Latest Studies

Private equity investments still attractive to US insurers
AM Best’s Special Report;
June 22, 2021

The book-adjusted/carrying value of the private equity holdings of U.S. insurers increased 14.8 percent in 2020, and the growth remained strong among both life/annuity and property/casualty sectors. The report shows private equity holdings and commitment for additional investment among life/annuity, property/casualty and health insurers for the years 2014 through 2020 and compares the alternative asset trend in private equity with the same trend among hedge funds during the same period. The performance of venture capital during the period was remarkable, with invested funds totaling nearly $297 billion, with $391 billion realized through exits, exceeding by a large margin the previous total of $177 billion in 2018. Signs supporting continued growth in the private equity market over the long term are positive, owing to low interest rates, mild inflationary environments and the prospects for higher investment yields. However, AM Best notes that financial stress in the markets or severe public market corrections remain a risk.

Swiss Re Sonar—new emerging risk insights
Swiss Re Institute;
July 08, 2021

This 2021 report focuses on the long-term effects of the pandemic and related reinsurance-focused emerging risk trends. The report discusses nine new emerging risk themes and spotlights six trends. The top emerging risk theme for property and specialty lines is restarting suspended operations, which involves the question of whether larger accidents are imminent. For casualty, the theme is the lack of diversity and safety in product testing. For life/health, the question is whether longer-term health burdens can be expected from COVID-19; and financial markets are wondering how long COVID-19 support will sustain zombie companies. Although COVID-19 vaccines are now available, the virus still inflicts losses and causes widespread suffering in various nations as well as disruptions in the global economy, and the latest report also repeats the need to address climate risk. The report includes multiple exhibits.  Full report

COVID-19 insurance fraud impact study: Evolving perspectives 2020-2021
Coalition Against Insurance Fraud;
June 30, 2021

This report from the Coalition Against Insurance Fraud uses information gathered from state departments of insurance; law enforcement agencies; and state fire marshal offices to capture observations of the pandemic’s impact on insurance fraud across America. Following mandated lockdowns and closures, some business changes made to accommodate telework and online interactivity, including transactions, might become permanent, and may have an impact on fraudulent activity. The report also examines any potential increases in fraudulent claims, and whether the decrease in economic activity lead to a corresponding decrease in claims, including auto, whether economic stress at the time of the study led to a correlated increase in arsons, auto-give ups, inflated claims or similar property/casualty insurance abuses.  Full report

Cannabis market growth expected but federal laws remain a roadblock
Best’s Special Report;
June 21, 2021

The rapidly growing cannabis market is offering insurers significant opportunities but also involves challenges that differ among jurisdictions and at the state and federal levels. As the demand for cannabis-related insurance products increase, the risk exposures of businesses in the cannabis industry also expand. Insurers are also challenged by conflicting state and federal laws on cannabis. The major obstacle to the development of cannabis-related insurance products is the federal government’s classification of marijuana as a Schedule 1 controlled substance, and Congress is working on legislation that would remove this obstacle that has prevented large insurers from entering the new market. The article also discusses the evolution of cannabis legalization among state legislatures and summarizes the products and growth in the current legal cannabis market. Press Release

Early estimate of motor vehicle traffic fatalities in 2020
National Highway Traffic Safety Administration;
May 01, 2021

According to a projection of the 2020 data on traffic fatalities, 38,680 people are estimated to have been killed in motor vehicle crashes last year, or an increase of approximately 72 percent compared with 2019. Preliminary data from the Federal Highway Administration indicates that vehicle miles traveled (VMT) in 2020 declined by approximately 430.2 billion, or a decrease of approximately 13.2 percent. The fatality rate for 2020 was 1.37 deaths per 100 million VMT, compared with 1.11 fatalities per 100 million VMT in 2019. The projected fatality rate for last year is the largest since 2007, and the number of fatalities in the third and fourth quarters of 2020 are projected as being far higher than the same quarters in 2019. The number of fatalities and the fatality rate per 100 million VMT increased in all 10 of the National Highway Traffic Safety Administration’s (NHTSAs) regions in 2020, compared with 2019. The report includes multiple exhibits.  Full report

2021 Hurricane Report
June 01, 2021

NOAA forecasts that the 2021 Atlantic hurricane season will include 13 to 20 named storms and six to 10 hurricanes, three to five of which will be major hurricanes of Category 3 or higher. In 2020 a record 30 named storms made landfall along the East and Gulf Coasts of the U.S. The report also discusses the attributes of major hurricanes of Category 3 or higher and notes that the two most extreme storms—Hurricane Katrina in 2005 and Hurricane Harvey in 2017—caused more than $100 billion in damage and took at least 1,833 and 68 lives, respectively. The 2017 Fourth National Climate Association is cited as concluding that substantial mitigation efforts are needed to prevent future damage to the U.S. economy, environment, and human well-being. The report has multiple exhibits, including two tables showing the 2021 storm surge risk numbers and wind risk numbers for the Gulf and Atlantic Coasts.  Full report

Rating the States 2021
Insurance Institute for Business and Home Safety;
June 01, 2021

This fourth edition of Rating the States from the Insurance Institute for Business & Home Safety (IBHS) evaluates building code enforcement and administration as well as contractor licensing in the 18 states along the Atlantic and Gulf Coasts, a region at high risk of damage from major hurricanes. The report rates each state on a scale of zero to 100, and the latest report considers the risks to the U.S. territories of Puerto Rico and the Virgin Islands. The report emphasizes the need for building resilience to reduce the potential financial losses from these destructive natural disasters, and states that building resilience depends on enforcing building-code standards in the construction of residential dwellings. For statewide codes to be effective, they must also be enforced so building officials need to be properly educated and trained. The report discusses the details of the assessment of these factors in each of the 18 states that led to their scores for this year and concludes with discussions of the developments in building resilience in Puerto Rico and the U.S. Virgin Islands.  Full report