INSURANCE NEWS FLASH November 16, 2013
Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 8 Technology .......................................................................................................................... 12 Strategy .............................................................................................................................. 16
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Sales & Marketing J.D. Power: Customers Happier with Homeowner Claims Process November 15, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/15/jd-power-customers-happier-withhomeowner-claims-p Customers are becoming happier with the way insurers are handling property claims, shows results from a recent J.D. Power study of homeowners. Its findings are based on the 2014 Property Claims Satisfaction survey, which polled 1,740 homeowners insurance customers who filed a property claim after June 1, 2012. Customers rated satisfaction with the damage claim experience from first notice of loss through settlement and the repair process. J.D. Power says customers are more satisfied with industry service levels because they are receiving more accurate timelines of claim process lengths from insurers, who are also helping them avoid settlement negotiations—in fact, customer satisfaction increased by 17 points (on a 1,000 point scale) in the third quarter of 2013. “Insurers are doing a better job of setting claimant expectations of the time it will take to settle their claim, which is a significant contributor to overall satisfaction,” said Jeremy Bowler, senior director of the global insurance practice at J.D. Power. “Based on feedback from claimants, it is evident that insurers also are more consistently taking time to explain the settlement, which results in fewer claimants negotiating their settlement.” Overall claimant satisfaction increased to 848 in Wave 2 of the study, which gathered responses in Q3 2013, from 832 in Wave 1, which covered claims filed between April 2012 and June 2013. In Wave 2, 76 percent of customers said their insurer accurately estimated how long it would take to settle their claim, and 75 percent said they avoided a settlement negotiation–a three-and-four percent increase, respectively, from Wave 1 of the study. Satisfaction with agent first notice of loss dropped to 853 from 875 in Wave 1, but satisfaction with direct claims reporting via a call center, website or other electronic method improved by about three percent. Customers were also slightly happier with non-catastrophic damage claims in the 2013 study than in the 2012 study, a result of significantly higher scores in the estimation process, repair process and settlement factors.
Esurance Pioneers Online Homeowners Insurance Purchasing November 15, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/15/esurance-pioneers-online-homeownersinsurance-purc Esurance is now offering Wisconsin homeowners the option to purchase coverage directly over the internet, a first for the insurance industry.
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“Today, only 2 to 3 percent of U.S. homeowners insurance is purchased online,” said Esurance President and CEO Gary Tolman in a press release. “Much like the way Esurance pioneered car insurance online, making it quick and easy to quote and buy, we’ll change how consumers shop for and buy homeowners insurance.” Esurance’s online tool automatically works with property specialists to estimate reconstruction costs related to an individual home’s characteristics as well as the current cost of labor and materials in the homeowner’s neighborhood. Coverage includes the standard homeowners policies of structure protection, personal property protection, family liability protection, water backup coverage and additional living expenses, along with customizable options such as “eco” upgrades to Energy Star rated appliances and electronic data loss recovery. The program offers 12 types of premium discounts for those who provide their own appraisal/inspection report, or for customers who bundle their auto and homeowners policies. According to Steve Lekas, Esurance’s director of Homeowner Product and Actuarial Management, a lack of consistency between carriers catering to a variety of customer needs made it impossible to define homeowners risk efficiently enough without an agent’s help. However, “Consumers are becoming more and more familiar and comfortable shopping and buying online, and it is becoming something that people expect,” Lekas told PC360. “With these changes, the next step is for an insurance company, who really understands how to best help consumers shop and buy insurance online, to build that capability.” Esurance underwrites its own homeowners policies, as it does with auto insurance—the insurer chose to debut the program in Wisconsin because the state domiciles one of its underwriting companies, says Lenkas. Allstate purchased Esurance in late 2011 to revive its limp auto-insurance business that was losing customers’ attention to Progressive and Geico, which were wooing new business with direct-toconsumer online sales. Esurance has been growing since its acquisition, enjoying a steady incline in new policies and a 27 percent increase in net written premium between the third quarters of 2012 and 2013. However, Allstate’s homeowners policies in place decreased by about 3.2 percent even as its net written premiums increased by 5.5 percent since Q3 2012. Although only currently available in Wisconsin, online homeowners sales will be expanded within the U.S. In a previous news interview, Esurance president Tolman said the policy will not be offered in Florida and California because of high disaster risks.
