Latest Studies

Hype or reality? The state of artificial intelligence and machine learning in the insurance industry
LexisNexis Risk Solutions;
December 01, 2019

This report examines how the top 100 U.S. carriers are using artificial intelligence (AI) and machine learning (ML). Approximately 62 percent of respondents have adopted AI and ML initiatives. About 75 percent said they believe AI and ML can provide carriers with a competitive advantage through better decision-making. Auto insurers are leveraging AI and ML at a 68 percent rate, followed by life, commercial and home insurance. About 65 percent of companies prefer to develop their applications internally despite the proliferation of AI and ML focused insurtech startups. Marketing, underwriting and claims are the most common practice areas in which AI is being applied. About 8 percent of early adopters said they’re already seeing significant benefits including faster claims settlement and more targeted cross and upselling. Approximately 87 percent in this group also reported improved fraud detection. About 82 percent of adopters said their organizations have or will buy external data for their AI/ML initiatives. Nearly 74 percent of adopters said they are worried about data privacy, security and ownership issues, anticipating increased regulatory scrutiny as more data sources are accessed and modeled. Full report

Verisk Perspectives 2019
December 01, 2019

This report by the ISO Emerging Issues unit of Verisk discusses four emerging trends and makes suggestions for how the insurance industry can mitigate potential losses. In the climate change section, the report discusses sea level rises, the polar vortex, arctic warming, technological malfunctions in the industrial sector caused by natural events ("natech"), and the challenges posed by actions to lessen greenhouse gas emissions. Cybersecurity, particularly the vulnerability of global supply chains and quantum computers, is also discussed. Another section deliberates the possible negative impact on weather forecasting 5G technology can have, as well as other risks. This section also discusses potential benefits of 5G. Finally, a section on cannabis warns about the myriad of risks that emerge as cannabis becomes legal, such as how researchers are facing a new set of challenges around drug and pesticide interactions. Full report

2019 Political Risk Survey Report
Willis Towers Watson and Oxford Analytica;
December 04, 2019

This survey of 41 major corporations found that 68 percent of firms reported a political risk loss in 2019 so far. Disruption of international trade was considered the most significant risk in the majority of regions. The Middle East continues to be the region with the highest concern for political risk – with 70 percent of respondents with political risk in that area saying it is of high concern – followed by Africa and South America. About 61 percent of respondents believe political risk levels have increased since 2018 and 75 percent experienced expropriation losses that were larger than $250 million. Political losses were reported in 37 countries. Full report

Directors and Officers Insurance Insights 2020
December 01, 2019

This report describes how the range of exposures facing directors and officers (D&Os) have increased significantly in the past few years. First, “event-driven litigation” has dramatically affected the number of claims against D&Os. Environmental, social and governance (ESG) failings have also often caused brand values to plummet. Securities class actions, most of which have previously been seen in the U.S. and Australia, are growing globally as legal environments evolve. Business insolvencies also rose in 2018 by more than 10 percent. This was primarily due to a sharp surge of over 60 percent more insolvencies in China. Finally, the report says that these mega-trends are further fueled by the fact that litigation funding is now becoming a global investment class. This has attracted investors hurt by years of low interest rates searching for higher returns. Full report

Judicial hellholes
American Tort Reform Foundation;
December 01, 2019

In this annual report, the American Tort Reform Foundation identifies places it dubs "judicial hellholes," where laws and court procedures are applied in an "unfair and unbalanced" way in civil cases, usually to the disadvantage of defendants. In 2019 the Philadelphia Court of Common Pleas ranked at number one. It is one of the preferred jurisdictions for asbestos litigation and home to an $8 billion product liability verdict. California, New York City, Louisiana and St. Louis also rank in the top five. The report covers legal trends including: the trial bar's push to use public nuisance law to shift costs associated with public crises to businesses; lead paint and climate change litigation; the opioid and vaping crisis; and new rights of action against employers. Full report

