Latest Studies

For the first time in the history of this survey all top five global risks in terms of likelihood are environmental. The report sounds the alarm about: extreme weather events with major damage to property, infrastructure and loss of human life; failure of climate-change mitigation and adaptation by governments and businesses; human-made environmental damage including oil spills, and radioactive contamination; major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries; and major natural disasters such as earthquakes, tsunamis, volcanic eruptions, and geomagnetic storms. Economic confrontations and domestic political polarization were recognized as significant short-term risks in 2020. The report warns that geopolitical turbulence and the retreat from multilateralism threatens everyone’s ability to tackle shared, critical global risks. Full report.

Cyber incidents ranked as the top risk for the first time, according to this annual survey of global business risk, with 39 percent of respondents naming this risk as their top concern. Seven years ago, cyber incidents ranked 15th on the list of top business risks. Allianz reports that cyberrisk continues to evolve, with a mega data breach–one that involves more than one million compromised records–now costing an average of $42 million, up 8 percent year over year. The former top risk, business interruption, came in second place at 37 percent. Businesses are also concerned about changes in legislation and regulation (3rd place), natural catastrophes (4th), market developments (5th), fire and explosions (6th), climate change (7th). Loss of reputation or brand value, new technologies and macroeconomic developments rounded out the top 10. The report discusses each risk in detail. Full report

This report shows that a new record was set over the last decade for economic damage and insured losses. Aon said that between 2010 and 2019, global economies lost $2.98 trillion, $1.19 trillion more than during the previous decade. Payouts in the U.S. represented 55 percent of that total. The private sector and insurance programs sponsored by governments covered $71 billion of the losses for the last decade. Data show that in 2019 the protection gap was 69 percent, the fifth lowest for this century. A total of 41 billion-dollar economic loss events occurred in 2019, while billion-dollar insured loss events totaled 12. Full report

This year-end recap found that global natural catastrophe insured losses were $52 billion in 2019, down from $80 billion in 2018. Severe tropical storms were the predominant cause of these losses. Typhoons Faxai and Hagibis in Japan were the costliest natural catastrophes for insurers, with carriers incurring estimated losses of $17 billion. Insured losses in the United States during the 2019 hurricane season reached about $2 billion, dropping the U.S. share of global catastrophe losses four points lower than the long-term average of 35 percent. The toll from 2019 wildfires dropped steeply in California to $800 million. According to Munich Re, other notable losses included flooding in the Midwest and other Mississippi River regions with estimated insured losses of $14 billion. Australian bushfires cost an estimated $484.9 million. Full report

Atmospheric rivers accounted for 84 percent of flood damages, or $42.6 billion, across the western United States from 1978-2017, according to this study, based on an analysis of 40 years of National Flood Insurance Program data. Not only were atmospheric rivers the primary driver across all 11 states, with annual average damages of $1.1 billion, but they also caused over 95 percent and even exceeded 99 percent of flood damages in some coastal areas of northern California and the Pacific Northwest. In addition, the authors used a recently developed atmospheric rivers intensity and duration scale varying from 1 (weak) to 5 (exceptional) to assess how flood damages change with each category. They found that each increase in the atmospheric intensity and duration scale corresponds to a roughly 10-fold increase in flood damages. Flood damages from atmospheric rivers are expected to increase in the face of rising population, increased development, and climate change. Full report

Atlantic hurricane seasons have a long history of causing significant financial impacts, with Harvey, Irma, Maria, Florence, and Michael combining to incur more than $345 billion in direct economic damage during 2017-2018. While Michael’s damage was primarily wind and storm surge-driven, Florence’s and Harvey’s damage were predominantly rainfall and inland flood-driven. Several revised scales have been proposed to replace the Saffir-Simpson Hurricane Wind Scale (SSHWS), which currently only categorizes the hurricane wind threat, while not explicitly handling the totality of storm impacts including storm surge and rainfall. However, most of these newly proposed scales are not easily calculated in real-time, nor can they be reliably calculated historically. Minimum sea level pressure works better as a predictor of hurricane damage than does maximum sustained wind, according to this paper by Colorado State University meteorologist and Triple-I non-resident scholar, Dr. Philip Klotzbach. The improvement in the relationship is most dramatic along the East Coast of the United States. It is also much easier to measure pressure than it is to measure wind, and consequently, it would serve as a better way to categorize hurricanes than wind. Full report

