The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights.
One passenger was killed, and seven others were injured, after a Southwest Airlines plane engine blew apart about 20 minutes after leaving New York City’s LaGuardia Airport on Tuesday, April 17. U.S. commercial airlines had not had an accident which led to a passenger’s death since February 2009.
A winter-like April storm brought to Green Bay, Wisconsin its second-highest snow total ever. Minnesota, Michigan, and Illinois were also hit by heavy snowfall over the past week.
The U.S.’s January 3-5 and March 1-3 snowstorms, as well as the nation’s tornadoes and hail storms of March 18-21, each generated $1 billion-plus in economic losses, according to the National Oceanic and Atmospheric Association (NOAA).
Florida’s small P/C insurers have withstood losses from Hurricane Irma and a legal environment that’s dubbed a “judicial hellhole” by the American Tort Reform Association, a recent article in S&P Global Market Intelligence reports.
The financial ratings firm Demotech affirmed the financial strength of over 50 companies in late March, a decision found “encouraging” by the CEO of the state-run Citizens Property Insurance Corp, Barry Gilway.
Gilway said that Demotech’s March actions is evidence of the resilience that smaller carriers showed during a year in which Hurricane Irma caused insured losses of about $8.61 billion, according to the latest Florida Office of Insurance Regulation tally.
Florida insurers face both weather-related risk and costs stemming from litigation on non-weather-related water-loss claims with an assignment of benefits (AOB) and other legal matters. To combat the AOB problem, Citizens has drawn-up changes in policy language, increased efforts to fight fraud and grew its managed repair program. In January, Citizens said it expects AOB and litigation costs would account for about 23 percent of its 2018 operating expenses, up from 16 percent in 2017 – an increase of $17 million.
The frequency and severity of water-loss claims over the past 2.5 years shows “extremely negative trends,” and that deteriorating trends have begun to spread northward within the state, said Gilway.
Citizens is reopening approximately 37 percent of claims related to Hurricane Irma as part of its ongoing work to help its policyholders, who have been frustrated by a shortage of contractors, the Insurance Journal reported. A spokesperson for Citizens said that it’s common for claims to be reopened, and that the majority of those reopened are non-AOB Irma claims.
This week the Insurance Information Institute (I.I.I.) has published its 2018 Insurance Fact Book, the industry’s go-to resource for businesses, journalists, policymakers, researchers, and students. Providing comprehensive statistics indexed by state and insurance categories, the Insurance Fact Book allows its readers to understand the industry at a glance.
“The 2018 I.I.I. Insurance Fact Book was developed for use by anyone needing in-depth knowledge of the power that is the insurance industry,” says Sean Kevelighan, Chief Executive Officer of the Insurance Information Institute. “For nearly six decades, the Fact Book has been the essential reference resource on insurance. After record natural catastrophe losses in 2017, it’s more important than ever for audiences to have objective, fact-based content—and know that the insurance industry will emerge from these challenges stronger and better prepared to serve the public.”
The 2018 Insurance Information Institute Fact Book may be purchased by ordering copies via email at email@example.com or from the I.I.I.’s online store at www.iii.org/store. A PDF of the publication may also be downloaded online and is complimentary to I.I.I. member companies.
Competition for customers is fierce, so incumbent property/casualty (P/C) insurers must hustle to integrate digital technologies into their operations. Digitizing the claims experience holds great promise for the P/C industry both in terms of customer experience and cost savings.
McKinsey and Company has recently released a report about planning for a successful claims digitization process. The essential elements needed to digitize and transform claims include developing a new value proposition that sets a high-level aspiration (and getting managers to buy in) and pursuing an end-to-end digitization of the claims customer journey.
A truly innovative customer journey can be achieved by integrating with three other areas—AI and digital technologies, the digital integration of the claims ecosystem, and a new digital operating model.
The figure below shows what an aspirational future state of a customer journey would look like, and the digital assets needed to achieve that state.
