Latest Studies

Homeowners and renters insurance customer satisfaction has reached a record high following a multi-year run of declining catastrophic losses and relatively stable pricing, but these high levels of satisfaction will be tested in the coming months amid the historic losses and profit strains created by Hurricanes Harvey and Irma. Satisfaction among homeowners and renters was driven by improvements in policy offerings, but price and direct customer service interactions remain problem spots. Multichannel interactions that include direct and live channels throughout the year produce the highest levels of satisfaction. Customers who understand their policies and the details of what they cover scored 92 points higher satisfaction levels than those who do not fully understand their coverage. Despite this huge effect on satisfaction, just 48 percent of customers say they completely understand their policies. Traditional service providers are fighting back against the growing crop of insurtech competitors by partnering with smart home assistants like Amazon Echo and Google Home. Since 2012 insurtechs have raised more than $7.1 billion globally in an attempt to carve out a slice of the home insurance marketplace by offering lower premiums and technologically advanced self-service interactions. While overall awareness of these innovators is still low at just 5 percent of all property customers, awareness among millennial customers is more than double that rate (11 percent). Among millennials who are aware of these startups, 29 percent say they “definitely will” or “probably will” purchase from one in the future. Amica Mutual ranks highest in the homeowners insurance segment for a 16th consecutive year, with a score of 866. Shelter and COUNTRY Financial rank second and third with scores of 850 and 839, respectively. Erie Insurance ranks highest in the renters insurance segment with a score of 862. American Family ranks second with a score of 844. State Farm ranks third with a score of 833. Press Release.

In this report on the National Flood Insurance Program (NFIP), the Congressional Budget Office (CBO) concludes that the NFIP will continue to accumulate debt even in the absence of any catastrophic storms (the report was prepared on August 31, 2017, before Hurricanes Harvey and Irma). It found that the NFIP had an expected one-year shortfall of $1.4 billion. The $1.4 billion estimated shortfall has two main causes. The first is that expected claims exceed FEMA’s estimate by about $1.0 billion. Because FEMA’s estimate is its basis for premium setting, the difference between the two estimates causes premiums to fall $1.0 billion short of CBO’s estimate of expected claims. The second issue is that the cost of providing discounted rates for certain policies is about $0.3 billion more than the receipts from surcharges created to help cover the costs of those discounts. The discounts are mainly for properties built before flood insurance rate maps were developed. They are intended to prevent households from facing significant new costs that could impose hardship and cause some homeowners to forgo coverage. Full Report

This study attempts to determine whether the National Flood Insurance Program (NFIP) has a redistributional effect on wealth. The authors used a nationwide database of flood insurance policies and claims between 2001 and 2013 from the Federal Emergency Management Agency. They found that premiums as a percentage of coverage purchased are regressive: premium shares are larger than income shares for lower-income ZIP codes. Payouts, however, also as a percentage of coverage purchased, are progressive, meaning lower-income ZIP codes receive a larger portion of claims paid. Overall net premiums divided by coverage are also regressive. The findings are driven by aspects of the current rate structure of the NFIP, as well as how income is related to risk. The authors discuss potential policies to provide assistance to lower-income households in purchasing flood insurance. The full report is available for purchase. 

The National Flood Insurance Program (NFIP) offers Increased Cost of Compliance (ICC) coverage, which provides funds to bring flood-damaged homes into compliance with current floodplain management regulations. This brief examines ICC coverage claims for single-family homes from 1997 to 2014. The authors also interviewed floodplain managers in several states. From 1997 to 2014, the NFIP paid 774,000 single-family claims, totaling $30.6 billion. Over the same time period, there were only 27,000 ICC claims for single-family homes, totaling a bit over $700 million (2016 dollars). The analysis provides context for ongoing debates in Congress and highlights some of the key reasons the program is not more widely used. The report compares the proposals currently under consideration and discusses the implications of proposed reforms. Full Report

