Latest Studies

Half a billion people worldwide are affected by floods annually, and about 90 percent of all U.S. natural disasters involve flooding. The human and economic tolls are massive, and until recently insuring these risks and helping communities recover fell almost entirely on government programs. Improved data, analysis, and modeling have helped drive private-sector interest in flood-risk transfer and mitigation. But despite growing private involvement, many experts consider the current system unsustainable. A resilience mindset is required, and that demands more than insurance products. An understanding of loss trends and expertise in quantifying risk must be married to technology, public policy and finance, and science. This, in turn, requires collaboration and innovation to promote pre-emptive mitigation and rapid recovery. Full report

The Camp Fire in November 2018 took more lives and destroyed more property than any wildfire in California history. This worst-case scenario in the state is attributed to extremes of weather, fuel and complex topography that led to losses totaling $16.5 billion, of which $12.5 billion were insured. Another devastating year was recorded in 2020, when five of the six largest wildfires in state history broke out and consumed more than 4.2 million acres and caused losses estimated in the range of $5 billion to $9 billion. IBHS discusses the research it uses to identify ways to increase the resilience of homes and communities to wildfires, and concludes that individuals, communities and governments must work together to effectively reduce wildfire risks. The measures proposed in California Senate Bill 63 that would expand the applicability of the state’s wildfire building code and improvements in California fire hazard severity zone maps would help reduce the toll of wildfires. The report includes multiple exhibits. Full report

The purpose of this report is to evaluate how the use of data and risk-based pricing improves consumer access to financial services products and makes the pricing of these products more accurately reflect risk. The report recommends policies that would increase equity in the system of risk-based pricing. In 2020 the U.S. Chamber of Commerce organized the Equality of Opportunity Initiative to develop effective and sustainable solutions to close opportunity gaps in education, employment, enterprise, criminal justice, health and wealth. The report presents five key findings: 1) Consumers receive more benefits from the risk-based pricing system than in uniform pricing systems; 2) Credit scores, credit-based insurance scores and other risk-based pricing approaches have been shown to accurately predict risk; 3) Minority and low-income households have attained the largest improvements in assets and access to capital; 4) Companies are taking innovative approaches to lower the credit-invisible population and improve credit scores of others; and 5) Incorporating higher levels of predictive data into risk-based pricing models provides additional economic benefits. The report includes multiple exhibits. Full report

Global investment in the InsurTech sector reached a new quarterly high of $2.55 billion during the first quarter of 2021. This included eight "mega-rounds" which accounted for more than $1.13 billion of the funding. Total funding during the quarter grew by 180 percent compared with the first quarter of 2020, which suffered a deep fall due to fears surrounding COVID-19. The number of deals increased 42 percent over the previous quarter. WTW reports that investment was propelled largely by property and casualty focused companies, which represented 69 percent of deal share. Full report

An increasing number of firms are the target of cyberattacks, and this year’s report calls attention to the extent of the problem, but also provides an optimistic outlook. Even during such a challenging time as was presented by the pandemic, firms have stepped up their efforts to combat hacking attacks by devoting more of their resources to cyber defenses and giving greater attention to cyber resilience. The report shows that despite their concerns about the pressure that the pandemic placed on their IT budgets, most businesses spent more on cybersecurity. The report presents a new cyber readiness model that assesses the strengths of respondents in six crucial cybersecurity areas involving people, process and technology. The model is designed to be interactive, to allow management to compare their business’s maturity to that of other companies in the same geography and sector, and also with similar turnover. Full report

This Economic Insights report anticipates a recovery in infrastructure spending this year after the sharp downturn during the pandemic. The renewable energy industry is expected to surge as policymakers give greater attention to global warming. Private investors are projected to take advantage of an estimated $1.4 trillion annual global opportunity to close the funding gap for infrastructure projects, especially those in the green and sustainable category. Swiss Re continues to project $3.3 trillion annual public and private infrastructure investment globally during the period of 2021 through 2040, and sees these investments as providing significant premium potential for the world’s insurers. The article includes multiple exhibits. Full report

