Latest Studies

This report by Triple-I's chief economist is based on ISO/Verisk's property/casualty (P/C) insurer financial data for 2019. The year was characterized by relatively low catastrophe losses, which cannot be counted on to recur on a regular basis. Net income after taxes for the year was $61.4 billion, and the combined ratio for 2019 was 98.9, slightly better than the 99.2 in 2018. Industry surplus attained its highest-ever level--$847.8 billion. This was driven largely by unrealized capital gains from a soaring stock market in the second, third, and fourth quarters of the year and declining interest rates. Direct Premium Written (DPW) grew by 5.6 percent in 2018 and by 5.2 percent in 2019. This means that DPW grew at roughly the same rate as the U.S. economy in 2018 (5.4 percent in current dollars) and at a faster rate than the economy in 2019, which grew by 4.1 percent. However, premium comparisons of net premium written (NPW) and net premium earned (NPE) growth in 2019 vs. 2018 are distorted by changes in reinsurance practices in early 2018 that are attributable to the major tax legislation adopted in December 2017. The effect of these changes was to raise calculated NPW and NPE growth rates for 2018 and, by comparing to an inflated base year, lessen the growth rates for 2019. To overcome this, ISO calculated the average annual growth rates for 2017 to 2019. Full report

Severe convective storms, which include thunderstorms, tornadoes and hail, are among the most common and damaging natural catastrophes in the United States. These storms were the costliest peril for insurers in 2019. The start of this year's convective storm season coincided with the shutdown of much of the U.S. economy due to the coronavirus pandemic, potentially complicating disaster response and claims handling as the season-already shaping up to be the deadliest in eight years-continues. Population growth and economic development have also contributed to increased losses, with research suggesting that the geography, frequency and intensity of these storms also may be changing. This paper examines these trends and how insurers, risk managers, individuals and businesses are responding to mitigate the risks and improve community resilience. Full report

Measuring and forecasting inflation is important in setting premiums and anticipating claims. Historically, recessions tend to drive prices down, but that's not necessarily true for insurance. This presentation by Triple-I Chief Economist Dr. Steven Weisbart looks at insurance prices and the forces that affect them. Full presentation

On May 12 NCCI reported its financial results during its annual State of the Line report at its first virtual Annual Issues Symposium (AIS). For Calendar-Year 2019 the combined ratio for workers compensation insurance was 85 percent for private carriers--the sixth consecutive year that the line of business posted an underwriting gain. During the presentation, NCCI Chief Actuary Donna Glenn said the workers compensation industry had another good year in 2019, pointing out that declining claim frequency for the year, a strong industry reserve position and favorable metrics in the residual market characterized the health of the workers compensation line of business. She and NCCI President and CEO Bill Donnell pointed out that the workers compensation system is facing significant uncertainty because of the COIVID-19 pandemic and resulting economic fallout but expressed confidence that the system will respond effectively. Full text

This report concludes that the coronavirus pandemic will accelerate changes to the global supply chain already in motion due to the US-China trade war, and subsequently spur new insurance opportunities. Eighty-two percent of respondents to a recent survey of 600 multinational companies across Asia and 93 percent of Chinese companies said they are changing their supply chains because of the trade war. The COVID-19 crisis will accelerate these changes and gives rise to new concerns such as supply chain disruptions. Relocations and building of parallel supply chains will entail construction of new business facilities in different locations. Coupled with increasing awareness of the risk of supply chain disruption, this will generate new demand across credit, surety, engineering, property and especially for business interruption insurance (BI) insurance. The report estimates a 5 to 10 percent increase in demand for property and engineering insurance in new host markets in emerging Asia. Demand for BI coverage could rise 10 to 20 percent over the medium-term. Full report

The world's top risk experts expect that a prolonged global recession is likely due to the coronavirus pandemic, according to this report. The fundamental unpreparedness of nations for pandemics is clear and shortcomings are also obvious in economic safety nets and international cooperation, with 500 million people at risk of becoming impoverished. The report is organized around discussions of four primary areas of concern: economic shifts and emerging risks from structural change; sustainability setbacks; societal anxieties; and technology dependence. The report also reveals the results of a survey of nearly 350 senior risk professionals. Two-thirds of the respondents identified prolonged global recession as their leading concern, with other top concerns including: bankruptcies; industry consolidation; inability to recover post-pandemic; and a disruption of supply chains. The report was compiled by the World Economic Forum's Global Risks Advisory Board in cooperation with Marsh & McLennan Companies, Inc. and Zurich Insurance Group. Full report