This report by Zurich North America, in collaboration with DuPont and the nonprofit Institute for Social and Environmental Transition (ISET-International), examines the ever-increasing risk of wildfires in California. Fires are becoming more frequent in California, with an increasing number of people living closer to affected areas. The study provides a thorough investigation into the steps that need to be taken to avert these disasters. Drawing from research and interviews with those affected by the fires in addition to civic and nonprofit representatives involved in risk reduction, response and recovery, the report seeks answers to why these fires have become so hazardous, and the ways in which communities can become more resilient. Key takeaways from the report include: there needs to be more data on benefits and costs of mitigation that could in turn help set priorities; many Californians impacted by fire are slow to take actions to reduce their risk; there needs to be more preparation for a fire’s aftermath; mechanisms are required to ensure adequate insurance; and that there continues to be development in high-risk areas, further amplifying the risk and danger of wildfires. Full report

This report details how digital agencies are the new hotspot for investor capital in the U.S. insurtech space. The report contends that tech-driven approaches to insurance distribution tend to be less capital-intensive than other insurtech models, since digital agencies are not assuming risk. The report also discusses how digital agencies can make sizable commissions from the insurers they work with, and that a few digital agencies have started their own carrier subsidiaries as underwriters. Also addressed is the divide between tech companies that seek to remove the agent versus those that seek to empower the agent, a division which will grow even more pronounced as artificial intelligence progresses. Full report

This report states that although insurance companies’ technology and operations functions have traditionally operated autonomously, the relationship between the two is changing. The report notes that insurers are allocating more resources to technology functions without making similar investments in operational ones, and that evolving technologies may help companies automate 50 to 60 percent of traditional back-office operations. The report suggests that insurers should reshape themselves by forming interdisciplinary teams, formally integrating the technology and operations organizations and assembling tools that match customer preferences. The report states that although this is a large undertaking requiring substantial effort, insurers that make this shift could see a significant drop in expense ratio and time to market and in turn may be able to make more investments, reduce prices and improve profitability, with insurers that fail to change likely losing market share. Full report

The Federal Reserve Bank of New York modeled how a cyberattack could spread through the U.S. financial system, focusing on the wholesale payments network. The report estimates that the impairment of any of the five most active U.S. banks will result in significant spillovers to other banks, with 38 percent of the network affected on average. The impact of the cyberattack could be even greater if banks respond by forgoing payments and hoarding liquidity. This liquidity hoarding would have an adverse effect on forgone payment activity, hitting over 2.5 times daily GDP. In a reverse stress test, interruptions originating from banks with less than $10 billion in assets are sufficient to impair a significant amount of the system. Additional risk emerges from third-party providers, which connect otherwise unrelated banks. Full report

This report finds that internet crimes are becoming more sophisticated and persistent in Florida and several of America’s other most populous states, including California, New York and Texas. The report states that California had the largest victim losses and largest number of victims from 2015 to 2018, with an increase in victim losses of 130 percent, from $195 million to $451 million. Additionally, in 2018, North Carolina became the leader with the highest loss rate, while Virginia became the leader with the highest victim rate. The report states that Business Email Compromise/Email Account Compromise (BEC/EAC) was the top online crime in 2018 with reported victim losses of $1.2 billion with Confidence Fraud/Romance placing second among top internet crimes, with a total reported amount of victim losses of $363 million in 2018. Full Report

Although the price of auto insurance has risen sharply over the years, the main driver is loss costs, not insurer profits. The study found that auto insurance is not a greater burden on low-income people vs. others with more income. As a percentage of what they spend, auto insurance is about the same for the lowest one-fifth of income earners as for the two next higher quintiles. For all three quintiles over the past two decades, the relative expenditure on auto insurance has been stable. In the period since the end of the Great Recession, the trend for all three quintiles has been slightly down—more affordable. Full report (See also Triple-I blog post highlighting the report's findings).