The widespread lawsuits related to claims filed in the aftermath of both the financial crisis and the onset of the coronavirus pandemic are examples of how critical disruptions can escalate litigation. Climate change is another global issue that has a similar effect, and litigation related to global warming is increasing worldwide as those who suffer losses or anticipate losses because of climate change turn to the judicial system to obtain relief or funding for abatement efforts. This report offers a cohesive mapping and analyses of evolving litigation related to global warming and identifies seven key drivers and three major factors that account for climate change becoming a global phenomenon. Full report

This is the first summary of two surveys commissioned by Cambridge Mobile Telematics and conducted by a neutral survey agency in January 2020 and January 2021. Three thousand insured drivers representing five groups were interviewed twice about their responses to different models of pricing, services and rewards as well as the effect of the pandemic on their driving, choice of insurer, decisions about coverage and interest in buying additional services. During the pandemic there was an unprecedented decline of miles traveled in March and April of 2020, and as well insurers returned billions of dollars in refunds to their customers as a result. The pandemic accelerated the adoption rate of telematic programs, and 95 percent of the respondents said they were now more likely to switch to connected insurance than before the outbreak of the coronavirus, even if the change involved a monthly fee. Full report

This Economic Insights report discusses the increasing use by companies of captive insurance to self-insure. A September 2020 survey by Marsh showed that 59 percent of the companies surveyed expected to expand their use of captives by including more lines of coverage and increasing the retentions in the captives. Developments in data analytics and actuarial research indicate that captives can be useful in underwriting such hard-to-insure risks as cyber. More than 7,000 captives are now domiciled in more than 70 jurisdictions, with the U.S. being the world’s leading market for captive insurance, which is used by as many as 70 percent of Fortune 500 companies. The report includes multiple exhibits, including a table describing the following captive structures: rental captives, protected cell companies and virtual captives. Full report

As many governments adapt fiscal and monetary policies to stimulate economic recovery, this report from Marsh Specialty focuses on the increasing economic risks that can be linked to greater deficit spending that exacerbates sovereign and commercial credit risks in less developed economies. The major themes in the report are the growth inequality between rich and poor nations; a continuing increase in economic risks among all nations, particularly in terms of sovereign credit risk, currency risk and commercial risk; and increased nationalism and its effect on such strategic resources as energy, food, technology, water and other supplies essential to national industries. Another crucial factor is vaccine diplomacy as nations offer access to vaccines to bargain with allies and trading partners. The Political Risk Map discusses risks by region and focuses on nine crucial risks: contractual agreement repudiation; economic risk; currency inconvertibility and transfer; expropriation; legal and regulatory; sovereign credit; strikes, riots and civil commotion; terrorism; war and civil war. Insurers can support political risk and credit solutions that play important roles in securing trade and investment capital, unlocking liquidity and promoting growth in fuel to sustain recovery. A strong private political risk insurance market can help investors and businesses withstand political and economic crises. Full report

Medical cost containment strategies fall into the categories of price management and utilization management—with a goal of either curbing the cost of a particular service or reducing the amount of services provided. With medical benefits representing the single largest cost component for many state workers compensation systems, this study provides a basic understanding of the cost containment strategies used in all 50 states and 3 federal workers compensation programs as of January 1, 2021. The study includes tables of statutory provisions, administrative rules, and processes used by states, which come from surveys completed by state and federal administrators. One of the most popular tables compares fee schedule allowances for eight of the most common medical procedures in states that regulate fees. New to the report are four medical cost issues that have received a great deal of attention since the last edition: telehealth, ambulance fees, “balance billing,” and fees for surgically implanted hardware. The report includes multiple exhibits. To learn more about the study and download a copy, please visit WCRI.org.