All posts by Maria Sassian

Insurance Labor Outlook 2018 Q3

The U.S. insurance industry continues its hiring spree in 2018, with 63 percent of companies saying that they plan to increase staff during the next 12 months, according to a new Jacobson and Ward Group survey.

The primary reason cited for hiring is the expectation of an increase in business volume – 66 percent of companies listed this as the primary reason-to-hire. Business expansion and/or entry into new markets was listed as the second most popular reason for hiring (43 percent).

The most difficult to fill positions are executive, technology, and actuarial, while the biggest growth is expected in technology, claims and underwriting roles.

“The insurance industry is coming face to face with an unprecedented talent reality,” says Gregory P. Jacobson, co-chief executive officer of Jacobson. “Virtually non-existent unemployment, an emerging skills gap and impending mass retirements of the industry’s continually aging workforce are challenging insurers to reevaluate their current staffing strategies. This survey will provide a baseline from which insurers can make necessary adjustments to build a successful workforce.”

When it came to reducing staff, 11 percent of companies reported that automation will be the primary reason for reductions in staff during the next 12 months followed by reorganization at 9 percent.

The Jacobson Group and Ward Group conducted a webinar to review the trends uncovered by the survey. The webinar can be viewed here.

 

The I.I.I. tracks insurance industry employment trends here.

The dangers of smart city hacking

 

The adoption of smart city technology is altering the way municipalities manage critical services and infrastructure. Worldwide spending on technologies that enable smart cities is projected to reach $80 billion in 2018 and will grow to $135 billion by 2021.

There are as many as hundreds of thousands of connected systems embedded throughout a city’s critical infrastructure, which are used for things like traffic monitoring and emergency alerts. Researchers from IBM and Threatcare evaluated three smart city sensor hubs and uncovered vulnerabilities, including bugs that would allow hackers to access the systems.

The type of damage exploiting smart city technologies could cause includes: Causing disaster detection and alarm systems to report incorrect data; manipulation of law enforcement response (for example manipulating traffic control infrastructure to create gridlock and delay law enforcement teams from accessing the real scene of a crime); and the manipulation of farm sensors to cause irreversible crop damage.

From the I.I.I. Daily: Our most popular content, August 17 to August 23

Here are the 5 most clicked on articles from the I.I.I. Daily newsletter.

 

 

To subscribe to the I.I.I. Daily email daily@iii.org.

 

Hawaii braces for Hurricane Lane

I.I.I. non-resident scholar Phil Klotzbach gives us a forecast update on Hurricane Lane which is tracking northwest to the islands of Hawaii.

 

Whether Lane makes landfall in Hawaii or not, heavy rainfall and wind threaten the islands and residents are urged to make necessary preparations.

Hawaii’s Insurance Department has issued a declaration authorizing temporary assistance of nonresident unlicensed independent adjusters due to the anticipated arrival of the hurricane.

The last hurricane to hit Hawaii was Hurricane Iniki in 1992.

 

The I.I.I. has a Hawaii Hurricane Fact File here.

Missouri auto study rebuts 2017 ProPublica story

By Michael Barry, Senior Vice President Media Relations and Public Affairs, Insurance Information Institute

 

ProPublica’s investigative story last year on auto insurer pricing in four states—California, Illinois, Missouri, and Texas—will be seen in a different light, at least when it comes to Missouri, following this month’s meeting of the National Association of Insurance Commissioners’ (NAIC) Auto Insurance Working Group in Boston, MA.

To refresh everyone’s memory, ProPublica’s April 2017 report alleged “some major insurers charge minority neighborhoods as much as 30 percent more than other areas with similar accident costs.” The I.I.I. pushed back immediately, calling ProPublica’s assertions “inaccurate, unfair and irresponsible.” Moreover, the I.I.I. sponsored research by a leading actuarial firm, Pinnacle Actuarial Resources, which found “multiple concerns” with the methodology ProPublica employed when arriving at its findings.

The NAIC heard from Missouri’s Angela Nelson on Saturday, Aug. 4.  Ms. Nelson said her state’s Department of Insurance, Financial Institutions, and Professional Registration (DIFP) found “no evidence” Missouri’s private-passenger auto insurers were employing discriminatory pricing practices while also determining in a comprehensive July 2018 assessment of Missouri’s auto insurance market the following trends:

  • When adjusted for inflation, the typical Missouri driver has seen a 17 percent decrease in their auto insurance premiums since 1998.
  • Premium levels for liability coverage are two-times higher in Kansas City and St. Louis than they are in the rest of the state.
  • About 13.7 percent of Missouri’s drivers are operating vehicles while uninsured; this tracks closely to the Insurance Research Council’s estimate of 14 percent.

 

Hail damage to property is averaging $10 billion per year

Hailstorms have grown more destructive in recent years, causing up to $10 billion per year in damage. The reasons range from larger homes being built, to more homes being built in vulnerable places, to the rising costs of roofing materials, according to a recent Washington Post article.

