Latest Studies

Across the country about one in eight drivers on the road was uninsured in 2015, according to a new report from the Insurance Research Council (IRC). After a seven-year decline from a high of 14.9 percent in 2003, the countrywide uninsured motorist (UM) rate increased from 12.3 percent in 2010 to 13.0 percent in 2015. Uninsured motorist rates varied substantially among individual states, ranging from 4.5 percent in Maine, to 26.7 percent in Florida. Despite the recent increase in countrywide UM rates, several states with chronically high rates of uninsured drivers experienced significant declines in UM rates. Oklahoma’s UM rate in 2015 was 10.5 percent—15.4 percent lower than the state's 25.9 percent rate in 2012. New Mexico also experienced a significant decrease in its UM rate—falling from 29.8 percent in 2006 to 20.8 percent in 2015. Other states with significant improvement include Alabama, Arizona and California. The number of jurisdictions with increasing rates from 2010 to 2015 doubled the number with decreasing rates. The report includes a color-coded map of the U.S., and a chart showing the estimated percentage of uninsured drivers in 2015 in each state. For more information on the study’s methodology and findings, contact David Corum, at (484) 831-9046, or by e-mail at IRC@TheInstitutes.org. For more information about how to purchase the report, visit the IRC’s website at www.insurance-research.org.

This annual report on the homeowners insurance sector forecasts continued growth in direct U.S. homeowners insurance premiums for 2017 despite a decreasing return on equity for insurers. The report reveals that U.S. homeowners' premiums increased from $89 billion in 2015 to $91 billion in 2016, and are expected to reach $93 billion in 2017. The study highlights that the top 20 US homeowners’ insurers secured an average countrywide rate increase of 3 percent during the 18 months from January 2016 to August 2017, with the highest average rate increase of 7 percent being achieved in the states of Texas and North Carolina. Meanwhile, Florida insurers achieved an average rate increase of 5 percent during the period, which will likely be insufficient to maintain their current ROE levels given the increased costs facing the state's carriers from benefits and claims adjustments. Full report (Registration required).

This report contains by-peril trends in the U.S. home insurance industry and provides insights on loss cost, frequency and severity, details on seasonality, distribution of catastrophe claims and geographic trends. In 2016 All Peril loss costs continued to trend downward in aggregate; compared with 2015. Frequency remained steady however, while severity declined. Two states—Colorado and Texas—accounted for nearly half (48 percent) of U.S. catastrophe-related home insurance claim payouts in 2016. Thirty percent of U.S. home insurance claim payouts were caused by catastrophes, while all peril loss costs continue to trend downward. Hail losses reached their highest levels since 2011, at about $8.4 billion. Full Report

This report examines how well states provide tools to help homeowners resolve disputes with their insurance companies. The report recommends that states adopt mediation programs and an appraisal process for claims disputers. The enforcement of forced arbitration is not recommended. The report ranks Hawaii and South Carolina highest for consumer remedies. Washington D.C., Iowa, New York and Virginia rank the lowest. The full report and additional information about the issues are available on the Essential Protection for Policyholders website.

Cybercriminals can easily identify small and midsize enterprises (SMEs) with few cybersecurity measures in place. While SME owners are aware of cybercrime, they often see themselves as too small to attract such attacks. However, more than half of all cyberattacks are directed at SMEs, and that number is climbing. The impact such attacks have on business can be crushing; 93 percent of SMEs that have experienced a cyber incident reported a severe impact to their businesses. Almost all reported a loss of money and savings. Thirty-one percent reported damage to their reputations, leading to a loss of clients, as well as difficulty attracting new employees and winning new business. And nearly half reported an interruption in service that damaged their ability to operate. Despite these statistics, less than 3 percent have cyber insurance. The paper explores the ability of cybercriminals to identify specific weaknesses within SMEs, such as outdated or unpatched software, poor password hygiene, open web ports and unencrypted data in transit. SMEs are given measures to take to help shield themselves from these threats. This report is based on research completed by the Janet & Mark L. Goldenson Center for Actuarial Research at the University of Connecticut. Full report

This annual study uses actual reported claims under cyberliability policies to illuminate the real costs of incidents from an insurer’s perspective. While many leading cyberliability insurers participate in the study every year, there are many insurers that have not yet processed enough cyber claims to be able to participate. Total breach costs for claims submitted in years 2014 to 2017 were $202 million. The smallest breach cost reported was $110, while the largest was $16.8 million. The average cost for the period 2014 to 2017 was $394,000; the median cost was $56,000. Companies with less than $50 million in revenue were the most impacted, accounting for 47 percent of claims. Retail exposed 67 percent (420 million) of the number of records in the total dataset. Hackers were identified as the most common cause of loss, followed by malware/virus, ransomware/cyber extortion and staff errors. Full report

