Latest Studies

Insurers’ Digital Reality. Fewer Premiums, More Competition
Tanguy Catlin, Johannes-Tobiaz Lorenz, Christopher Morrison
McKinsey Quarterly;
May 01, 2017

This report on the impact of digital technology on the insurance industry found that new tech startups (or insurtechs) are not much of a threat to the established companies. Just the opposite was found. Instead, they help incumbents provide better services, and only 9 percent of insurtechs intend to overthrow incumbents. The main threat lies in longer-term trends, which are already disrupting the traditional business model and destroying value in the process. A graphic demonstrates how an incumbent auto insurer could improve profits over the next eight years by taking advantage of digital technology. Better data will make pricing more accurate and help detect fraud, while automation could cut the cost of a claim by as much as 30 percent. After eight years, however, car safety features will reduce risk and lower premium income. And in the case of self-driving cars, manufacturers may assume the risk for what was previously a personal liability. The result of these changes could be that over the course of a decade, insurers’ profits could fall drastically. Other insurance sectors such as homeowners and health could be similarly impacted. A business model built on the use of gadgets or services that predict and help prevent risk, instead of premiums paid for protection from risk is not too farfetched. To succeed, incumbents will need to be fast and first to digitize existing businesses. Incumbent insurers should consider partnerships to offer new, value-added services, be they part of a cybersecurity package offered by software providers, or part of a package for car owners offered by telematics providers and car manufacturers, as well as those offering roadside assistance, car repairs or car rental. Full Report

From Concept to Reality: How Blockchain Will Reshape the Financial Services Industry
The Economist Intelligence Unit; 24 pages
April 01, 2017

This report, commissioned by the UK’s Department for International Trade, examines the financial industry’s current and future use of the distributed ledger technology known as blockchain. Financial services companies are eager to experiment with the new technology, first introduced in 2008. The projected savings in cross-border payments, securities trading and compliance could add up to $15 to 20 billion per year by 2022. In the coming years some of impacts of blockchain adaption on the finance sector will likely include: the development of blockchain systems closed to outsiders; reduced costs of checking the ownership of transactions; the need for regulatory overhaul; cheaper financing to small and midsize firms; and embedded smart contracts that could transform the way bank accounts work, and how insurance payments are made. For the insurance industry, the case for blockchain is strengthened by a lack a secure industrywide network for sharing claims related information. An industrywide, blockchain-based shared database of risk could improve the precision of pricing coverage, and lower the administrative costs of providing insurance. Full Report


Swiss Re SONAR. New Emerging Risk Insights
Swiss Re Institute; 43 pages
June 01, 2017

Swiss Re’s latest SONAR report discusses 20 new emerging risks. The biggest risks by line of business impacted are: growing water stress for property; cloud risk accumulation for casualty; underestimated infectious diseases for life and health; the effect of inflation on insurance business for financial markets; and regulatory fragmentation for operations. Full Report

Storm Surge Report 2017
June 01, 2017

Almost 7 million homes along the Gulf and Atlantic coasts are potentially at risk from storm surge damage. The report estimated the reconstruction cost value (RCV) of those homes to total more than $1.5 trillion. The report provides an annual evaluation of the number and RCV of single-family residential homes in the U.S. exposed to storms that form in the Gulf and Atlantic basins. The report features interactive maps and charts showcasing the number of homes at risk of storm surge flooding by state and Core Based Statistical Area (CBSA). A new addition to this year’s report is an in-depth probabilistic storm surge analysis for Florida with a special emphasis on the storm surge from Hurricane Matthew in 2016. For the 2017 hurricane season, CoreLogic predicted fewer storms than 2016. However, they also made note that the landfall location of any storm is a more important factor in figuring out how storm surge will impact property loss. Full Report

Small and Young Businesses are Especially Vulnerable to Extreme Weather
Benjamin Collier
Harvard Business Review;
November 23, 2016

The author of this article, along with his colleagues and the Federal Reserve Bank of New York, conducted a study to better understand businesses’ financial preparation for and management of disasters in the New York area one year after superstorm Sandy. The team found that small businesses—especially startups—are particularly vulnerable to extreme weather and other natural disasters. Small businesses tend to be more productive than larger ones and may be unlikely to invest in risk management that diverts resources from production. About 950 businesses are included in the data, and the median firm is around 10 years old and has 4 employees. The study found that almost one-third of the firms negatively affected by the storm had no insurance of any kind, and applied for credit at twice the rate of unaffected ones. The author suggests that small businesses should make risk management a strategic priority and rethink what is considered a rare risk. Full article

Climate Sources for Actuaries
Society of Actuaries; 19 pages
April 01, 2017

A repository of information about existing climate and environmental sustainability research has been developed by the Society of Actuaries. The repository, called the Climate Sources for Actuaries Resource Index, will be of use to actuaries whose practice concerns climate change and environmental sustainability and to anyone else who is interested in improved financial projections associated with climate change. Full Report

