Latest Studies

AIR Worldwide estimates that the insured losses from wind and storm surges associated with Hurricane Florence will total between $1.7 billion and $4.6 billion. AIR's estimate excludes damage caused by the continued flooding from the storm's unprecedented rainfall. The slow movement of Florence resulted in its greatest impact being the excessive precipitation over an enormously wide area. Many parts of the region received more than 20 inches of rain, and several bodies of water rose to new record levels. The extent of wind damage in affected areas is consistent with the destruction of a Category 1 hurricane. Full release

This study found that almost $14.1 billion in potential home value appreciation has been lost due to flood risks in New York, New Jersey, Connecticut, Florida, Georgia, South Carolina, North Carolina, and Virginia since 2005. The northeast states lost nearly as much value as the southeast states, totaling $7 billion and $7.4 billion, respectively. However, home values still rose in the last decade, and officials say elevating homes and building sea walls can help mitigate flood risks. Full report.

This annual review of key consumer and product segments in life-annuity insurance is designed to keep insurers abreast of trends, activities, and growth opportunities. Conning analyzes consumer trends and their impact on insurer products and distribution activities. Demographic segments are analyzed over time, to bring into focus the shifts in population and consumer preferences. The life insurance and annuity industry in the United States has found the path to strong growth elusive, as premium on both group life and individual life has had low growth in the past decade. As Baby Boomers age into retirement, and a similarly large generation is only in young adulthood, insurers have been struggling to attract new customers. This series reviews major trends in the U.S. population, concentrating on the following areas that impact the individual life-annuity industry: Quantification of Opportunity; Income Grouping; Generation; and Demographic Markets. Annuities have been challenged by a low interest rate environment, increased regulatory pressures, and equity markets volatility. The study is available to purchase from Conning.

Moody’s Investors Service’s outlook for the U.S. property/casualty commercial insurance sector remains stable through 2019. Moody’s Vice President and Senior Credit Officer Bruce Ballentine said commercial insurers held up well despite the large catastrophes of 2017 and will generate good core earnings in 2018 to 2019. Ballentine added, “Insurers will benefit from higher rates in property lines and stable-to-rising investment yields, tempered by slightly worse combined ratios in casualty lines.” Moody’s said commercial lines pricing is more favorable than in recent years, and casualty rates are trending slightly upward as a whole. The rating agency said it expects insurers to curb their investment risk appetite as portfolio yields improve with rising market interest rates. Moody’s also expects insurers will continue to invest in technology, including data and analytics, robotic automation and mobile solutions. Full text

Homeowners insurance customers who have multiple policies with a single home insurer have higher satisfaction and are more likely to advocate on behalf of their carrier. The overall satisfaction rating among customers with six or more bundled insurance products averages 863, which is 111 points higher than among those who have just one home insurance product. About 20 percent of home insurance customers who also have auto insurance do not bundle their auto policy with a home policy, representing a growth opportunity for home insurers. The survey also found that there is a growing preference for using digital channels for various types of interaction. A separate J.D. Power survey found that 20 percent of consumers would use a company such as Amazon or Google for their home insurance. News release.

This study from Accenture found that the percentage of successful security breaches against insurance companies has decreased by 8 percent in 2018 from the prior year. The number of cybersecurity capabilities rated by Accenture as “high performing" among insurance respondents significantly increased—from 12 to 20 (out of 33). High-performing capabilities included: "cooperation during crisis management” and “peer monitoring.” More than 80 percent of insurance executives are “confident” or “extremely confident” about the effectiveness of their security measures, but leadership may be overconfident. Attackers are becoming more sophisticated, and attacks can shut down the business or expose customer data. Given that one in five of all attempted breaches is successful, and that 45 percent of breaches are not detected for more than a week (9 percent require more than a month), that means that exposure to risk can be significant. The most frequent sources of cybersecurity breaches experienced by insurance companies were: internal attack by a malicious insider; a hacker attack; and accidentally published information (e.g., insider errors/failure to follow processes and policies). Full report

Marine cargo remained the largest commercial marine line of business in 2017, with global cargo premium reaching $16.1 billion. Globally, the cargo line had been unprofitable for several years, and this was of great concern to underwriters, said Sean Dalton, cargo committee chair of the International Union of Marine Underwriters (IUMI) at the organization's 2018 conference, held in Cape Town, South Africa. Growth in global merchandise trade was expected to remain strong in 2018 and 2019, which was positive for cargo marine insurers, but the continued growth would depend on various factors, political and economic. Developments of serious concern to marine insurers include: countries that are restricting international trade; cargo losses from natural disasters; container ship fires; misdeclared cargo and cyberthreats. “As vessels continue to grow larger, the accumulation of cargo values, coupled with the increasing risk of onboard fires, needs to be addressed urgently by all stakeholders,” said Dalton. Full text

This report from the Insurance Research Council (IRC) estimates that Florida’s third-party bad-faith legal environment added an average of $106 in claim costs to every insured vehicle in the state in 2017 and resulted in a total of $7.6 billion in additional claim costs over the past 12 years. A majority of the additional claims costs can be attributed to rapid growth in the frequency of bodily injury (BI) liability clams, prompted by Florida’s legal rules and standards for resolving allegations of bad faith. The report compares key BI liability claim trends in Florida to trends in three other large no-fault states—New York, New Jersey and Pennsylvania. The three comparison states rely primarily on administrative approaches to investigating and resolving allegations of bad faith on the part of auto insurance companies and experienced relatively stable BI claim trends over the study period. The estimate of the effect of Florida’s third-party bad-faith environment on BI claim frequency and costs is based on the assumption that claim trends in Florida would have followed similar trends if Florida had also relied on an administrative approach to investigating and resolving allegations of bad faith. For more detailed information on the study’s methodology and findings, call David Corum at 484-831-9046 or email IRC@TheInstitutes.org. To obtain a copy of the study, please visit the IRC’s website, www.Insurance-Research.org. News release