Latest Studies

This report is the 14th study from A.M. Best on the long-term impairment rates of the U.S.-domiciled insurance companies rated by A.M. Best. The report updates a similar report published on November 30, 2016, which covered impairments from 1977 through 2015. During 2016, one property/casualty insurer, CastlePoint National Insurance Company, appears on the list of impaired insurers, compared with nine impairments reported in 2015. The report’s Exhibit 1, Gross Impairments, 2016, based on A.M. Best’s U.S. life/health and property/casualty data, includes only CastlePoint, a property/casualty insurer based in California. The report includes a detailed discussion of the definition of a financially impaired company and the calculation of gross impairment, net impairment and liquidation rates. Also included are 18 other exhibits, including a list of gross impairments by year, 1978 to 2016; a table and graph showing average cumulative gross impairment rates; and a table showing select rating transition matrices for financial strength ratings. Full report

The National Association of Insurance Commissioners (NAIC) has presented state lawmakers across the U.S. with a model cybersecurity law that they hope will standardize the current patchwork of cybersecurity laws that state legislatures have put in place. The model law requires insurers and insurance agents to develop, implement and maintain a program for information security based on their individual risk assessments, to have an employee or third-party vendor overseeing the program, and to be required to conduct assessments of internal and external threats regularly. Full text

Deloitte's 2018 Insurance Industry Outlook report identifies key opportunities and threats to both life and property/casualty insurers in 2018 and beyond. For P/C insurers, challenges include overcapitalization, rising auto costs, and soaring natural catastrophe claims. Life insurers are hampered by low interest rates, new regulations, and outdated systems and underwriting processes. The report offers advice to insurers for dealing with challenges and leveraging opportunities. For example, it is recommended that auto insurers offering usage based programs (UBIs) should leverage their telematics data to price policies more effectively. Homeowners insurers are advised to use the Internet of Things (IoT) for proactive risk management. Insurers will need to partner with manufacturers and service providers to deliver and capitalize on opportunities supplied by IoT. In the cyber insurance market, developing a cyber coverage template for smaller prospects on a mass scale could help insurers establish standard, preferred and substandard risks. To close the information gap, the industry could press for greater sharing of anonymous, aggregated loss data, an advantage they already enjoy with auto and workers’ compensation claims. The report also covers trends in mergers and acquisitions, insurtechs, robotics and artificial intelligence.  Full report

This annual report from the American Tort Reform Foundation lists courts that are the "most unfair" in the nation in their handling of civil litigation. This edition ranks Florida at the top of eight "hellholes" due to its famously aggressive plaintiffs’ bar. Florida authorities have begun to crack down on the lawsuit industry in the state, notes the report. California ranked at number two, for having plaintiff-friendly judges, although in June the U.S. Supreme Court reversed a California high court decision that would have granted more access to the state's courts to out-of-state plaintiffs. The City of St. Louis Circuit Court, was last year's No. 1 hellhole; it drops to No. 3 this year due to a change in gubernatorial leadership, civil justice reforms and a curbing of forum shopping. Still, St. Louis civil courts are known for “fast trials, favorable rulings, and big awards.” The report contains a "points of light" section and takes a closer look at Supreme Court decisions that should slow litigation tourism; opioid litigation; and the influence of trial lawyers at the American Law Institute. Full report

Product recalls are increasing in both size and number, and according to this Allianz report, defective product incidents have caused over $2 billion in insured losses over the past five years, making them the largest generator of liability losses. Allianz analyzed 367 insurance industry product recall claims from 28 countries across 12 industry sectors between 2012 and the first half of 2017. Overall, defective product or work is the major cause of recall claims, followed by product contamination. The average cost of a significant incident is over $12 million, with the costs from the largest events far exceeding this total. Over 50 percent of losses arise from 10 incidents. The IT/electronics sector is the third most affected industry after automotive and food and beverage, according to the claims analysis. Full report 

