Latest Studies - February 2016

Each month the Insurance Information Institute compiles recent studies from industry, government, academic and other sources. Topics include consumer issues, industry trends, climate and environment, and studies covering individual lines of business like automobile liability and workers compensation.

1. REPORT ON PROFITABILITY BY LINE BY STATE IN 2014
The National Association of Insurance Commissioners; Page N/A
December 31, 2015

This report estimates profitability in property/casualty insurance by state and by line of insurance. The report combines by line and by state calendar year data from certain exhibits of the Annual Statement to develop estimates of profits on earned premium and the return on net worth by line and by state. The report also shows the various components of estimated profits including: premiums earned; losses incurred; loss adjustment expense; general expenses; selling expenses; state taxes, licenses and fees; dividends to policyholders; changes in premium deficiency reserves; underwriting profits; investment income; and federal income taxes. As fluctuations in calendar year financial results occur, long-term historical averages are also provided. The complete report is available for download in the NAIC Store.


2. AUTO INSURANCE DATABASE REPORT 2012/2013
The National Association of Insurance Commissioners; Page N/A
January 11, 2016

This annual report provides the average costs associated with personal automobile insurance nationwide. It features state-by-state auto insurance data designed to provide necessary information and analysis to insurance regulators, consumers and policymakers. This report includes written premium and exposure data from calendar years 2009 to 2013 for the combined voluntary and residual market. The report also compiles earned premium and exposure data – as well as incurred loss and claims data (separately) – from calendar/accident years 2010 to 2012 for voluntary and residual market business. Average premium and expenditures, pure premium, loss ratio, claim frequency and claim severity are calculated by coverage for each state. This includes the following types of auto insurance coverage: bodily injury and property damage liability (including no-fault), uninsured and underinsured motorist, medical payment, collision and comprehensive. The NAIC recognizes the differences in state requirements for insurance coverage, limits and benefits. Many factors affect a state's expenditures and premiums, including underwriting costs, driving locations, accident rates, traffic density, auto theft statistics, repair costs and state laws. These variances make direct state-by-state comparisons difficult. The complete report is available for download in the NAIC Store.


3. MARKETPLACE OF CHANGE. AUTOMOBILE INSURANCE IN THE ERA OF AUTONOMOUS VEHICLES
KPMG International; 52 Pages
October 1, 2015

The most significant benefit expected from the autonomous cars that are being developed is a large reduction in collisions. This report concludes that the reduction in accidents will disrupt the entire insurance industry. KPMG speculates that the industry could contract by as much as 60 percent by 2040. Full Report


4. NON-CATASTROPHIC HOMEOWNERS WATER CLAIMS
(Florida) Citizens Property Insurance Corp.; 13 Pages
January 1, 2016

According to this analysis of non-catastrophic water loss claims by Florida’s insurer of last resort, such claims are growing “at a disturbing rate” in both frequency and severity and are driving higher rates in South Florida and throughout the state. Citizens examined data for both litigated and non-litigated claims, with and without an assignment of benefits, under which homeowners sign over control of their claim to water remediation companies, contractors and/or attorneys. The analysis found that cases in which customers assigned benefits to contractors or remediation companies were almost twice as expensive on average and more likely to lead to litigation. The average litigated assignment of benefits claim cost for 2014-2015 was $37,677 statewide and $38,544 in the southern portion of the state – more than double that of a non-litigated claim. Claims where benefits weren’t assigned and there was no litigation averaged $8,507 statewide. Full Report


5. 2015 ANNUAL GLOBAL CLIMATE AND CATASTROPHE REPORT
Aon Benfield; 68 Pages
January 13, 2016

Global catastrophe losses were below average in 2015 in spite of an uptick in the number of disasters. Global natural disasters in 2015 combined to cause economic losses of $123 billion, an amount 30 percent below the 15-year average of $175 billion. However, the losses were just 8 percent lower on a median basis ($134 billion). The economic losses were attributed to 300 separate events, compared to an average of 269. The disasters caused insured losses of $35 billion, or 31 percent below the 15-year mean of $51 billion and 14 percent lower than the median ($40 billion). It comprised the lowest total since 2009. This was the fourth consecutive year with declining catastrophe losses since the record-setting year in 2011. Notable events during the year included winter storms in the United States; extensive flooding in parts of India, the United States, the United Kingdom and China; a major earthquake in Nepal; record-setting tropical cyclones in the Pacific Ocean; European windstorms; and massive forest fires in Indonesia. The top three perils, flooding, severe thunderstorm, and wildfire, combined for 59 percent of all economic losses in 2015. Despite 32 percent of catastrophe losses occurring inside of the United States, the U.S. still accounted for 60 percent of global insured losses. This speaks to a higher rate of insurance penetration in the country. The report contains numerous charts and graphs ranking global catastrophe events that occurred in 2015 and throughout history. Full Report


6. GEOPOLITICAL THREATS FOR THE YEAR AHEAD: MARSH’S POLITICAL RISK MAP 2016
Marsh Insights; 12 Pages
January 1, 2016

Marsh’s Interactive Political Risk Map and companion report present risks facing multinational organizations and investors. Accounting for in-country political, economic, and operational risks, the map presents overall country risk scores for more than 200 countries and territories, helping businesses and investors make better choices about where and how to deploy financial resources. Data and insight for the map are provided by BMI Research, a leading source of independent political, macroeconomic, financial and industry risk analysis. According to the report, the major political risks in the coming year include: terrorism and heightened conflict in the Middle East; emerging economy struggles; 2016 US elections; anti-establishment parties in Europe; continued falling commodity prices; succession risks; centralization vs federalism and rivalries among leading nations.


7. ALLIANZ RISK BAROMETER: TOP BUSINESS RISKS 2016
Christina Hubmann, Heidi Polke-Markmann, Patrik Vanheyden and Joel Whitehead
Allianz Global Corporate & Specialty; Page N/A
January 1, 2016

The fifth annual Allianz Risk Barometer discusses the most significant risks for 2016 and beyond as identified by over 800 risk experts from more than 40 nations. The 10 risks, listed in the order of the frequency of citation, are business interruption, including supply chain disruption; market development (volatility, intensified competition and market stagnation); cyber incidents; natural catastrophes; changes in legislation and regulation; macroeconomic developments (austerity programs, commodity price increase, inflation/deflation); loss of reputation or brand value; fire and explosion; political risks (war, terrorism, revolution); and theft, fraud and corruption. A global map shows the risks that are leading concerns in various regions. Changes in risk perception in the latest survey from previous risk barometers are discussed. Axel Theis, a member of the board of management of Allianz SE, said that businesses need to prepare for a wider variety of disruptive forces in 2016 and later years and revise business models to reflect globalization, digitalization and technological developments that are making markets increasingly competitive. The report includes three bar charts showing the three factors respondents cited most often as geopolitical risks, as causes of business interruption and as trends increasing the threat of business interruption. Five tables list the top business risks in 2016 cited among the following industries: engineering, construction and real estate; manufacturing; marine and shipping; power and utilities; and transportation. Four bar charts list the three factors respondents cited most often as primary causes of economic loss after a cyber incident, as main reasons companies are not better prepared for cyber risks, as the major concerns about increasing digitalization, and as top emerging risks for the long term. Tables show the top business risks in the following regions: Africa and Middle East, the Americas, Asia Pacific and Europe. Full Report


If you have a suggestion for a study to be included in this section please email info@iii.org.