Latest Studies

The Insurance Information Institute (Triple-I) 2020 Consumer Poll was conducted in July 2020, as the nation was coping with the COVID-19 pandemic, and many states were experiencing some phase of non-essential business closings and stay-at-home orders. Many auto insurers offered a wide variety of benefits to consumers — premium credits, partial refunds, forgiveness of late payment and more. While most motorists were aware of the programs, the Triple-I believes that the percentage of those offered some type of relied could be even higher. The poll found that homeowners are protecting their properties against disasters like flooding and hurricanes at a higher rate than previously reported, a welcome development as the 2020 Atlantic hurricane season got off to an early start and is expected to produce a higher-than-average number of storms. And homeowners who live in areas that are likely to experience a hurricane say that they are preparing more when forecasts predict an average or above-average number of storms. However, the poll also found that greater consumer understanding on insurance coverage is still needed. Details on take-up rates for flood, earthquake and renters insurance are also included. Full report

The annual Federal Emergency Management Agency National Household Survey found that nearly 60 percent of Americans perceive themselves to be prepared for a natural disaster emergency, and 10 percent still see no need to prepare. Forty-seven percent of the respondents were influenced to prepare because of their awareness of an issue, and 98 percent acknowledge that a single disaster could prompt them to decide to live elsewhere. Those who live in hurricane areas are more likely to have taken community-based action or prepared a plan than those living in other areas exposed to tornadoes, floods, wildfires and earthquakes. Full report

The pandemic has slightly increased the difficulty of recruiting for most insurance functions, but employment is expected to continue to grow over the next year, however at a significantly lower pace. Most of the companies considered in the study (83 percent) plan to maintain or increase their workforce over the next 12 months. Forty eight percent of companies plan to increase staff during the next 12 months driven by the personal lines segment at 60 percent. During the same period, 17 percent of companies plan to lower the size of their workforce, the largest percentage since January of 2012. Total revenue is expected to increase by 58 percent, 19 points lower when compared with the January survey. Large companies are the most optimistic about revenue growth, with 73 percent of these respondents expecting growth, compared with 67 percent for medium-sized companies and 48 percent for small companies. Technology, underwriting and analytics roles are expected to grow the greatest during the next 12 months and the fewest candidates are available for actuarial, technology and analytic positions.  Full report

In recent years corporations have been facing a widening range of exposures and subsequent losses and claims. Corporations are having to pay greater court costs and more for recalls in addition to losses stemming from political violence and environmental issues at a time when the world’s economy is being challenged by a pandemic. This report focuses on five trends that are expected to affect risk managers and brokerage firms and that provide an overview of the current liability insurance market. The five trends are identified as follows: 1) drivers of U.S. social inflation like litigation funding and class actions challenging businesses and moving into new jurisdictions; 2) rising automotive repair and recall costs drive higher liability claims, as supply chain complexity deepens; 3) pandemic challenges manufacturers to avoid costly food safety risks and recalls; 4) political violence risks threaten business disruption beyond physical property damage; 5) indoor air quality after coronavirus and enforcement undertakings concern environment market. The report identifies the recall risks of particular products including sweets, infant milk, green beans, and canned peaches. A table lists the top causes of liability claims loss by value of claims and by number of claims, with defective products as the leading factor in both lists. Full report

The novel coronavirus pandemic has increased reliance on digital technology in business and other activities, making cyberrisk even more pervasive, according to this report. Willis Re made COVID-19 the focus of its fourth annual cyber survey, which asked respondents how the pandemic had affected their opinions on cyberrisk now and for the future. Willis Re received nearly 1,000 responses from 56 nations, which includes input from buyers, risk managers, underwriters, claims staff, actuaries and brokers. The report includes responses on multiple topics including demand, types of attacks, liability and pricing. The demand for cyber insurance is expected to grow, and the supply may not continue to be adequate, especially if increased exposure leads to more losses, and prices may continue to increase. Full report

With this report on the auto insurance market in New York state, the Insurance Research Council (IRC) continues its close look at affordability issues. The coverage in New York is the fourth least affordable in the U.S., measured by calculating auto insurance expenditures as a percentage of median household income. The index in New York was 2.21 percent from 2013 to 2017, compared with the national average of 1.58 percent. New York’s auto insurance system has been one of the nation’s most expensive for many years now; but in the late 1980s, the state’s combined injury cost differed little from other states. The large increases in combined injury costs during the 1990s and early 2000s are attributed to pressures in no-fault costs. The article identifies six factors that contribute to the high cost of insurance in New York: 1) high claim frequency, 2) high claim severity, 3) high medical utilization, 4) litigiousness, 5) culture of insurance fraud and 6) influence of the New York City area. Insured vehicles in New York are more likely to incur property damage liability (PD) claims, personal injury protection (PIP) claims and bodily injury liability (BI) claims than the U.S. average. The average amount paid for auto injury claims is significantly higher than the national average because of the state’s generous limits on both PIP and BI coverages. The report includes a bar graph showing auto insurance expenditures as a percent of median income for each state, based on data from NAIC and the U.S. Census Bureau. Approximately 20 other graphs display data showing that New York’s lower accident rate is accompanied by more frequent claims. The study is available for purchase from the Insurance Research Council.

This Lloyd’s report published in collaboration with KPMG provides a deep dive into the subject of intellectual property (IP), identifying the key risks confronting this asset class. The value of IP has appreciated consistently in recent years, with many of the world’s most valuable businesses possessing sizeable IP portfolios. COVID-19 has amplified this trend with businesses racing to open a digital presence, while still trying to adjust to the consequences of remote working. However, many corporate leaders do not understand the value and importance of IP. This means that IP decisions are often delegated to lower level legal staff who understand IP but not necessarily the broader strategic implications. The report sets out four actions risk owners and managers of organizations can take to enhance their risk management practices around intellectual property and to increase their preparedness for the changing risk landscape. The report also discusses six intellectual property assets: copyright/database rights, patents, trademarks, industrial designs, geographical indications and trade secrets. Full report

According to this report, the COVID-19 pandemic has yet to result in a noticeable increase in mergers and acquisitions (M&A) claims activity, but it is possible that certain types of claims will become more common, such as those related to labor issues or key customer insolvency. Other M&A trends uncovered by the report include an uptick in notifications, with about 19 percent of policies now receiving a notification. However, no more than 25 percent of these notifications result in actual claims—a statistic that has remained relatively consistent over the years despite rising notification frequency. The report concludes that the appetite of some insurers may start to wane for this class of business. Full report

This report by Coalition, a provider of cyber insurance, explores top cybersecurity trends and threats facing organizations. Cyberattacks have increased in number and severity since the onset of the COVID-19 pandemic. Overall, ransomware (41 percent), funds transfer loss (27 percent), and business email compromise incidents (19 percent) were the most frequent types of loss—accounting for 87 percent of reported incidents and 84 percent of claims payouts in the first half of 2020. The report found that the implementation of basic cybersecurity controls could have helped avoid a majority of the claims and losses reported. While cyber insurance claims impacted businesses of all types and sizes in the first half of the year, certain industries, including consumer businesses (retail, hospitality and food), healthcare and financial services were more frequent targets of cyberattacks. The report states that for each claim processed, cyber insurance played a critical role in helping the insured recover operationally. Full report