Health tops middle class priorities in China, Taiwan and Hong Kong, says AIA November 11, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2306030/health-tops-middle-classpriorities-in-china-taiwan-and-hong-kong-says-aia The middle class in China, Taiwan and Hong Kong are placing health above wealth and career according to a survey from AIA.
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The AIA Survey on the Hopes and Aspirations of the Middle Class in Greater China, has found that 56% of respondents in Hong Kong, 69% of middle class respondents in Mainland China, and 62% in Taiwan cite being healthy as a goal, ahead of wealth or a successful career. Commenting on the survey findings in Hong Kong, Gordon Watson, regional chief executive, AIA, said: "One of the most interesting findings in this study is that, contrary to the common perception that monetary wealth and career success drives the middle class in Hong Kong, the majority of middle class respondents believe that attaining good health is the most important life goal". Health is the top-ranked life goal of the middle class in Hong Kong, (56%), as well as in Mainland China (69%) and Taiwan (62%). Almost one in two (45%) Hong Kong middle class cited "spending time with family" as the most important activity in life. Owning a home is a higher priority in Hong Kong (18%) than it is in Mainland China (3%) and Taiwan (6%). 94% of respondents in Hong Kong believe that their family's financial situation will improve or remain the same in the next five years. A majority in all three markets - Hong Kong (76%), Mainland China (84%) and Taiwan (71%) - feel financially secure. Across the markets, the majority (over 90%) of the middle class believe that luck plays a role in achieving financial security. Respondents in Hong Kong reported that to be considered financially secure means having total assets worth HK$15m ($2m), while they believe to be considered wealthy, HK$30m in total assets is required. Meanwhile, 50% of respondents in Hong Kong feel confident about saving enough for retirement; however the other half are worried about having sufficient savings for a comfortable retirement. Across all the three markets, among the respondents who currently do not have children but want them, achieving financial security is seen as a barrier to having children - Hong Kong (47%), Mainland China (33%) and Taiwan (59%). Across the board, children's education is prioritised over retirement savings. The study looked at: quality of life, financial security, retirement, and family and education. The survey of 1,501 self-identified middle class individuals across Mainland China, Hong Kong and Taiwan was commissioned by AIA, and was carried out by the international opinion research firm Penn Schoen and Berland in the second half of September 2013.
Over 170m low-income people using microinsurance in Asia-Pacific November 7, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2305450/over-170m-low-incomepeople-using-microinsurance-in-asia-pacific According to research by the Munich Re Foundation and GIZ, which assists the German government in sustainable development, the microinsurance sector in Asia-Pacific has reached 172m lives representing a 40% annual growth rate between 2010 and 2012.
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India is leading the market at over 100m, whilst Malaysia and Indonesia emerge as having the most vibrant microinsurance markets with a growth rate of 185% and over 100% respectively, over the same time period. However the microinsurance sector still covers less than 5% of the people living in Asia and Oceania. Craig Churchill, chair of the Microinsurance Network said: "When low-income people are unable to manage risk, they cannot break out of the cycle of poverty." Life insurance is the main risk for which people are covered (83m), followed by accident (77m), health (27m), agriculture (26m), and property (7m) insurance. In addition, over 1.6bn are estimated to be covered by subsidized schemes referred to as "social microinsurance" or social protection schemes. "Market-based microinsurance needs to be complemented by schemes with governmental involvement to increase outreach, especially in the field of agriculture and health. It is important that approaches based on insurance principles are being developed jointly, involving the insurance industry, regulators and client representatives, as well as donors," commented Dirk Reinhard, vice chairman of the Munich Re Foundation. Capacity development along the value chain is seen as a key factor for the sector going forward. Dr. Antonis Malagardis, programme director of the GIZ Programme 'Regulatory framework promotion of pro-poor insurance markets in Asia', said: "The capacity development strategy of RFPI Asia prioritises the development of trainers and experts on inclusive insurance regulation, particularly in key areas such as agriculture, disaster risk management, SMEs and Islamic insurance."