Lawsuits arise when an employee or job applicant feels they have been discriminated against in the workplace by management, another employee, or even someone outside the organization. This Hiscox Inc. report found that one in 10 businesses will face an employee charge, with only 24 percent of cases resulting in any payment by the insurance company.  Retaliation was the most prevalent charge category named in 45.9 percent of all charges. There are various state laws on credit checks, notice of crime convictions on employment applications, pregnancy accommodation and work authorization. In some states employees can go to court without filing a federal or state charge.  A survey by Hiscox found that employers in some states have a much higher chance of being sued than in others. In Washington D.C. employers have an 81 percent higher chance of being sued, followed by Delaware, Nevada and California. Understanding state and federal laws and implementing effective risk-prevention, mitigation and transfer techniques can help companies minimize the impact of employee charges. Full report

This annual study of customer satisfaction with large commercial insurers and brokers conducted by J.D. Power and RIMS, found that overall customer satisfaction with large commercial insurers is 761 (on a 1,000-point scale), up 7 index points from 2016. The overall improvement is largely due to a 10-point increase in satisfaction with program offerings. Cyber insurance was found to present both challenges and opportunities. Property/casualty wrote $1.35 billion in premiums for cyber insurance in 2016, a 35 percent increase from 2015. Yet, data breach/cybercrime programs are among the lowest-rated programs in 2017, averaging 7.56 on a 10-point scale. Among top concerns of commercial insurance customers are gaps related to security; loss prevention and risk control; business interruption; and remediation. The study found that demonstrating an understanding of customers’ business needs is one of the most important performance metrics for large commercial insurers, and is associated with a 141-point improvement in customer satisfaction among those who say their insurer completely understands their business vs. those who say their insurer does not understand or only partially understands their businesses (827 vs. 686, respectively). The study also found that commercial insurance customers are less likely to become brand ambassadors than customers of other services, including personal auto.  XL Catlin ranked highest among large commercial insurers with a score of 806. Chubb ranked second (783) and The Hartford ranked third with a score of 772.  Lockton ranked highest among large commercial insurance brokers followed by Arthur J. Gallagher & Co. and Aon. News release

This annual study of average driving costs found that the average cost to own and operate a 2017 model vehicle was $8,469 in 2017. The average insurance cost for medium sedans was $1,202. AAA insurance cost estimates are based on a full coverage policy for a driver who is under 65 years of age, has more than six years of driving experience, no accidents and lives in a suburban/urban location for a policy with $100,000/$300,000 personal liability, $25,000 medical, $100,000 property and $25,000/$50,000 uninsured/underinsured motorist coverage, with a $500 deductible for collision and comprehensive claims. Full report

Around the world, small and medium-sized enterprises (SMEs) are the lifeblood of every economy. They account for 99 percent of all firms, 70 percent of employment, and between 50 percent and 60 percent of value added in the Organization for Economic Co-operation and Development (OECD). They are also one of the most vigorous sectors of the economy, with 97,000 new SMEs formed each year in the UK alone. This should make SMEs an attractive market for insurers, but the market is challenging, as SMEs come in all shapes and sizes and have different, and sometimes complex, needs. They often need personalized advice but are unwilling to pay for the premium services tailored to bigger corporate clients. To find out if digital channels hold the answer and if business customers are ready to buy insurance online, PwC surveyed 2,100 small businesses (with up to 50 employees) in 14 countries. Their responses pointed to a demand for digital insurance services that is not being met. The authors of the PwC report recommend that insurers develop a clear strategy on how to deliver products and services across multiple channels and work to understand the evolving needs of current and prospective clients better.  Insurers will also need to consider what is required in terms of people, processes and technology to deliver a personalized, multichannel experience. Full report

This annual report estimates and allocates profitability in property/casualty insurance by state and by line of insurance. When combined with other information, the report can be utilized in further analysis of competition and market performance. The report pools calendar year data from exhibits of the annual statement to develop estimates of profits on earned premium and the return on net worth by line and by state. It 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 through NAIC Publications.