Latest Studies

The U.S. commercial property segment recorded the biggest rise in pricing among insurance sectors in the second quarter of 2019, with its rate of growth increasing to 8.5 percent from 5.9 percent in the first quarter, according to this report. This is the first time since the end of 2014 that another line of business had a larger premium increase than commercial auto, where premiums rose 8.4 percent in the second quarter. The report includes the results of a survey of agents and brokers which found that clients are continuing to show concern about cyberrisk, with 74 percent of respondents reporting an increase in demand for cyber insurance. According to one respondent from a midsized firm in the Southeast, “many of our accounts purchased cyber liability this year whereas they declined in past years.” Future premium increases and limitations on coverage were also sources of client concern. Full report

Small business owners have never been more satisfied with their insurance providers, according to this J.D. Power study. The all-time high satisfaction score of 844 (on a 1,000-point scale) follows three years of stagnant satisfaction levels and is the result of insurance company investment in technology, servicing, product expansion and dedicated infrastructure designed to support small business customers, according to the report. “Insurers have focused on improving their approach to the small commercial market and it shows,” said David Pieffer, Practice Lead, Property & Casualty Insurance Practice. “Technology has become an increasingly critical component in the small commercial insurance offering. Digital channels are now more influential than ever before in shaping commercial customer experiences and this will be an important area of focus moving forward as technology continues to evolve rapidly and more customers interact with their insurers via electronic channels. News release

The report discusses the exponential growth of digital data, and how the newest resources are generally inexpensive and can help property/casualty insurers price new markets and risk classes by augmenting internal data with external semi-structured data sources. The four business needs supported by data analytics are: 1) identifying new opportunities in reference to current portfolio structure; 2) understanding and engaging customers more effectively especially through the use of behavioral economics to improve targeting, bidding and engagement; 3) understanding how insurers can complement their portfolio data by links to multiple external databases; and 4) automating underwriting and claims processing. The article includes a colorful array of figures, graphs, tables and diagrams showing various aspects of the increasing use of advanced analytics in the insurance industry. Full report

Almost half of auto insurance customers would be interested in a data-powered rewards program from their insurers based on data collected from the car, according to a survey by Aite Group. Younger customers and those with higher incomes were more likely to be interested in these kinds of initiatives. Customers who already used an app to collect their own driving data also were more likely to be interested in signing on for a discount program. About a quarter of the auto insurance customers surveyed reported that they already have such a data-collection mechanism; 10 percent of those customers said they never use it, compared to 55 percent who use it "every day.” Press release

This report shows that U.S. captive insurance companies rated by A.M. Best continued reporting strong financial results in 2018 and outperformed their counterparts in the commercial casualty sector. According to the report, the rated captive composite reported a pretax profit of approximately $1.1 billion, a decline of 16 percent compared with the $1.3 billion posted in 2017. A.M. Best emphasized that the market remained profitable, however, despite the decline. The post-dividend combined ratio of the composite was 96.0 percent in 2018, and net underwriting profit was $160.0 million. Premium increases in medical professional liability and commercial multiperil insurance lines of business were primary factors in the 4.4 percent increase in net premiums written in 2018, which reversed the 6.7 percent decline the previous year. The report shows that captives have successfully weathered low interest rates, revisions to the U.S. tax law and prolonged soft market conditions. Full report (subscription required)

This report shows that plaintiffs filed 198 new federal securities class actions in the first half of 2019, and they overall have filed more than 1,000 securities class actions in the last two and a half years, accounting for more than 20 percent of the total number of cases filed since 1997. The core filings increase is largely attributable to a delayed effect of market volatility in the last quarter of 2018 and to an uptick in filings in the consumer non-cyclical sector and against internet and high-tech firms. The consumer non-cyclical sector had 47 filings, with 32 of these against biotechnology, pharmaceutical, and healthcare companies. The 19 filings in the communications sector were all against internet and telecommunications companies. Core filings against S&P 500 firms in the first half of 2019 occurred at an annualized rate of 6.4 percent. The report also notes that there were three core filings involving initial coin offerings (ICOs) or cryptocurrencies in the first half of 2019 up from one such filing in the second half of 2018. Full report

This article by environmental scholars from universities including Harvard and Stanford, make the case for planned retreat for communities that are repeatedly impacted by natural disasters. “By reconceptualizing retreat as a set of tools used to achieve societal goals, communities and nations gain additional adaptation options and a better chance of choosing the actions most likely to help their communities thrive,” the paper states. It notes that retreat strategies should be forward-looking and responsive to economic opportunities, market forces, and demographic changes. “A proactive strategy may recommend retreat be pursued in at-risk areas the next time those homes are flooded,” the paper states. “Or it might identify path dependencies: steps taken today that promote or limit future options. For example, limits on shoreline armoring could enable future retreat, whereas heavy armoring today is likely to encourage dense development and make future retreat more difficult." Full text

This study, commissioned by FEMA, assesses disaster resilience by measuring the financial stability of individuals and their connection to their communities, as an alternative to such typical resilience measures as the quality of infrastructure, physical protection from natural disasters and risks of flooding and hurricanes. The primary factor in the analysis is how well individuals know their neighbors, since the quality of these relationships leads to the providing of care and the sharing of such simple resources as flashlights. An analysis of FEMA records shows that the states with the lowest resilience are generally the states which have been hit by the largest number of federal disasters since 1953. The top 10 states in terms of the total number of disasters include Texas, Louisiana, Alabama, Kentucky and Mississippi—states in which a majority of the counties were given low or mediocre resilience rankings. The study concludes that the southern half of the U.S. is much less resilient than the northern half, based on an analysis of income inequality and religious affiliation in all counties. Manhattan, or New York County, is one of the least resilient counties, primarily because most of its residents do not own automobiles. Full report

With low back pain prevalent in workers compensation, this study from the Workers Compensation Research Institute (WCRI) highlights large interstate variations in the use of early magnetic resonance imaging (MRI) and lumbar decompression surgery for injured workers with lower back conditions. It also finds that state-adopted medical treatment guidelines and mandatory use of these guidelines in utilization review, reimbursement and dispute resolution tended to correlate with a lower rate of lumbar decompression surgery. The study includes claims from 27 states, with injuries from October 1, 2015, through March 31, 2017. Detailed medical transactions for these claims cover the first year of treatment from the date of injury up through March 31, 2018. To learn more about this study, visit WCRI’s website at www.wcrinet.org. 

This report from Los Angeles-based Consumer Watchdog, asserts that while warnings about potential hacks of self-driving cars are well publicized, components that carry similar risks are frequently being installed in ordinary consumer automobiles without much ado. Citing anonymous interviews with 20 auto and software engineers who work on connected cars, the report warns that each year 17 million new cars are deployed on American roads in which the mechanisms that control movement—accelerating, steering, and braking—can be overridden by computers and software. To reduce the risk, Consumer Watchdog recommends that automakers should install a 50-cent electronic “kill switch” to give drivers the option to cut the connection between the internet and safety-critical features (like the brakes and the engine). Full report