In 2014, Customer Will Be King, but Can Insurers' Systems Keep Up? November 5, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/05/in-2014-customer-will-be-king-but-caninsurers-sys Commercial-lines customers will exert more influence over the insurance-buying process over the next year, driving insurers to support real-time interactions, a new report says. In its latest report, “2014 Trends to Watch: Insurance,” Ovum says, “The insurance industry is at an inflection point between operating in a product-orientated marketplace and operating in a customer-orientated marketplace.” The analyst firm contends insurers see it as an imperative to embrace customer-centricity due to growing customer empowerment, the increasing ubiquity of mobile capabilities and minimal economic growth in developed countries. “In 2014, insurers will have to support real-time commercial interactions not only with customers, but also with prospects and sales channels,” says Ovum. “Insurance sales channels will expect insurers to provide them with the capabilities to create market awareness, generate business and service clients.”
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Barry Rabkin, principal analyst, Insurance Technology, Ovum, says in a statement, “The old saying that the ‘customer is king’ has never been more apparent in the insurance industry. However, to improve the level of customer focus, insurers’ legacy IT systems will need modernizing. Insurers need to integrate systems of record, such as core administration systems, with systems of engagement, such as customer channels.” Rabkin contends insurers should look at hybrid systems that combine the two systems, “such as customer relationship management (CRM) or customer experience management (CEM) systems.” Rabkin concludes, “It is imperative that insurers cross the inflection point between a product- and customer-orientated marketplace in 2014. However, they will have difficulties in accomplishing this with their decades-old underwriting and core administration legacy systems.”
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Finance Generali takes full control of Philippines, Thailand and Indonesian operations November 15, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2307128/generali-takes-full-controlof-asian-operations Generali has completed the acquisition from Kuok Group of the 40% interests held by the partner in Generali Asia, the holding company controlling the group's insurance operations in the Philippines, Thailand and Indonesia. Generali has paid â‚Ź40m for the stake. Generali Asia was established in 1999 as a regional partnership between Generali Group and Kuok Group, one of the leading Asian conglomerates. In Indonesia, Generali Asia operates in the life segment through a multi-channel distribution strategy. In the Philippines, the insurer operates in the life segments primarily through bancassurance. In Thailand, it operates in the property and casualty and life businesses segments through in the direct and broker channels. According to the insurer, overall premium income in the three markets increased by around 50% in the first nine months of 2013 compared with the corresponding period the previous year. Generali group CEO, Mario Greco, said: "The minority buy-out of Generali Asia allows the Group to simplify its operations in the region and it is in line with its strategy to have the full control of its core businesses. This investment is testament to our commitment to Asia, an area with exceptionally high growth prospects due to rising middle class and a young population. We are very thankful to the Kuok Group, which remains a solid and long-term partner in the area and whose support and effective cooperation has been key to build successful operations over the years." Across Asia Generali operates in eight countries (China, Hong Kong, India, Indonesia, Japan, the Philippines, Thailand and Vietnam) with premium income in 2012 of approximately â‚Ź1bn.
Zurich records 2% profit increase to $3.6bn in Q3 November 14, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2306854/zurich-records-2-profitincrease-to-usd36bn-in-q3 Zurich's business operating profit increased by 2% at the end of Q3 2013 compared to the same time last year. Zurich was buoyed by its performance in Europe where profits in general insurance rose from $445m at the end of the third quarter last year to $798m this year. However, its global corporate's profits dipped from $734m to $645m whilst its international markets division which includes Asia fell from $140m to $121m.
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General insurance business operating profit increased by 2%, as an improved underwriting result and expense management compensated for a continued reduction in investment income and losses from severe weather-related events and other large losses. The reported combined ratio improved by 1% to 95.3%. Overall premiums climbed 3% in GI to $21.8bn. Zurich CEO Martin Senn: "We delivered a solid operating profit in all core segments for the first nine months of 2013. Against the backdrop of a fragile global economic recovery and persisting low interest rates, we remained focused on our strategy, growing our business in emerging markets while delivering a resilient performance in mature markets." The results come in a trying period for Zurich which has included the suicide of its chief financial officer Pierre Wauthier and its decision to restucture its operations in the Middle East. Global life profitability continued to improve, as a growing contribution from Zurich Santander offset a decrease in other regions while Europe was largely flat. Farmers business operating profit increased, driven by an improved underwriting result at Farmers Re. Zurich said it had preserved its strong capital position with shareholders' equity at $32.1bn and the solvency position, as measured under the Swiss Solvency Test, further strengthened in the first half of 2013.
