Latest Studies

In a letter submitted this week to the U.S. Treasury Department’s Federal Insurance Office (FIO), the Insurance Information Institute said U.S. auto insurers accurately price their policies by using a wide variety of rating factors. “If rating factors do their job well, they make insurance relatively inexpensive for some people and quite expensive for others. In both cases, the assessment is correct. Drivers who present less risk pay less for coverage,” the Triple-I said. The Triple-I response to FIO’s Request for Information (RFI) was the subject of a news release issued on July 29 and highlighted how the appropriate price for an insurance policy varies greatly from customer-to-customer, and from state-to-state. Full text

J.D. Power’s annual auto satisfaction study shows that many auto insurance companies failed to effectively communicate more than $18 billion in refunds they made to policyholders during the coronavirus pandemic. J.D. Power concludes that the marketing opportunity missed by many industry members, combined with their difficulty in meeting digital expectations during the pandemic, led to no improvement in the overall customer satisfaction levels in 2021 after four consecutive years of improvements. According to a survey conducted in February and March, only 50 percent of auto insurance customers were aware of their insurers’ premium-relief programs during the onset of the pandemic in 2020. The article includes a table showing the percentage of customers who were aware of the COVID-19 response of more than 40 auto insurers, based on J.D. Power’s survey.

This report anticipates a short-term increase in the severity of property claims in the U.S., which is linked to a surge in inflation after a strong recovery from the pandemic and from supply chain shortages. The price of home construction is expected to temporarily surge by 10 percent. Casualty claims could also rise because of medium-term increases in medical and wage inflation. Social inflation is expected to continue to be an important factor in the increasing severity of claims in the medium term. Until last April, four decades had passed since the annual rate of core inflation was more than 3 percent. Some economists express concerns that the recent surge could signal a long period of high inflation, but others see the spike as temporary. The Swiss Re Institute has raised its forecasts for inflation in the U.S. for 2021 and 2022 to 3.7 percent and 2.3 percent, respectively. But the Institute expects the surge in construction-related prices, and the related surge in property claims, to be temporary and to fade in 2022. Full Report

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

Although lenders, title companies and real estate brokerages have internal cybersecurity controls that help protect their customers, the real estate market continues to be rife with identity theft and fraud. Consumers reported the loss of over $3.23 billion to fraud in 2020, compared with $1.8 billion in 2019, with mobile transactions accounting for 21 percent of the fraud attacks. District attorneys (DAs) have a role to play in helping consumers as well as in prosecuting people who commit fraud. The article recommends DAs alert first-time buyers and senior citizens about the potential types of fraud and identity theft that can occur. DAs can also use social media, direct outreach and service providers to reach millennial buyers, thus increasing their awareness of the risks they face. Two major trends account for the recent proliferation of mortgage fraud: the first is the large number of millennials whose lack of experience in the process of buying a home; and the second trend is scammers who prey on cash-strapped homeowners who are desperate for financial solutions. Full Report

In 2020 natural catastrophe resilience around the world remained low, with the global protection gap rising to a new high of $231 billion. Advanced markets have been working on improving global resilience since 2000, while emerging markets have become less resilient as the rate of their economic expansion has exceeded the growth of their insurance markets. Last year, the global Swiss Re Institute Natural Catastrophe Resilience Index remained at the low level of 24 percent, approximately the same as in 2019 and indicates that approximately three-quarters of the globally modeled annual expected losses from wind, flood and earthquakes are not covered by insurance. The largest natural catastrophe protection gap is in the U.S., followed by Japan, although other advanced markets have led a strengthening of global resilience since 2000. The world’s 10 most resilient markets include Denmark, France, the U.K., Switzerland and Belgium. The report includes multiple exhibits.  Full Report

The Colonial Pipeline cyberattack in May 2021 is believed to be one of the first attacks to bypass defenses put in place through operations technology (OT)—security systems developed in response to threats launched by nation states. Cybersecurity experts formerly assumed that only nation states had the skills and resources to develop such attacks. Recently as IT and OT systems have been combined as businesses sought remote visibility into industrial operations for predictive maintenance, the convergence has allowed less sophisticated hackers to gain access to infrastructure. The report outlines principles that critical infrastructure companies should follow in their operational and technical operations to enhance their cyber resistance.  Full Report

The Rev. Dr. Martin Luther King Jr. emphasized the importance of employment in closing the economic gap between races and pointed out the disparity in opportunities available to Black workers when he addressed the issue in 1966. The economic condition of Black Americans still lags far behind that of whites 55 years later. According to a recent study, “The Economic State of Black America: What Is and What Could Be,” critical roadblocks prevent Black Americans from full participation in the nation’s economy and significantly limit their mobility. Blacks continue to work primarily in lower-wage jobs, are underrepresented in higher-paid occupations and are on average paid less than whites who hold the same jobs, especially in management or other higher-level employment. The authors estimate that the current annual wage disparity among Black workers, compared with their white counterparts to be $220 billion. The study suggests two initiatives that could ease the economic disparity: broadening access to higher-paying professions and establishing pathways from lower-paying occupations to higher-paying employment. Full Report