A New Subsidence Map for Coastal Louisiana
Jaap H. Nienhuis et al.
GSA Today Bulletin;
June 14, 2017

This research paper indicates that the sinking of Louisiana into the Gulf of Mexico, which experts have long considered inevitable, is proceeding more rapidly than anticipated. The paper shows the rate of a process known as subsidence, a phenomenon that is unfolding in addition to the rising of the sea level linked to global warming. A new map indicates that the Louisiana coast, on average, is sinking at a rate of approximately 9 millimeters, or slightly more than a third of an inch, a year, a rate faster than suggested by earlier studies. Full Report.

Public Understanding of Hurricane Deductibles, Need for Consumer Education Persists
Insurance Research Council (IRC);
June 16, 2017

An IRC survey found that one third of homeowners in several coastal states are still unaware of hurricane deductibles and how they work. The findings come as the National Oceanic and Atmospheric Administration projects two to four major hurricanes this hurricane season, which lasts from June 1 through November 1. Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked whether they were familiar with hurricane deductibles. Thirty-three percent of respondents said that they had never heard of them, and 25 percent lacked an understanding of deductibles in general. Hurricane deductibles were a prominent issue in 2012, with misunderstanding and confusion after superstorm Sandy did not make landfall as a hurricane. The level of understanding of hurricane deductibles varied across the five states studied. For more detailed information on the study’s methodology and findings, contact David Corum at 484-831-9046 or by email at Visit IRC’s website,, for information about purchasing a copy of the report.


The Nation’s ‘Hot Spots’ For Car Thefts
National Insurance Crime Bureau (NICB);
June 01, 2017

Albuquerque, New Mexico, tops the NICB’s list of “Hot Spots" for auto thefts per capita in 2016. According to the NICB, 10,011 cars and trucks were reported stolen among nearly 680,000 residents in New Mexico’s Bernalillo County. California’s Los Angeles-Long Beach-Anaheim metro area had the highest number of auto thefts overall with 60,000 vehicles stolen in 2016. Anchorage, Alaska, rose to 6th place in per-capita thefts in 2016, up from 47th place just a year earlier. Hawaii’s Kahului-Wailuku-Lahaina corridor had the fewest number of cars stolen in 2016—just one. Full Report

2017 Driving in America Report. The Costs and Risks
Lacey Glover
June 13, 2017

This report found that 28 percent of Americans who currently have car insurance think they pay too much for it. The report also found that good drivers are missing out on $416 a year in auto insurance savings by not shopping around for a cheaper policy. Drivers in Delaware, Michigan and Connecticut stand to lose the most with $1,845 in annual average savings. Thirty eight percent of drivers have not comparison shopped in three years, or ever. Sixty seven percent of those who have driven in the past 12 months admit to using a cell phone while driving. Of those that admitted to using a cellphone, 87 percent talked on the phone, 54 percent used GPS, and 38 percent texted while driving. In 2013 padded claims for bodily injury and personal injury protection totaled almost $6 billion. About 10 percent of Americans surveyed admitted to providing inaccurate information when applying for insurance. The report provides additional findings on unsafe driving behavior, ranks states by cost of claims padding fraud (Florida, Michigan and California are on top) and ranks the lies told to insurers most often on applications (lowballed mileage is the top lie). Full Report


Legalizing Recreational Marijuana is Linked to Increased Crashes
The Highway Loss Data Institute (HLDI) News Release;
June 22, 2017

The Highway Loss Data Institute (HLDI) has issued an analysis of auto collision claim frequency trends from 2012-2016 in the three states where recreational marijuana use was first legalized: Colorado, Oregon, and Washington. Collision claim frequency rates are about 3 percent higher overall in those states than would have been otherwise expected without legalization. Colorado had the highest change in claim frequency with a 13.9 percent increase, followed by Washington with 6.2 percent and Oregon with 4.5 percent. Some studies have found that using the drug could more than double crash risk, while others, including a large-scale federal case-control study, have failed to find a link between marijuana use and crashes. Studies on the effects of legalizing marijuana for medical use also have been inconclusive. Full Release

Safety and Shipping Review 2017
Allianz Global;
June 01, 2017

This detailed review of trends and developments in shipping losses and safety reports that maritime safety has been improving in recent years. Shipping losses declined by 16 percent in 2016 over the prior year, and by 50 percent over the past decade. Stringent regulations and the improvement in safety culture is partly responsible for the decline in losses, but the recent downturn in the shipping economy could also be a factor. Trends such as piracy, autonomous shipping and the cyberthreat at sea are discussed. Large losses are expected to cost more in the future with the size of ships increasing. A potential $4 billion loss could occur if a cruise ship collides with a large container ship. Full Report