Willis: Q3 2013 Cat Bond Issuance at Highest Rate in 15 years November 6, 2013 | Property Casualty 360 Htt p://www.propertycasualty360.com/2013/11/06/willis-q3-2013-cat-bond-issuance-at-highestrate-i The third quarter of 2013 saw $1.4 billion of non-life catastrophe bond capacity issued through seven bonds, in comparison with $0.5 billion issued through three bonds in the third quarter of 2012, according to Willis Capital Markets & Advisory (WCMA), part of Willis Group Holdings (NYSE: WSH), the global risk advisor, insurance and reinsurance broker. Third quarter 2013 catastrophe bond issuance was approximately three times higher than the five year average and was the highest on record since 1998, according to WCMA in its latest ‘Insurance Linked Securities’ (ILS) report. Bill Dubinsky, Head of ILS at WCMA, said: “If fourth quarter issuance remains at a similar level to that of recent years it will be a record year for ILS issuance, surpassing the 2007 record. Outstanding capacity has now grown in each of the past five years, with the currently outstanding capacity of $17.3 billion, representing an all-time high.” Elsewhere in the report, WCMA explores how some traditional reinsurers are responding to the influx of capital into the reinsurance market, by managing increasing amounts of investor capital in funds and sidecars, as well as sponsoring deals themselves. Dubinsky added: “Some investors are encouraging more catastrophe bond issuance so that they can continue to fulfil mandates for liquid investments. Other investors are chasing the illiquidity in collateralised reinsurance as a mechanism to protect themselves from the ruthless price pressure in a well run syndication process.”
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The report also contains an interview with Dr Andreas Müller, Head of Origination, Distribution and ILS investments at Munich Re’s Risk Trading Unit.
Upward Trend in Commercial Rates Lost Steam in October; Personal Lines Up 3% November 6, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/06/upward-trend-in-commercial-rates-loststeam-in-oct The composite rate for October was plus 4 percent as compared to plus 5 percent in September. Several significant adjustments were recorded in October. Small accounts and commercial property rates decreased from plus 6 percent to plus 4 percent.. Business owners’ policies (BOP) rates decreased from plus 5 percent to plus 3 percent. The largest downward adjustment was in general liability coverage, which was down from plus 6 percent to plus 3 percent. The market adjustments drew these comments from MarketScout’s CEO, Richard Kerr, “The upward trajectory of rates certainly lost some steam in October. The general liability results are significant because this coverage is offered by a large percentage of both the admitted and non-admitted marketplace. We will watch closely to see if more aggressive pricing creeps into other lines of coverage through the end of the year.” Five coverages measured rate reductions: property, BOP, general liability, D&O and EPLI. Commercial auto was the only coverage with a rate increase at plus 6 percent as compared to plus 5 percent the month before. By industry class, contracting and habitational rates were lower than the preceding month. Rates for accounts measured by size all remained the same as posted for the prior month with one notable exception. Small accounts ($0 to $25,000 premium) moderated from plus 6 percent to plus 4 percent. The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout's analysis of market conditions. These surveys help to further corroborate MarketScout's actual findings, mathematically driven by new and renewal placements across the United States. PERSONAL LINES As the 2013 hurricane season comes to an end, US personal lines insurers are beginning to relax pricing. Homes under $1,000,000 and automobile exposures were assessed lower rate increases in October as the overall rate for October was plus 3 percent compared to plus 4 percent in September. Kerr says, "Homeowners and auto coverages on traditional accounts are enjoying premium reductions largely due to little catastrophe activity, but the high value personal lines market actually assessed a month on month rate increase on their insureds. We expect the difference in pricing among traditional vs. high value accounts is due to the fact that high-net-worth insurers provide significantly broader coverages, which ultimately result in more claims. Many of these type of claims would not be covered by traditional markets. Thus, the need for a little higher rate."