The first North American Workshop on Hail and Hailstorms is happening this week (August 14- 16) in Boulder, Colorado. The group will discuss the rising costs of hail damage, and 200 experts from the fields of meteorology, engineering, economics and insurance are attending. These experts will work together to better detect hail; the microphysics and dynamics of hailstorms; the cost of damage and how to mitigate it; and the likely effects of a changing climate on hailstorms.

The I.I.I. has facts and statistics on hail damage here.

From the I.I.I. Daily: Our most popular content, August 3 to August 9

Here are the 5 most clicked on articles from the I.I.I. Daily newsletter.

To subscribe to the I.I.I. Daily email daily@iii.org.

 

A world without insurance? Not if these University of Alabama students can help it!

By Steven Weisbart, Chief Economist, Insurance Information Institute

Bill Rabel, a professor at the University of Alabama (and a long-time friend of mine and of the I.I.I.), has sent an email to all students who are enrolled in his fall Intro to Insurance class. Here is the opening of his email:

Dear FI 341/597 Principles of Risk Management & Insurance students,

 I’m looking forward to seeing you in class on Thursday, August 23!  The purpose of this message is to give you a head start on the fall semester—which will be here before we know it.

A major objective of the course is understanding insurance; in order to give you an idea about the important role it plays, I invite you to check out the following video: A World Without Insurance?  It’s short (about four minutes) and will give you important insights that will help you to appreciate the course, and why insurance is essential to all of us.

 

 

 

Revised 2018 Hurricane Season Forecast (August 2, 2018)

By Phil Klotzbach, lead author of the Colorado State University (CSU) hurricane forecasting team, and I.I.I. non-resident scholar. 

Watch the video

Colorado State University (CSU) updated its outlook for the 2018 Atlantic hurricane season today, and they continue to call for a below-normal season with a total of 12 named storms (including Alberto, Beryl and Chris), 5 hurricanes (including Beryl and Chris) and 1 major hurricane (maximum sustained winds of 111 miles per hour or greater; Category 3-5 on the Saffir-Simpson Wind Scale) (Figure 1).  This prediction is similar to their early July forecast and is a considerable reduction from their earlier April and June outlooks which called for 14 named storms, 7 hurricanes, and 3 major hurricanes and 14 named storms, 6 hurricanes and 2 major hurricanes, respectively.  Accumulated Cyclone Energy (ACE) and Net Tropical Cyclone (NTC) activity are integrated metrics that take into account the frequency, intensity and duration of storms.

Figure 1: August 2, 2018 outlook for the upcoming Atlantic hurricane season.

CSU uses a statistical model as one of its primary outlook tools.  The statistical model uses historical oceanic and atmospheric data to find predictors that worked well at forecasting prior year’s hurricane activity and has shown considerable skill based on data back to 1979 (Figure 2).  The statistical forecast for 2018 is calling for a below-average season.

Figure 2: Skill of the July statistical forecast model at predicting historical Atlantic hurricane activity since 1982.

CSU also uses an analog approach, whereby the team looks for years in the past that had conditions most similar to what they see currently and what they predict for the peak of the Atlantic hurricane season (August-October).  The forecast team currently anticipates below-average sea surface temperatures (SSTs) in the tropical Atlantic and warm neutral to weak El Niño conditions in the eastern and central Pacific.  The average of the five analog seasons also calls for a below-average season (Figure 3).

Figure 3: Analog predictors used in the August 2, 2018 seasonal forecast.

The primary reason that the seasonal forecast remains below average is due to much cooler than normal waters in the eastern and central tropical Atlantic.  Sea surface temperatures (Figure 4) are at their coldest levels on record (since 1982) for late July when averaged over the tropical Atlantic from 10-20°N, 60-20°W.  Colder water temperatures provide less fuel for developing tropical cyclones, and they also tend to be associated with drier and more stable air, which suppresses deep thunderstorms that are the building blocks of hurricanes.  This drier and more stable air has predominated over the tropical Atlantic and the Caribbean over the past several weeks.

Figure 4: July-averaged SST anomalies in the North Atlantic.  SSTs are much cooler than normal across the entire tropical Atlantic.

CSU also believes that there is chance for a weak El Niño event developing for the peak of the Atlantic hurricane season from August-October.  El Niños tend to reduce Atlantic hurricane activity through increases in upper-level winds that tear apart hurricanes as they are trying to develop.  NOAA gives a slightly higher than 50% chance of El Niño development in the next few months (Figure 5).

Figure 5: Official NOAA forecast for El Niño over the next several months.  The black arrow highlights the August-October period, which are the peak three months of the Atlantic hurricane season historically.  Figure courtesy of International Research Institute for Climate and Society.

Coastal residents are reminded that regardless of any seasonal forecast, they need to prepare the same for every hurricane season, since it only takes one storm to make it an active season for you.  A prime example of this is 1983.  The 1983 Atlantic hurricane season had only four named storms all year, that is, we only made it to the ‘D’ storm that year.  The first hurricane of that season, Alicia, was a major hurricane that caused major damage in southeast Texas.