According to a nationwide survey of business executives, released by The Hartford Steam Boiler Inspection and Insurance Co. (HSB), part of Munich Re, more than half of U.S. businesses (53 percent) have experienced a cyberattack in the past year. Of those businesses hacked in the last 12 months, 72 percent spent more than $5,000 to investigate each attack, restore or replace software and hardware, and manage subsequent resulting issues. More than one-third of the hacked businesses (38 percent) said that they had spent more than $50,000 to respond; 10 percent spent $100,000 to $250,000; and 7 percent spent more than $250,000. The survey also found that the most common consequence of cyberattacks was data loss (60 percent), followed by business interruption (55 percent). News Release

This report contains findings by a group of leading seismologists who studied earthquakes using a model called the Uniform California Earthquake Rupture Forecast, Version 3 (UCERF3). This is the first model to provide self‐consistent rupture probabilities over forecasting intervals from less than an hour to more than a century, and it is the first capable of evaluating the short‐term hazards that result from multievent sequences of complex faulting. A Los Angeles Times article provides some interesting takeaways from the report. One finding dispels the long-held belief that moderate quakes relieve pent-up stress on an earthquake fault and postpone the prospect of a Big One, when in fact, many small quakes can lead to a much larger earthquake. The study also gives an overview of UCERF3, illustrates the short‐term probabilities with aftershock scenarios, and draws some valuable scientific conclusions from the modeling results. The full report is available to subscribers.  

Income protection gap (IPG) is the reduction in household income caused by the death or incapacitation of an adult wage earner on whom the household relies, taking all public and private sources of replacement income into account. IPGs are caused by several factors including an aging population; reduced funding for government social programs; inadequate savings and insurance protection for individuals and families; and rising disability levels. This study highlights the growing risk of IPGs and gives global recommendations for closing the IPGs for 12 countries –Australia, Brazil, Germany, Hong Kong, Italy, Malaysia, Mexico, Spain, Switzerland, UAE, the United States and the United Kingdom. Full report

This report by consulting firm Capgemini and the non-profit industry body Efma, concludes that digital technology has become central to insurers’ strategies following the rise of disruptive insurance technology (insurtech) start-ups. The consensus among insurance executives is that incumbent insurers and insurtechs have complementary strengths, and that the natural progression is for the two to collaborate. Insurtechs offer better value and faster and more efficient service, and insurers offer better security, brand identity and support for personal interaction (40 percent of customers said they trust their insurers compared to 26 percent of insurtech customers). Most insurers favor partnering with insurtechs over acquisition or in-house development. The report includes profiles of several insurers' technology innovation activities as well as insurtechs' innovations in areas such as: individual customer profiles; personalized risk assessment; pricing analytics; AI-augmented customer service; peer-to-peer insurance; and on-demand insurance and usage based insurance. Full report

This white paper was written as part of the World Economic Forum's project, Mitigating Risks in the Innovation Economy. The project was implemented to examine how emerging technologies are causing a major shift in the nature of risk faced by individuals, businesses and society. The roles of insurers, governments, technology firms and risk owners will need to evolve to address the changing risk landscape. Some of the risks and their implications for the insurance industry examined include: artificial Intelligence; self-driving cars; drones; smart utilities and other smart infrastructure; the internet of things; and the sharing economy. The paper concludes that significant dialogue will be required between various parties and across borders to mitigate these new risks. The persistence and scale of technology-induced change and the risks technologies pose have led to a large and persistent knowledge gap. The authors see an opportunity for the insurance industry to play a larger role in risk education, whereas in the past the industry has largely focused on risk protection, and to some extent risk mitigation. Insurers will need to continue to innovate risk assessment tools and consider alternative data sources and new forms of modeling for emerging risks that are difficult to predict. Open-source platforms, for example, may support the industry in these undertakings. Full report

Several states have seen decreases in medical payments per workers compensation claim, according to a series of new studies by the Workers Compensation Research Institute (WCRI). The studies, examine the costs, prices and utilization of workers compensation medical care through March 2016 for injuries occurring mainly in 2010 to 2015. Eighteen states were included in this research: Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia and Wisconsin. There are individual reports for every state except Arkansas and Iowa. “This research can help policymakers and other stakeholders identify cost drivers and emerging trends in payments, prices, and utilization of medical providers,” said Ramona Tanabe, WCRI’s executive vice president and counsel. These reports also examine how these metrics of medical payments compared among the 18 study states. For more information about these studies or to purchase them, click here. 

This annual report on crime in the United States found that in 2016, overall crime increased by 4.1 percent over 2015, and property crime decreased by 1.3 percent. About 7.9 million property crimes were reported to the FBI’s Uniform Crime Reporting (UCR) system, with losses (excluding arson) of about $15.6 billion. Larceny/theft made up 71.2 percent of all property crimes in 2016, burglary accounted for 19.1 percent, and motor vehicle theft accounted for 9.7 percent. Full report