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NAPCO Study Reveals Flat Pricing Trends November 6, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/05/napco-study-reveals-flat-pricing-trends Despite a well-capitalized insurance market, the price of property‐catastrophe insurance is surprisingly flat as insurers resist competitive pressure, maintain underwriting discipline and offer lower prices only to select accounts. This is according to the fall 2013 issue of the biannual report State of the Market: NAPCO Property Catastrophe Insights from wholesale insurance broker NAPCO. Combining broker insight and analysis of property-catastrophe indicators, this report examines industry performance, catastrophe losses and the outlook for the end of 2013 and beginning of 2014. Key findings include: •
Despite $600 million in policyholders’ surplus, insurers are only lowering prices for select accounts with good loss histories—not offering across the board discounts.
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Insurers are maintaining underwriting discipline and resisting pressure to underprice accounts because of the influence of catastrophe models, low interest rates, increased accountability from ratings agencies and other factors.
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Low catastrophe losses have helped insurers report very strong results for the first quarter of 2013, with a 43 percent increase in net income to $24.5 billion.
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Frame habitational market still struggles with prices spiking and insurers exiting market.
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Hailstorm claims were up 84 percent in 2012, so insurers are imposing percentage deductibles for Midwest wind and hail coverage.
“A combination of trends appears to be leading to flatter insurance cycles and we are cautioning buyers to temper expectations about lower prices,” said David Pagoumian (pictured), CEO/President of NAPCO. “Rather than responding to market spikes and dips, insurers are considering the individual merits of each account. Broad downward pressure on rates is inconsistent with our experience.” This smoothing out of market cycles is traceable to a few trends, which the report highlights in detail. Catastrophe models are getting better a predicting large losses, so rating agencies have pressured insurers to avoid discounting too steeply. At the same time, insurers cannot raise prices when major incidents—like Hurricane Sandy—fail to impact the well-capitalized market.
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Technology Tinkoff takes Guidewire software to Russia November 14, 2013 | Insurance and Technology http://www.insuranceinsight.com/insurance-insight/news/2306902/tinkoff-takes-guidewiresoftware-to-russia Direct-to-consumer insurer Tinkoff Online Insurance has chosen Guidewire Software’s Guidewire Insurance Suite as its platform for underwriting, rating and policy administration, claims management and billing. Commenting on the company's decision, Tinkoff's chief information officer Sergey Konyukhov, said: "We have selected Guidewire Insurance Suite because its common technology platform and applications are the most suited for our tasks and long-term goals. "We look forward to leveraging the features and functionality of Insurance Suite and are confident that this is the ideal choice for our newly launched direct online operation." Tinkoff's chief operating officer, Fedor Voronin, continued: "We were also impressed with Guidewire's track record of implementation success with insurers around the world and look forward to the enhanced customer service capabilities InsuranceSuite will bring that will enable us to provide our customers with superior services. We believe our customers will benefit from the winning combination of the established best practices in business processes that InsuranceSuite can provide and our own developments". Keith Stonewell managing director EMEA, Guidewire Software, said: "We are very pleased to welcome Tinkoff Online Insurance as our first Guidewire Insurance Suite customer in Russia. We are excited to expand our presence in Russia in this way, and we are looking forward to working with Tinkoff Online Insurance and helping them make their project a success."
Telefónica partnership offers first telematics product in Germany November 11, 2013 | Insurance and Technology http://www.insuranceinsight.com/insurance-insight/news/2306246/telef-nica-partnership-offersfirst-telematics-product-in-germany Telefónica has partnered with Sparkassen Direktversicherung to bring the first insurance telematics product to Germany from this month. Customers who use the service will have a telematics box installed in their car which will automatically emergency services in the event of an accident, provide feedback on driver behaviour, and provide a car tracking service in the event the vehicle is stolen. Carlos Morales, m2m director at Telefónica Digital, said: “We are seeing rapid growth in this market across Europe as consumers recognize the benefits of telematics in helping them to save money on their insurance premiums.”
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“Through partnerships like this we can work together with the insurance industry to help them leverage the significant benefits this technology can bring to their businesses,” Morales said. The product is based on Telefónica’s insurance telematics service which was introduced in Germany earlier this year. There will be a range of premiums available on the product.