Puerto Rico is still suffering the devastating aftereffects from 2017 hurricanes Irma and Maria. Rebuilding the island will cost up to $50 billion according to a recent statement by FEMA head, William “Brock” Long. Many residents are still without power and the new hurricane season is just around the corner.
The situation in Puerto Rico is a warning to North America of what could happen If we fail to address our outdated and crumbling infrastructure, according to a new report from Zurich North America.
The report, Rebuilding Infrastructure: The Need for Sustainable and Resilient Solutions, points out that during the years leading up to Hurricane Maria, Puerto Rico’s infrastructure had been in increasing need of routine maintenance. The island’s power grid had fallen into a particular state of disrepair as a result of declining revenues and political corruption.
While the U.S. mainland infrastructure may not be in as bad a shape, the increased frequency and severity of extreme weather events makes the issue of resilient and sustainable building impossible to ignore.
The report stresses the importance of planning to rebuild BEFORE a disaster strikes and of anticipating future needs. On the positive side, over the past few years, use of reinsurance and catastrophe bonds by governments and government agencies have been increasing. Several South and Central American countries have obtained bonds that would pay for damage caused by earthquakes, and FEMA has begun obtaining reinsurance for its National Flood Insurance Program.
April is National Volunteer month, and in time with this event State Farm® has conducted an interesting survey which reveals key insights into what motivates people to volunteer.
The study found that that only 23 percent of younger millennials currently volunteer, compared to 46 percent of older millennials (those who are married, have kids, or own a home). State Farm research confirms what others have found, that younger people are looking to align their giving opportunities with their life goals.
Millennials have supplanted Baby Boomers as the largest population group in the United States, and as a result they have the biggest potential to influence volunteerism. With that in mind the study offers several useful tips for engaging young professionals in volunteer activities:
- Show the impact: People want to know their work was worth it. Forty-three percent of older millennials and 34% of younger millennials say seeing the impact of their time and talent reaffirms their commitment to give back.
- Career development: Forty percent of older millennials and 35% of younger millennials said offering opportunities to help their career or job search would boost their willingness to volunteer.
- Knowledge is power: The prospect of gaining expertise in a certain area or learning a new skill inspires more people to get involved. Forty percent of older millennials and 31% of younger millennials say this opportunity would make them more likely to volunteer.
- The more the merrier: Both groups agree, being able to participate with friends (44% older millennials, 35% younger millennials) or meet new people (28% older Millennials, 22% younger millennials) plays a large role in their decision to volunteer. In fact, one in five millennials reported finding a significant other through volunteering!
For more about how the insurance industry is committed to our communities read the latest issue of I.I.I.’s Impact magazine
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On Thursday April 5th Philip J. Klotzbach and Michael M. Bell, scientists with the Colorado State University, issued their 2018 Atlantic Hurricane Forecast. The forecast anticipates slightly above-average activity for the 2018 Atlantic basin hurricane season.
There is slightly above-average probability of a major hurricanes making landfall along the continental United States coastline and in the Caribbean.
Klotzbach and Bell estimate that 2018 will have 7 hurricanes (median is 6.5), 14 named storms (median is 12.0), 70 named storm days (median is 60.1), 30 hurricane days (median is 21.3), 3 major (Category 3-4-5) hurricane (median is 2.0) and 7 major hurricane days (median is 3.9). The probability of U.S. major hurricane landfall is estimated to be about 120 percent of the long-period average.
Probabilities for at least one major hurricane landfall on each of the following coastal areas:
- Entire continental U.S. coastline – 63% (average for last century is 52%)
- U.S. East Coast Including Peninsula Florida – 39% (average for last century is 31%)
- Gulf Coast from the Florida Panhandle westward to Brownsville – 38% (average for last century is 30%)
As is the case with all hurricane seasons, coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them. They should prepare the same for every season, regardless of how much activity is predicted.
Click here for the full forecast.
Dr. Philip Klotzbach is a non-resident scholar for the Insurance Information Institute (I.I.I.)