(by: Insurance Journal) What would happen to the auto insurance industry if automobile safety improves to the point that vehicle collisions become relics of the past? That’s the question explored by global consulting and research firm, Celent, in a new report that envisions a future of increasing emphasis on safety in the automobile industry and among government entities that leads to a massive drop off in auto insurance premium for U.S. property/casualty insurance companies. In its own introductory words, “A Scenario: The End of Auto Insurance — What Happens When There Are (Almost) No Accidents,” by Celent Senior Analyst Robert Light, “describes a provocative, but plausible, scenario for the not distant future of the US property/casualty market, and explores that scenario’s implications. “In that scenario, technology is widely deployed that radically reduces the frequency and severity of motor vehicle accidents. Consequently, the need for automobile insurance is substantially reduced — and insurers see a large reduction in their revenue as automobile insurance premiums drop.”
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Insurance sector shake-up looming
A major shake-up is looming in the insurance industry as the regulatory body plans to raise minimum capital requirements for the sector. The Insurance and Pension Commission (IPEC) said following recovery of the sector after the adoption of multiple currencies in 2009, plans were at an advanced stage to increase capital levels in a bid to boost confidence. Addressing delegates at a seminar on financial reporting for insurers in Zimbabwe on Tuesday, IPEC commissioner Manette Mpofu said new capitalisation levels may result in ownership changes. As at December 31 2011, the countrys short-term insurance industry had 26 registered direct short-term insurers and eight licenced re-insurers.
Geneva Association Reminds Federal Reserve Insurers Aren’t Banks
The thrust of the letter, as given in an accompanying summary, seeks to establish a dialogue with the Fed to review the special nature of the insurance industry that should be considered before rules that apply to the banking industry are also made applicable to the insurance industry. The letter urges the “Federal Reserve Board to allocate sufficient time to undertake an activities-based approach to develop any incremental regulations for covered insurance companies.” The main point, which the Association has substantially documented and disseminated, is simply that there is “no systemic risk from traditional insurance activities.” It points out that “banking activities were at the root of the financial crisis,” and that there is “widespread agreement among insurance regulators and international standard-setting bodies that traditional insurance activities have not led to systemic breakdowns or taxpayer bailouts, and showed great resilience throughout the financial crisis.”
Fitch on medical professional liability insurance underwriting performance
(Reuters) The medical professional liability insurance (MPLI) market remains one of the most profitable segments of the U.S. property/casualty industry, although a deeper look into the segment reveals a somewhat less positive performance, and operating challenges going forward according to a Fitch Ratings report. MPLI, a specialty segment that represents approximately 2% of the U.S. property and casualty (P&C) insurance industry’s written premiums, has posted significantly better underwriting results than other long tail commercial lines segments with an average calendar year combined ratio of 85.3% from 2007 – 2011. This outperformance is a function of more attractive competitive fundamentals in MPLI, as well as stable loss trends in recent years driven by declining claims frequency and the impact of litigation reforms in numerous states.
Insurers increasingly depend on health insurance
(Reuters) In a report published today, Standard & Poor’s Ratings Services said the introduction of mandatory health insurance in some Gulf Cooperation Council (GCC) countries, combined with low insurance penetration in other lines, has meant that health insurance has quickly emerged as the largest line of business in the region (see “Health Insurance Increasingly Defines The Fortunes Of Gulf-Based Insurance Companies”). In our view, managing health insurance properly will increasingly define success versus failure for regional insurance players. Over the next two to three years, Standard & Poor’s expects the growth in health insurance to outpace growth opportunities in other major lines of business.
AXA – 1Q 2012 Activity Indicators
“In the first quarter of 2012, we continued to focus on the delivery of our Ambition AXA initiatives. Thanks to the quality and diversification of our distribution network, we notably increased our top line in Protection & Health and Property & Casualty, those businesses which are less sensitive to financial markets”, commented Denis Duverne, Deputy CEO of AXA.
“In Life & Savings, our ongoing efforts to improve new business mix continued to bear fruit, with Protection & Health now representing nearly a half of new business volumes. This resulted in a further increase in new business margin to 25% in a lower interest rates environment.”