First Chinese online insurer launches in Shanghai November 8, 2013 | Insurance and Technology http://www.insuranceinsight.com/insurance-insight/news/2305751/first-online-insurer-in-chinalaunches-in-shanghai Zhong'an Online Property insurance has launched as the first online insurance company in China. Zhong'An will provide insurance raning from property and cargo transportation with all sales and claims settled on the internet. In addition to insurance, it will provide other "customised services" for internet enterprises, platforms and individuals. Based in Shanghai, the company has capital of 1bn yuan ($164m). The company's shareholders include e-commerce company Alibaba, insurer Ping An and internet firm Tencent.
More Than Half of Insurers Plan Core System Replacements: Study November 8, 2013 | Insurance and Technology http://www.insurancetech.com/policy-administration/more-than-half-of-insurers-plan-coresys/240163640 Despite heavy investments in core legacy replacement initiatives throughout the past decade, P&C and Group Life carriers continue to depend on in-house developed systems, according to theUS Insurance Market Core Systems Research. The study concluded that challenges presented by older systems are motivating most companies to augment their core systems within the next 12 to 18 months. The research was conducted by Insurance Global Operations (IGO), a provider of insurance core systems. A total of 123 P&C carriers and 77 Group Life carriers participated in phone interviews to answer questions pertaining to the ages of their existing claims and policy administration systems, satisfaction levels, organizational and system challenges, and planned initiatives. IGO surveyed both groups to confirm its assumption that satisfaction levels, challenges and future plans were similar between the two market segments despite their differences in existing core systems and functionality needs. [Looking to replace your core system? Take our Crash Course: 4 Core System Replacement Strategies. ]
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More than three-quarters of Group Life carriers reported their core systems as homegrown, compared with slightly more than half of P&C carriers. More than half of total respondents cited legacy systems as their top core system challenge, followed by integration and scalability/flexibility problems. On an A to F grading scale, more than 40% of respondents rated their satisfaction with their current system as a “C” or lower. Old technology is likely the culprit behind system problems. 63% of respondents have had the same core system for at least 11 years, with 18% reporting systems older than 25 years. Given the widespread dissatisfaction, major technological changes are in store for P&C and Group Life carriers. Over the next year, 40 companies will invest in new or replacement policy systems, 35 will obtain new or replacement claims systems, and 11 will implement new end-to-end core processing systems. These changes indicate the beginning of a major industry shift away from in-house core systems. “As satisfaction levels with legacy systems continue to decline and the industry confidence continues to grow relative to new and modern core processing systems, we expect to see an accelerated shift from the old to the new,” explained Didier Lamour, IGO’s US CEO
Supersize Data and Analytics to Improve Underwriting Results November 6, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/06/supersize-data-and-analytics-to-improveunderwriti Property and casualty insurers have always masterfully commanded data and analytics in the daily course of their operations. Information, after all, is the cornerstone in building a successful business which must simultaneously identify real risks faced by clientele and profitably insure against them. However, that is not to say that existing operational analytics are enough to improve underwriting results and create new revenue streams in the face of a tough economic climate, increased competition, shifting regulations, and lagging organic growth. For obstacles this challenging, property and casualty brokers must supersize their data and their analytics to overcome them. Supersizing the effort is commonly referred to in technology circles as “big data.” The moniker is a bit misleading as this new line of analytics and data use has less to do with the size of the data than it does with the depth, breadth and precision of the data mining. And if there is anything of top importance to P&C brokers, it is precision in the analytical results. It all starts with analyzing all existing data, not just in-house data and not just slices of data but the whole kit-and-caboodle, in new and more thorough ways. “US property/casualty insurers have access to a rapidly expanding volume of data from transactions, claim histories, social media connections, internet searches and GPS-type devices,” according to an Ernst & Young report on the industry titled “2013 US property/casualty insurance outlook.” “A competitive advantage exists for those insurers that are capable of capturing and analyzing this wide-ranging data, integrating it with existing data and thereby developing new views of the business that guide innovative approaches,” the report states. “Insurers have the opportunity to integrate and leverage these data capabilities across the entire value chain, from distribution and underwriting to customer service and claims.”
