October 14, 2022
What: According to the J.D. Power 2022 US Home Insurance StudySM, the rapid rise in auto insurance premiums is causing many personal lines customers to unbundle their home and auto. This is a market that has historically been less sensitive to rate increases, but this recent spike is changing that.
Why it matters: Profit pressure is challenging the concept of the personal lines bundle which is where carriers have been competing for years. This sector has long been the one carriers rely on for good customer lifetime value because of it’s stability.
This is likely going to result in more churn for companies that have historically relied on bundling. Could be an interesting opening for new companies to break into these markets that have been locked up for some time.
What: Allstate CEO Tom Wilson says that higher loss costs have become “embedded in the system,” which means that auto premiums are going to be rising frequently to keep up with costs.
Why it matters: Allstate may be tipping their hand that they are pursuing creative product innovation to realize rate increases. For example, Wilson suggested he “also imagined a way of embedding automatic price increases triggered by severe weather into personal lines insurance coverage.”
Read: Auto Loss Costs Not Coming Down; Bigger Rate Hikes Ahead: Allstate CEO
What: 6 of the top 10 US homeowners Insurers have less than 1% of their written premium in Florida. These carriers have been significantly reducing their exposure in Florida for several years, but for Florida-only home insurers, Ian is clearly a loss event.
Why it matters: For these large carriers, this means they’ll still have to fight for rate increases with regulators. This could open the door for new types of insurance products like direct to consumer parametric insurance.
Read: Top U.S. Homeowners Insurers Minimally Exposed to Losses from Ian: Moody’s
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