This report was prepared in accordance with Section 4008 (Marijuana-Impaired Driving) of the Fixing America’s Surface Transportation Act (FAST Act), Pub. L. 114-94. The report summarizes what is known about marijuana use and driving. The report describes the absorption, distribution and elimination of delta-9-tetrahydrocannabinal (THC), the primary psychoactive substance in marijuana, in the body. It contrasts this process with the absorption, distribution and elimination of alcohol in the body, as they are very different processes. The poor correlation of THC concentrations in the blood with impairment is discussed, along with the implication that setting legal levels is not meaningful. Several issues are discussed: The challenges in measuring driving impairment resulting from marijuana use; state laws relating to marijuana and driving; and what is known about the prevalence of marijuana-impaired driving and the crash risk associated with marijuana-impaired driving. Finally, the report presents information on training for law enforcement to detect marijuana impairment in drivers, the feasibility of developing an impairment standard for driving under the influence of marijuana and recommendations for increasing data collection regarding the prevalence and effects of marijuana-impaired driving. Full Report

This report, prepared for the World Economic Forum, examines the challenges to global economic growth. It includes a survey that asked business leaders to rank the top10 global threats to the business community. The threats in order of importance are: Unemployment/underemployment; fiscal crises; failure of national governance; energy price shock; profound social instability; failure of a financial mechanism or institution; critical infrastructure failure; cyberattacks; inter-state conflict; and terrorist attacks. The report draws on the trends and risks highlighted in the survey to outline the key challenges that the world faces: Reviving economic growth; reforming market capitalism; facing up to the importance of identity and community; managing technological change; protecting and strengthening global cooperation; and deepening efforts to protect the environment. A special section dealing with technology assesses two specific technological risks: Artificial intelligence and the rapidly changing physical infrastructure needs and vulnerabilities. Full Report

This report from Lloyd’s of London states that profitability in the cargo insurance world has dropped due to more catastrophic events, aggregation of risk, and higher value shipments.  The report also suggests that underwriters may not be keeping a close enough eye on new trends in an age-old line of insurance. Over the last 50 years, globalization has led to an increase in international trade, and ships have increased in size. They are now able to carry more than 19,000 containers, up from 1,000 in 1956. The report describes the risks modern cargo ships are exposed to and outlines the future of cargo risk modeling. Full Report

This report presents statistics on health insurance coverage in the United States based on information collected by the Census Bureau in 2014 to 2017. Findings include: The uninsured rate decreased between 2015 and 2016 by 0.3 percentage points. in 2016, the percentage of people without health insurance coverage for the entire calendar year was 8.8 percent, or 28.1 million, lower than the rate and number of uninsured in 2015 (9.1 percent or 29.0 million); the percentage of people with health insurance coverage for all or part of 2016 was 91.2 percent, higher than the rate in 2015 (90.9 percent); in 2016, private health insurance coverage continued to be more prevalent than government coverage, at 67.5 percent and 37.3 percent, respectively; of the subtypes of health insurance coverage, employer-based insurance covered 55.7 percent of the population for some or all of the calendar year, followed by Medicaid (19.4 percent), Medicare (16.7 percent), direct-purchase (16.2 percent), and military coverage (4.6 percent). Full Report

In this report, the U.S. Department of Transportation (DOT) offers a nonregulatory approach to automated vehicle technology safety. The voluntary guidance supports the automotive industry and other key stakeholders as they consider and design best practices for the testing and safe deployment of Automated Driving Systems (ADS). Priority safety design elements are presented for consideration, including vehicle cybersecurity, human-machine interface, crashworthiness, consumer education and training, and post-crash ADS behavior. A section clarifies and delineates federal and state roles in the regulation of ADSs. The National Highway Traffic Safety Administration remains responsible for regulating the safety design and performance aspects of motor vehicles and motor vehicle equipment; States continue to be responsible for regulating the human driver and vehicle operations. Full Report