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One example of how increased and better data coupled with more powerful and real-time analytics can change the P&C profit picture is vehicle telematics. From readily available data streams provided by third parties such as OnStar and BMW Connected Drive to insurers’ own telematic tracking boxes such as Progressive’s Snapbox and Allstate’s Drivewise, real-time machine data renders the most accurate risk assessment based on actual user behavior. And it does so in real-time and continuously. ABI Research said subscriptions for driving-monitoring devices are expected to grow from nearly 6 million at the end of 2013 to 107 million in 2018. That is an indicator of a developing and very serious competitive edge for those insurers who are collecting and using the resulting data. But vehicle telematics is only the tip of the iceberg in the rich data P&C insurers can now access, analyze and use in myriad profit-building ways. “Insurers are likely to experiment with product design, led by the pioneers in pay-as-you-go telematics,” according to a Deloitte P&C industry outlook report. “Some will invest in predictive modeling capabilities to conceive new lines of business and products that cover emerging risks. Services can be enriched with mobile and online capabilities that take a customer across the insurance cycle for real-time sales, monitoring and service.” “Carriers should begin to benefit from ever more advanced analytics, as they transform existing processes and technology to achieve a 360-degree view of each customer,” the Deloitte report states. “Those that accomplish this innovative strategy are more likely to realize competitive advantages from cross-selling and subsequently attain the 'stickiness' that carriers strive for in customer retention. Advanced analytics can help micro-targeting of segments and facilitate crossselling opportunities. It will also significantly improve the accuracy of fraud detection through realtime analysis of structured and unstructured data.” P&C brokers too need to use big data tools to get a 360 degree view of customers in order to crosssell and retain existing customers, increase referrals, and efficiently and effectively find new prospects. New business user data desktop tools are invaluable in aiding this work at the agent level. “Data literacy throughout the organization is of utmost importance to a company’s ultimate success,” said Tony Salvador, researcher and sociologist at Intel.
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Strategy Solvency II on track after Omnibus II deal reached November 14, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2306884/solvency-ii-on-track-afteromnibus-ii-deal-reached An agreement on Solvency II has been reached by the trialogue parties of the European union, putting an end to years of political wrangling. In crunch talks on Wednesday evening, negotiators from the European Parliament , EU Commission and the Lithuanian Council agreed on a deal on the Omnibus II Directive governing elements, including the handling of long-term insurance liabilities. According to official rapporteur Burhard Balz, the terms agreed mean "Comprehensive rules will remain manageable even for small and medium-sized insurers". There will be "exceptions for small businesses to ensure that the reporting burden is not out of hand", including "exceptions include reporting during the year and the asset -by -asset reporting", he added. "Solvency II, the risk-based capital requirements to ensure in insurance with the newly agreed improvements Solvency II can start at last," Balz added. Insurance Europe welcomed the deal but said Europe's insurance now faced an "ambitious timetable" to meet the 2016 start date. Insurance Europe president, Sergio Balbinot said: "It was important for Omnibus II - which updates the Solvency II Directive of 2009 - to be finalised now, as a great deal of work remains to be done on the technical details of the new regime before insurers and supervisors can be ready to apply it from the start of 2016. "While the compromise reached between the institutions on Omnibus II is not the ideal solution the insurance industry would have wished for in terms of correctly reflecting insurers' long-term business and low exposure to market volatility, we do believe it is a workable base from which to develop the technical details of the new regulatory regime," Balbinot added.
Life insurance sector robust in Singapore November 11, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2306024/life-insurance-sector-robustin-singapore The total amount of new life insurance premiums increased 27% in the first nine months of 2013 compared to the same period last year.
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Total new premiums up until the end of September were S$2bn ($1.6bn) according the Life Insurance Association of Singapore. Each quarter this year has seen an increase in sales. Khoo Kah Siand, president, Life Insurance Association said: "We've seen three straight quarters of growth this year. Growth in both annual premium and single premium products is indicative of encouraging market sentiment and strong consumer confidence in life insurance."