A study published in the journal Drug and Alcohol Dependence suggests that chronic, heavy use of recreational marijuana impairs driving skills even when the driver is not high. The researchers used a driving simulator to evaluate the potential impact of cannabis use on driving performance. The study concluded that driving impairment was significantly worse among the study participants who began using marijuana regularly before age 16. The study, by researchers at Harvard Medical School’s McLean Hospital, found that cannabis users hit more pedestrians, exceeded the speed limit more often, and drove through more red lights compared with non-users. At the time of the study, the marijuana users had not used for at least 12 hours and were not intoxicated. Full text

This study includes analysis of the United States E&S market and conditions shaping its performance. The study examines the drivers of the current growth spurt including factors such as distribution, technology, and M&A, along with a review of E&S insurer peer group comparisons, and assessments of the different successful strategies employed by E&S writers. The study also provides for a primer on the E&S market, E&S premium by state and Conning’s Surplus Lines index. The study draws upon statutory data, company disclosures, as well as in-depth interviews with leaders at E&S insurers and wholesale brokers. It is available for purchase from Conning by calling (888) 707-1177 or by visiting www.conningresearch.com.

This report is a part of a series on gig workers, people who are self-employed or working as independent contractors, consultants or freelancers and are not legally organized as small businesses. Between gig workers and those who have a gig job in addition to another job, LIMRA estimates that there are about 40 million gig-economy workers aged 18 and over in the United States. The report discusses how the workforce is changing, with more employers turning to contingent workers to attract new skill sets, lower costs, increase capacity to meet consumer demands and change organizational culture. The report also talks about the benefits of gig work including flexible hours, control over the type of work and ability to choose when and where to work. The report discloses risks, challenges and financial issues that face gig workers, as well as the results of polls surveying gig workers on disability insurance, retirement savings, and life insurance. The full report is available to LIMRA members.

The report found that charitable giving in the insurance industry has held steady around $560-$600 million annually from 2015-2019, with an emphasis on education, health and social services and community. The report notes the industry’s increased willingness to work together toward common philanthropic goals and the influence of millennials on the types of charitable engagements companies pursue within their communities. Some of the report’s key findings, based upon responses from both property and casualty companies and, for the first time since 2011, life insurance and wealth management segments of the industry, include: the industry’s desire to work toward a single cause has increased to 33 percent in 2019 from 17 percent in 2015; the importance of giving within their own communities was evident as about 30 percent of respondents in 2019 prioritize contributions where employees live and work and where significant business is already done; and that insurers have shifted their charitable focus toward increased volunteering opportunities, recognizing millennials prefer to work with companies directly involved in charitable efforts and activities, rather than those making only monetary donations. Measurement of charitable giving has increased, to 41 percent in 2019 from 26 percent in 2015, as more companies use key performance indicators to evaluate the impact of their philanthropy. Full report

This report summarizes the findings of a survey of 2,500 consumers in the U.S. to enhance insurers' understanding of the business implications of Internet of Things (IoT). The survey focused on consumers' adoption of smart home devices and their awareness of smart home insurance programs and these programs' incentives as well as their attitudes about data sharing. Nearly 50 percent of the respondents now have at least one device from among the nine or more device categories in the study, and several respondents own many. Most of these consumers showed interest in purchasing or installing additional devices, particularly if their insurer offers them a discount on their homeowners policies. However, privacy was the primary concern among consumers who resisted the technology. The report includes multiple exhibits. Full report