2019 Insurance Regulation Report Card
R.J. Lehmann
R Street Institute;
December 04, 2019

This annual report ranks the effectiveness of each state's regulation of the insurance industry based on how free consumers are to choose the products they want, how free insures are to offer products consumer want, and how effectively states monitor insurers' solvency and foster a competitive environment. For the sixth straight year, Vermont had the best insurance regulatory environment. Louisiana had the worst score for the second year in a row, followed by New York. The biggest improvements were seen in Florida (from a B to an A-), Montana (from a D to a C-) and New Mexico (from a B- to a B+). The biggest declines were seen in Colorado (from a C to a D+), Maine (from an A- to a B) and Oregon (from a B to a C+). R.J. Lehmann, the author of the report said that in 2019 "…we saw progress toward more competitive insurance markets. Residual property insurance mechanisms continued to shrink. Florida enacted landmark reform of its assignment-of-benefits system and Michigan finally ended its mandate that all personal injury protection policies must provide unlimited lifetime medical benefits, which had driven out-of-control costs for decades.” Full report  

The role of insurance investments in the U.S. economy
U.S. Chamber of Commerce;
December 01, 2019

This report highlights the importance of U.S. insurance companies' role as institutional investors. Insurance companies aim to invest in longer duration, lower-risk assets in order to pay claims that are expected far in the future.  This investment strategy enables them to invest much needed capital into important sectors of the real economy of the U.S., such as public education and infrastructure projects, investment in U.S. businesses, and credit to the U.S. homeowner through real estate investments. U.S. insurance investments in education projects through municipal bond purchases could build about 1,000 elementary schools every year. Likewise, their annual investments in municipal bonds used for transportation projects could build a road from Washington, D.C., to Los Angeles every year. Their current holdings of mortgage-backed securities correspond to roughly two million mortgages, and life insurers’ public corporate bond investments alone funded about $120 billion of business investment in needed plants, equipment, and other capital expenditures in 2017. Across other asset classes, insurers provide approximately 12 percent of nongovernment funding for U.S. farm loans and hold about 15 percent of all commercial and multifamily debt ($468 billion). Full report

How Do Claim Costs, Components of Costs, and Worker Outcomes Differ by Age?
Bogdan Savych and John Ruser
Workers Compensation Research Institute (WCRI);
December 19, 2019

With American workers more likely to continue working into their later years, this FlashReport by WCRI aims to find out how injury rates, claim costs, the main components of claim costs, and postinjury worker outcomes differ by age. The study found that injury rates do not vary substantially by age but that the aggregate data hide substantial differences in injury events and nature of injury by age. Older workers are more likely to be injured in falls and to have fracture injuries while younger workers are more likely to be injured coming in contact with equipment and to have cuts. The study found that disability payments per claim rise to age 64, with permanent partial disability/lump sum payments averaging a little more than $10,000 per claim for younger workers and climbing to an average of nearly $25,000 for workers aged 60 to 64. Average duration of temporary disability benefits also steadily rose based on age, leveling out for workers at age 45 with an average of 24 weeks of temporary disability payments per claim, up from nine weeks for the youngest workers. To learn more about this study or to purchase a copy, visit WCRI.

Insurance in a world of climate extremes: what latest science tells us
Swiss Re Institute;
December 18, 2019

This report separates various climate-change effects and their relevance for the re/insurance industry into high confidence and reduced confidence categories. The confidence about current and future trends is highest for risks related to the increase in global temperatures. Sea level rise, for example, caused by the heating of water and the melting of glaciers and icecaps, will directly increase the magnitude of storm surges and pose a long-term risk for coastal regions. Confidence is much lower for atmospheric and oceanographic circulation changes, which affect the frequency and intensity of severe tropical cyclones, European windstorms or tornado and hail storms. The report urges the re/insurance industry to improve risk models to better assess climate hazards as well as to play a key role in advancing the transition to a low-carbon economy. Full report

Global Health and Security
Kathryn E. Bouskill and Elta Smith
RAND Corporation;
December 01, 2019

This report concerns the scope and operation of global health security, identifies emerging threats and assesses how current perspectives on global health security account for these threats. The authors target two primary threats to global health security: slow-burn problems, which are defined as long-term effects that are underestimated, potentially causing them to receive insufficient attention until the damage of the health threat has already been done; and novel technologies, which can be used for beneficial purposes but are also capable of being utilized as weapons. The report contends that a holistic definition of global health security should be considered that would encompass more than the threats of pandemics and bioweapons. The report also takes into consideration how global health security requires a systemic focus on the interconnection between human physical and mental health, animal health and the environment. The report contends that these efforts must not come at the cost of work to promote global public health and human rights. Full Report