Noting that the intensity, frequency, and duration of North Atlantic hurricanes and the frequency of Category 4 and 5 hurricanes have all increased since the early 1980s the report states that hurricane-associated flooding and rainfall rates are projected to rise in 2020. Multiple storm and flood damage mitigation techniques are discussed, including seawalls, sand scaffolding and artificial trees. The use of drones and satellite imagery to develop a new flood risk survey based on topographic data from drones used to model flood and drainage behavior on construction sites is also mentioned. Full report

Wildfire risks have increased worldwide and the assessment of wildfire risk for property insurance is complex and depends on many fields of expertise, such as large-scale data and analytics and scientific measurements of wildland fuels. The report provides a statistical snapshot of the risk report for California from Fireline, which uses advanced remote sensing and digital mapping technology to assess fuel, slope and road access and determine wildfire hazard scores. The impact of 2019 wildfires is summarized, and the article concludes by listing four questions insurers should consider in order to accurately underwrite properties for wildfire risks. Full report

According to the report, money has become the top focus for cyberbreaches, surpassing spying. The annual study of cybercrimes, which utilized data from more than 32,000 incidents and nearly 4,000 confirmed break-ins in 81 countries, found that approximately 86 percent of breaches were financially motivated. Additionally, breaches on web and cloud applications rose to 43 percent, double the previous year. Credential theft, phishing and compromising business emails caused 67 percent of the cyberattacks. Full report

“Social inflation” is the name used to describe growth in liability risks and costs related to litigation trends. This whitepaper by the Insurance Research Council  (IRC) examines this phenomenon and shows that insurers’ losses across several business lines have accelerated rapidly in recent years – much more rapidly than economic inflation alone can explain. The IRC study draws from a range of industry and scholarly resources to show that it does exist and hurts individuals and businesses who rely on insurance. Using loss data published by the National Association of Insurance Commissioners (NAIC), the IRC documents loss trends in several key insurance lines, including commercial and personal auto insurance and product liability coverage. The report notes that loss trends reflected in the data “are consistent with anecdotal observations and concerns about the impact of social inflation on insurance claims costs. While the analysis is based on data and trends that predate the COVID-19 pandemic, the IRC notes that state efforts to impose business interruption coverage for economic losses under insurance policies that specifically exclude bacteria and virus-related losses are a current example of the forces that drive social inflation. The report can be downloaded from the IRC website.

This risk bulletin concludes that restrictions on supply chains and travel related to COVID-19 could have a serious impact on the maritime industry. The pandemic has idled many ships that are facing new risks as they are anchored at a fixed location and not conducting commercial activities. Capt. Rahul Khanna, global head of marine risk for AGCS, said the increasing disruption and economic pressures from the pandemic also has serious risk management implications for both the maritime industry and insurers. AGCS points out that maintenance problems can be undetected until the vessels are returned to service. The report also notes that relieving crews has become much more difficult due to travel restrictions, which results in more fatigued sailors, the primary cause of human error on board. Full report

This report from the National Association of Insurance Commissioners (NAIC) discusses the impact of the coronavirus pandemic on the health and stability of the insurance market by clarifying its commitment to helping insurance regula.tors protect the health and safety of the nation's consumers and guarantee the stability of the nation's critical insurance sector. The report focuses on the NAIC's work with commissioners and their staffs to assess the ongoing solvency of major carriers, the need for additional regulatory relief in 2020, the continuing interest of policymakers in business income (interruption) coverage (BI), health coverage and other issues. Consumer protection is discussed, as is a list of emerging issues, including the relationship between BI claims caused by COVID-19 and claims arising from recent rioting and looting. Full report

The First Street Foundation, a nonprofit research firm, released an analysis of the state of flood risk in the continental U.S. The findings are the result of the firm's new Flood Model, a climate adjusted model that assesses flood risk at the individual property level. The analysis shows that nearly 6 million of the nation’s properties are at more substantial risk of flooding than indicated by federal flood maps. First Street says that the Federal Emergency Management Agency’s (FEMA) maps indicate that 8.7 million properties have a 1 percent annual flood risk, compared to its own maps, which indicate that 14.6 million properties, or approximately 10.3 percent of all of the properties in the contiguous U.S., have flood risks at this high level.  Full report