Latest Studies

Global economic growth will remain strong over the next two years, although momentum has peaked, according to the Swiss Re Institute. The still-positive economic momentum will support the insurance sector, with global premiums up more than 3 percent annually over the next two years in real terms, a one-percentage point increase from 2018. Most demand will come from emerging Asia, where premiums are forecast to increase at more than three times the global average rate, by close to 9 percent. Innovation in insurance will expand the boundaries of insurability and further drive premium growth. It will also help improve global resilience by narrowing existing insurance protection gaps. The full report can be found here.

Deloitte’s analysis of insurtech financing deals over the past 18 months found that the insurance industry has started to channel investments into proven entities rather than spread their money across many new insurtechs that are just getting off the ground. In the first half of 2018 Insurtech startup activity came to a virtual standstill with only four launches. The downward trend began in 2017 with the launch of only 88 insurtechs, which is half the number recorded in both 2015 and 2016. This is in line with the trend identified by Deloitte’s broader investment report in 2017. The full report can be found here.

In its latest Risk and Confidence Survey, CNA Hardy found that 82 percent of world business leaders surveyed consider the risk environment they work in as being moderate to high. The insurer also reported that 59 percent of respondents were confident that their organizations could grow and prosper, despite the risks. Thirty-nine percent of U.K. respondents expressed confidence, compared with 70 percent in continental Europe, 64 percent in North America and 53 percent in the Asia-Pacific region. A section of the report concentrates on the economic risk related to Brexit. The full report can be found here.

This report sees the life and annuities industry as having moved from recovery mode to a focus on growth, a transition that the analysts characterize as critical. A close examination of the data collected by McKinsey leads to the six following conclusions: 1) Industry growth is up. 2) The global view obscures a divergence, with developed markets such as Europe Japan and North America reporting growth of approximately 1 to 2 percent, while developing nations in Asia and Latin America are growing much more rapidly, at rates of 12 to 15 percent. 3) Industry cost structure has changed gradually but more adjustments need to be made. 4) Bold steps are needed to create long-term value. 5) Companies must be very careful about the markets they target. 6) Executives should consider four shifts to their operating model—strengthening mergers and acquisitions and business development; structuring the corporate center to show frequent resource allocations across the portfolio; using automation and outsourcing to greatly improve productivity; and developing an agile operating model so that decisions can be made rapidly. The article includes 13 exhibits and can be found here.

This report shows increases in the losses of U.S. homeowners insurers, and the percentage of those losses that can be attributed to an extreme weather event during 2017. The report indicates that loss costs increased 19 percent, compared with 2016, and that catastrophic claims accounted for nearly 35 percent of these claims, an increase of 5 percent, compared with the previous year. In 2017, 60 percent of wind claims and water claims qualified as catastrophic, particularly in Texas and Florida. The data also reflect the intense wildfires in 2017 that increased fire claims across the U.S. by 20 percent. Fire losses have been increasing since 2012, and the severity of the claims rose sharply last year due to the destructive wildfires in California last October. The report also discusses claims for damage from wind, hail and water last year. The report can be accessed here.

This Congressionally mandated examination of the consequences of climate change for the United States by 13 federal agencies finds that climate change creates new risks and exacerbates existing ones in communities across the United States; that it is expected to cause growing losses to America’s infrastructure and property as well as impede economic growth; and that the complex interactions within the nation’s natural resources, built and social systems are vulnerable to climate change in ways that are difficult to predict. It also discusses impacts on water availability; health; indigenous peoples; ecosystems; agriculture and food; infrastructure; oceans and coasts; and tourism and recreation. It notes that communities, governments and businesses are working to reduce risks and costs associated with climate change but notes that these efforts “do not yet approach the scale considered necessary to avoid substantial damages to the economy, environment and human health over the coming decades.” The report can be found here.

The cost of implementing codes and standards for building resilient homes in wildfire-prone lands is often cited as a barrier to adopting such regulations. This study compared existing codes and estimates to determine the additional cost of constructing a wildfire-resistant home vs. a standard one. It also considers the cost of retrofitting an existing home. It found that new homes can be built to resilient standards for roughly the same cost as a typical home. It also found that some elements in retrofitting an existing home, such as the roof and walls, can have a significant expense. The study, completed in partnership with the Insurance Institute for Business & Home Safety, can be found here.

France was ranked No. 1 among G20 nations for renewable energy investments in this annual ranking. The report evaluates policy and market factors that are important for attracting renewable energy investments. Countries are ranked by their long-term support for climate and renewable energy; whether their policies encourage private investors to support renewables; how prepared the country is to accept more renewable energy into their power grid; what status the renewable energy market holds; and the general investment conditions that facilitate investments in a country. European companies generally fared better than other regions, though Germany fell from the top ranking to No. 2. China, Japan, Canada and Brazil made improvements. Russia ranked last. The United States ranked ninth, down from seventh a year earlier. The entire report is here.

This research brief examines the use of potentially inappropriate medications (PIMs) The most commonly used PIMs are benzodiazepines, nonbenzodiazepine hypnotics, antidepressants and first-generation antihistamines. All have been linked to driving impairment. Their use is not unusual among older drivers, and some of these medications are known to impair driving ability. Overall 545 of 2,949 study participants with medication data (18.5 percent) used at least one PIM that should be avoided. White, female older drivers in urban areas were more likely to use PIMs than other study participants. The research brief can be found here.

The study compares hospital outpatient departments and ambulatory surgical centers for the cost of similar knee and shoulder surgeries in 18 states. The report also examined what factors might explain the difference in payment and looked at what overall payment trends were present in each. The report is free to WCRI members and available for purchase here.