Insurance Industry Leaders Gather for 2012 E-Signature Summit
Silanis, the leader in enterprise electronic signature solutions with the largest e-signature deployments, is pleased to announce the first ever E-Signature Summit for Insurance, which will be held in New York City on Thursday, May 31, 2012. A leading analyst firm predicts that 85 percent of new insurance applications will be submitted electronically by end of 2012. This prediction is being fueled by customer demands for improved service in all sales channels, the proliferation of mobile devices like tablet PCs, and a very competitive financial market. Carriers are investing heavily in the technologies needed to ensure their customer and agent websites can provide a straight-through paperless process for new business. As a linchpin technology for enabling e-submissions, e-signatures will be the focus of this one-day summit as leading experts and carriers address the key business, legal and IT issues for consideration when selecting an enterprise e-signature solution. Sponsored by IBM and Silanis, this free event features an impressive lineup of speakers from:
Insurance companies to pay $1 billion to consumers, businesses
Consumers and businesses will save more than $1 billion from insurance company rebates, according to a recently released report. Sen. Jay Rockefeller, D-W.Va., chairman of the Senate Committee on Commerce, Science and Transportation, said in a news release that the savings comes from the minimum medical loss ration provision, also known as the 80/20 rule. That rule is considered one of the most important consumer protections in the Affordable Care Act, which encourages health companies to spend a larger portion of their customers’ premium dollars on care by requiring companies to pay rebates if they spend less than 80 percent of their premium dollars on health care services.
US: The election outcome will define the industry
With a number of seats up for grabs in the U.S. House of Representatives and Senate, the outcome of the upcoming election could have a major impact on insurance issues, BestWeek U.S./Canada says in its latest issue. BestWeek outlines the most significant races in a year that the Senate has 33 members up for re-election and the House is looking at between 50 and 75 of the races that should be competitive. ”This election, everything is at stake. You have a tight White House contest, the Senate could flip toward the Republicans, and while the pundits say it’s less likely the House will flip, they have been known to be wrong in the past,” Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, told BestWeek. “The insurance industry works well with both parties, but how these elections come out could affect how much defense or offense we have to play.”
Insurance companies need to survive too!
President Obama and the liberals like to shout about the unfairness of insurance companies not covering pre-existing conditions. Evidently, they have no idea that the insurance industry was built on the practice of not covering pre-existing conditions. I know – I spent 20 years in the insurance industry. They don’t seem to realize that the concept of health insurance cannot work if it doesn’t exclude pre-existing conditions. When inexperienced, arrogant ideologues like Mr. Obama come to office, they tear down the fabric of society and rip apart workable industries. Are we supposed to insure houses when they are already on fire or let cancer victims not pay for insurance until they are sick – and then pick up the tab for the remainder of their lives? If the newly afflicted didn’t pay for insurance before, how are we supposed to pay for their illnesses when they are ill? From what pool of money will we fund a cure?
Insurance You Can Live Without
Julie Baumann, who lives in the San Francisco Bay area, knows all too well that just because you have insurance, it doesn’t mean you are covered. After years of paying high annual premiums for pet insurance she filed a claim for surgery on her Bernese Mountain Dog. To her surprise, she was told the surgery was not covered and she would be stuck with the $6,000 bill. Ms. Baumann isn’t alone. Millions of consumers file claims every year against a variety of policies only to find the money spent on premiums was virtually thrown away. So, with offers of insurance for everything from your wedding day and your cat to your identity, what is worth your hard-earned cash and what’s not?
Where to buy Life Insurance
A growing number of employees are buying life insurance through work, according to insurance-industry association LIMRA. But going through your employer isn’t always the best policy. Employers typically get life-insurance plans at a group rate, which can translate into lower premiums for employees. Some companies provide free coverage, other times employees pay the full premium, in many cases it’s something in between. Often, you get a basic benefit amount free and have the option to buy additional coverage.Employees typically don’t have to get a physical or blood test.
Davenport University to Introduce Insurance Education Specialty
Responding to the growing need for new talent in the insurance and risk management industry, Davenport University is proud to introduce a new Risk Management and Insurance specialty within its Bachelor of Business Administration in Management program beginning in the fall of 2012. Farmers Insurance, which worked with Davenport to develop the curriculum, has also made a generous commitment to provide $10,000 for the next three years toward student scholarships in Davenport’s Insurance Education Specialty.
Emerging Insurance Technologies: Life, Annuities, and Pensions Industry Edition 2012
New technologies have provided great benefits over the years to insurers, enabling IT to provide expanded functionality, greater efficiencies, and increased performance. In some cases, technology changed the way insurers interact with customers, agents, and regulators. This report, the inaugural version of Emerging Insurance Technologies: Life, Annuities, and Pensions Industry Edition 2012, bridges the gap between business and technology. It examines the technologies and system features that are changing the face of the insurance industry and links them to their predominant business benefits. The report also measures how ready certain technology is for the insurance industry, and vice versa.
