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May 5, 2022

Industry Challenge

Moderate Rate Increases for Commercial Insurance, Except for Cyber Coverage

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What: According to Marsh’s Global Insurance Market Index, global commercial insurance prices rose 11% in Q1. This is the 18th consecutive quarter of rising prices, but the increase has been moderate for most lines and regions. The most significant outlier is, of course, cyber, which saw an increase of 110% in the US for Q1. 

Why it matters: This is one of the most extreme cases of rate increases we’ve seen. Insurers using legacy systems will take a considerable amount of time to get this type of rate increase through. This is an example of a market shift that demands agility and the ability to quickly update insurance products in response to a fast-changing world. 

Read: Global Insurance Market Index 2022

Industry Challenge

Inflation and the Rising Costs of Claims

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What: This inflation cycle has been particularly tough on personal lines insurers because of where inflation has hit the hardest – the dramatically higher prices for cars (of all types), mechanical and home repair, and materials has significantly increased the severity of losses for personal insurance. Insurers are working to increase rates, but the process will take time. 

Why it matters: Personal lines results are in the gutter. The best way we’ve seen carriers mitigate these results is through product innovation and expanded segmentation. Regulators and/or IT systems often inhibit carriers’ ability to react, which underscores the need for carriers to carry flexible products. 

Read: Inflation and Insurance Are in a Complicated Relationship – WSJ

Industry Challenge

Tesla Insurance’s State-of-the-Art Collision Prevention

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What: Tesla insurance is focusing a lot of attention on collision prevention and the claims experience. On the prevention side, premiums are based on a mile-weighted average of daily Safety Scores over a 30 day period. Drivers receive feedback at the end of every trip on how their Safety Score changed. The same sensors used to provide the Safety Score are used to detect events, and Tesla aims to provide repairs extremely fast. 

“Aspirationally, it would be like a same-day repair of a collision, which is a night-and-day difference compared to sometimes having to wait for a month while insurance claims are settled and figured out, because Tesla is also doing collision repair,” Musk said.

Why it matters: With Tesla Insurance, there are no longer adjuster delays, slowdowns with bills of materials, price negotiation or repair shop hiccups. After an accident there is just an appointment with the nearest Tesla dealer. This cuts tremendous friction out of the claims process and looks to be an incredible upgrade. 

Read: Tesla Insurance Turning ‘Nightmare’ Claims Experience Into ‘Dream’: Musk

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