyst, RSM Canada

Guidewire says Customer Centricity will Determine Success for Insurers in Latest Report

Insurance companies must win the hearts and minds of customers in order to remain competitive in 2023, according to a new survey by Guidewire, the insurance software provider. 

The report, entitled “How Insurers Can Support Their Customers in Uncertain Times,” examines how factors such as the cost of living, new technology, and data privacy are affecting consumer attitudes towards insurance and insurers.

The study was conducted by market research agency Censuswide and surveyed approximately 1,000 insurance consumers aged 18 to 55-plus years old in the UK, France, Germany, and Spain. The results show that while cost-of-living concerns continue to affect insurance spending for some, others are more interested in new technologies and data privacy.

Tighter marketing budget? Time to re-evaluate auto insurance KPIs

Take a lesson from savvy insurance marketers and use this period of change to realign.

Proficiency in metrics and data analysis is an essential skill for auto insurance marketers, but even some of the savviest marketers are using the wrong KPIs to measure success.

Over the past year, top auto insurers significantly reduced their marketing budgets, and reports indicate the auto insurance industry continues to spend less on advertising year-over-year. Industry veterans have seen this play out before. Budgets get tight, executives panic and the next thing you know, marketing is the first line item to see major cuts.

So, this isn’t the first time marketers have been asked to do more with less. But this time around, many are looking for a more permanent solution — something that helps them prove their value in both good and bad economic conditions, and over the long term.

In today’s economic climate, auto insurance marketers have an opportunity to turn the current downturn into an upswing. But it will require them to redefine success through better KPIs and realign their marketing strategies accordingly.

Jen Gold, director of Product Marketing, Arity

More consumers opt-out of telematics programs, TransUnion

Auto and property insurance shopping continued to rise in the first quarter of the year, according to the TransUnion 'Insurance Personal Lines Trends and Perspective' Q2 2023 report.

Despite an interest in lower premiums, more consumers are opting-out of telematics programs, according to the report. The number of consumers who accepted a telematics offer was 53% or 12 percentage points lower than a year ago, at 65%.

Kaitlyn Mattson, Managing Editor, Digital Insurance

Drivers Are Shopping, Swapping Auto Insurance Policies at Record Pace

Drivers are kicking the tires and trading up for new auto insurance policies.

In the first quarter, new policy growth rate was up 17% over the same period in 2022, and a record-breaking shopping growth rate was up 10.2% compared to 2.8% in Q4 2022.

The new LexisNexis® Insurance Demand Meter report examines auto insurance trends and demographics. Overall, the report finds new policy shopping and sales have the pedal to the metal.

LexisNexis Reports Auto Rate Increases Drove 17% Growth in New Auto Policies in First Quarter

Growth likely to slow in second half of 2023 as more auto insurers raise rates.

The latest edition of the LexisNexis Risk Solutions Insurance Demand Meter reports the quarterly year-over-year U.S. auto insurance shopping growth rate rose 10.2% in Q1 2023, up from +2.8% growth in Q4 2022 as auto insurers continue to implement widespread rate increases.

New policy growth, or the rate at which consumers either switched or purchased new coverage, continues to be a big story. It was up a staggering 17% for the quarter compared to Q1 2022, and also increased from 10.2% growth in Q4 2022, continuing the record upward streak from November 2022.

30 Million Drivers at Risk from Air Bags; Few Know it

More than 33 million people in the United States are driving vehicles that contain a potentially deadly threat: Airbag inflators that in rare cases can explode in a collision and spew shrapnel.

Few of them know it.

And because of a dispute between federal safety regulators and an airbag parts manufacturer, they aren’t likely to find out anytime soon.

The National Highway Traffic Safety Administration is demanding that the manufacturer, ARC Automotive of Knoxville, Tennessee, recall 67 million inflators that could explode with such force as to blow apart a metal canister and expel shrapnel. But ARC is refusing to do so, setting up a possible court fight with the agency.

NHTSA argues that the recall is justified because two people have been killed in the United States and Canada and at least seven others have been injured by ARC’s inflators. The explosions, which first occurred in 2009, have continued as recently as this year.