As weather gets biblical, insurers go missing
As weather disasters strike with more frequency, homeowners first get hit with the destruction or total loss of property. Many are then hit with the unexpected loss of homeowners insurance policies as insurance companies re-evaluate their financial liabilities. After a tornado ripped through Springfield, Massachusetts, last year, R. Paula Lazzari’s home was badly damaged. The retired teacher found broken windows, missing siding and a damaged roof. Her insurer offered to fund repairs for one broken window and some of the siding. It took nine months — and mediation services from an independent adjuster and the Massachusetts Division of Insurance — to get her bills paid, according to the parties involved.
Hopes that insurers’ deal marks a turning point for older drivers
Older motorists and travellers have long been the pariahs of the insurance industry, often being charged over the odds or even refused cover altogether, but they could find life a little easier following an announcement this week. Under an agreement which came into force on Friday, members of the Association of British Insurers (ABI) and the British Insurance Brokers’ Association (Biba) will automatically refer customers to an alternative provider or Biba’s “Find a Broker” service if they are unable to offer cover because of age restrictions on their range of products.
China to build up new insurance supervisory mechanisms
(Reuters) China will strengthen supervision of its insurance industry over the next three to five years to guarantee the ability of insurers to pay compensation, the official China Securities Journal reported on Monday. New mechanisms will strengthen insurers’ capital adequacy supervision, risk management and information disclosure to ensure they retain good financial condition and can pay claims on time, the newspaper said.
Why the insurance industry needs Obamacare to stay in business
If there is a group of people more anxious about how the Supreme Court will rule on the health care reform law than President Obama and the millions of Americans who are already benefiting from it, it is health insurance executives. Not only have their companies been spending millions of dollars implementing the parts of the law that pertains to them — and most of them do — but they also have been counting on the law as very possibly the only thing that can preserve the free market system of health insurance in this country. This is why it is so ironic that defenders of the free market are the most vocal critics of the law and the ones hoping most ardently that the Court will declare it unconstitutional.
AIG Targets China Drivers in $50 Billion Insurance Market
(Bloomberg). Soon-to-be-relaxed rules in China have firms including American International Group Inc. (AIG) and Allianz SE (ALV) eager to grab a bigger share of the $50 billion that the country’s drivers spend each year on auto insurance. Both insurers are making plans to offer more products as China lifts a ban on foreign companies selling mandatory policies for drivers. On a recent two-week trip, Kevin Goulding, the Shanghai-based head of Chartis China, AIG’s property- casualty business in the country, scouted four municipalities and provinces with a combined population of 500 million, as he weighs where to open the company’s next branch and lays plans to sell car coverage for the first time. “We’re definitely looking forward to moving into the auto market in China,” he said in a phone interview. “It’s an extremely large market and will also allow us to offer other products to consumers.”
Report: In 2012 Insurance Industry Focus is on the Customer
(Report by claimsjournal.com). If 2011 was the year of retrenchment, then 2012 is the year of the customer, finds PwC’s “Top Issues: The Insurance Industry in 2012.” Leading insurers are keenly focusing on improving the customer experience to differentiate themselves from competitors and expand their global market share. The report also covers other key areas of focus, including international regulatory developments in risk and capital management. Innovation is happening in all aspects of information, from capturing and interpreting to integrating and sharing. Innovation is enabling insurers to make better and smarter use of greater amounts of data, called “big data.” While personal lines carriers are further along in their use of technology, all insurance sectors have an opportunity to use big data and smart analytics, many for increasingly large and complex risks. In these instances, big data will be used not only to automate, but also to enhance underwriting processes, reduce cycle time, facilitate better pricing, improve loss control and better inform decision making related to customer acquisition and retention. “One of the largest challenges insurers will face in 2012 and beyond is capturing and interpreting data from a growing number of structured and unstructured sources, including but not limited to social media, policyholder behavior and telematics,” said Jamie Yoder, PwC’s US insurance advisory practice co-leader. “Insurers that apply advanced analytical techniques to harness the power of big data will be better able to understand their customers, tailor products to meet their needs, and enhance the overall customer experience,” Yoder said.
Fitch on U.S. title insurance companies
(Reuters) Fitch Ratings has issued a sector-specific special report describing the credit factors the agency uses to analyze the U.S. Title Insurance sector. These sector-specific credit factors supplement the master criteria ‘Insurance Rating Methodology’, dated Sept. 22, 2011, which details Fitch’s overarching approach to rating insurance companies and is available at ‘www.fitchratings.com’. Consistent with the master insurance criteria, companies in the U.S. Title Insurance sector are evaluated considering various qualitative and quantitative credit factors, including but not limited to: industry profile and operating environment, market position and size/scale, corporate governance, capitalization and leverage, financial performance and earnings, investments and liquidity, and reserve adequacy. In its new special report, Fitch has placed the various building blocks used to formulate its ratings within typical ranges to increase the transparency of its analysis.