Qatar bullish on Asian reinsurance market November 7, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2305447/qatar-bullish-on-asianreinsurance-market The 1st Asia Reinsurance Barometer, published by the Qatar Financial Centre Authority, finds that the region's reinsurance markets are "still bustling with confidence", although "the outlook on pricing and profitability for the next twelve months is slightly waning." Asia's strong economic growth is seen as the market's key attraction. Reinsurance exposure and premium growth is expected to outpace regional gross domestic product growth driven by an accumulation of insurable assets in catastrophe exposed areas and low penetration rates. Based on interviews with senior reinsurance executives and intermediaries operating in the region, the Asia Reinsurance Barometer examines the current and near-term market opportunities, challenges and key trends in the $30bn Asian general reinsurance market. The executives polled see the region's economic and insurance growth momentum as its "most relevant strength". 96% of respondents expect a further increase in reinsurance capacity (supply) over the next 12 months which could see margins coming under additional pressure. 69% of polled executives expect retention levels, the amount of risk retained by primary insurers, to increase over the next 12 months, mainly due to mounting pressure from shareholders and ratings agencies to retain a higher portion of profitable business. 62% of survey participants believe that reinsurance prices will decline over the next year. Axccording to the survey, the high catastrophe losses in 2011, such as the Thai floods, only had a limited and short-lived impact on prices as capacity was quickly replenished. Shashank Srivastava, CEO and board member of the QFC Authority said: "Asia is one of the fastest growing reinsurance markets in the world and a strategic priority for any aspiring international reinsurer. Given the ever-closer economic ties between Qatar and Asia, it was only natural for the QFC Authority to extend its proven Barometer survey to the Asian reinsurance marketplace."
Towers Watson Sells Reinsurance Business for $250M November 6, 2013 | Property Casualty 360 http://www.propertycasualty360.com/2013/11/06/towers-watson-sells-reinsurance-business-for250m Towers Watson & Co. said Wednesday that it has completed the sale of its reinsurance brokerage business to Jardine Lloyd Thompson Group PLC for $250 million but plans to continue working with its insurance company clients.
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The New York-based human resources and risk management consultant plans to continue offering risk consulting, software, investment and HR services to insurers.
JLT expands reach with Dutch and Middle East acquisitions November 4, 2013 | Insurance Insights http://www.insuranceinsight.com/insurance-insight/news/2304674/jlt-expands-reach-withdutch-and-middle-east-acquisitions JLT has acquired a marine specialty broker based in the Netherlands and invested in a Dubai-based broker in a bid to expand its international reach. JLT has acquired Dutch broker IRS, which provides insurance broking services to Marine and Energy industries such as shipping, shipbuilding, on and offshore construction, contracting dredging and land reclamation. The business will be rebranded in due course and will become part of JLT Specialty, reporting to Henrik Ryden, CEO of JLT Nordic. Ryden said: "IRS's reputation as a professional and highly skilled organization, with deep knowledge of the maritime sector and a client-first approach, makes this an excellent cultural and business fit. This is an exciting acquisition for JLT as it not only offers the opportunity to strengthen our leading specialty marine capabilities but also to develop JLT's wider offering in the Dutch market." JLT's investment in Dubai-based broker Insure Direct will provide a platform to accelerate the broker's strategy of building its international reach and relevance in a region where there is growing demand for its specialist expertise in areas such as construction, infrastructure, telecoms, agribusiness, aviation, healthcare, employee benefits, energy and marine. Insure Direct's operations in Dubai, Bahrain and Qatar will be rebranded in due course. Kenneth Maw, president and CEO of Insure Direct, said: "This partnership will allow us to serve our existing clients even better as there is an excellent cultural and commercial alignment between the two businesses. Since its launch in 2000, Insure Direct has implemented a market-sensitive business development strategy that delivers innovative, cost-effective services to its client base." Peregrine Towneley, divisional managing director, JLT Specialty Middle East and North Africa, said: "This deal is the latest step in JLT's strategy of expanding its specialty-based international reach as well as providing local and regionally headquartered businesses with a world class choice of insurance adviser. "It also shows our commitment to a region in which insurance penetration and awareness is growing and where capital is increasingly being attracted. The United Arab Emirates also provides a strategic gateway for investment into North and East Africa and positions JLT well for future growth in the region." Both transactions are pending regulatory approval.
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