June 16, 2022
What: Travelers is doing well and using its cash flow to invest heavily into tech. These investments in technology and AI are boosting overall customer experience and reducing its expense ratio.
Why it matters: Tech investment is on the rise across the industry, with carriers of all sizes shifting from fixed fee and legacy expenditures to SaaS. Carriers who pick SaaS partners well will be able to upgrade their customer experience, expand their digital offerings, and improve their product flexibility.
What: For the sixth year in a row, analysts are expecting an above-average number of storms, while the western United States remains in a severe drought. Compounded by the War in Ukraine and civil unrest in generally stable democracies, this upcoming summer could be quite the challenge for insurers.
Why it matters: These catastrophes are likely to raise the number and cost of claims across the industry. Insurers need to act fast to carefully deploy profit improvements and product differentiations. The expected rise in claims and premiums means that policyholders and agencies will be requoting, creating opportunities for insurers with strong customer experiences and ease of use. One way we expect insurers to iterate on their products and enhance their customer experiences is through partnerships, which can increase speed to market and provide product enhancements, all in one fell sweep.
What: Southern Fidelity Insurance, which has around 98,000 policies, became the first Florida carrier to lose its financial stability rating because of the low availability of good reinsurance programs in the state. In an effort to address this growing issue, Florida’s Governor signed legislation creating state-funded, lower-level reinsurance. This reinsurance only covers hurricane-related losses and does not cover secondary perils which have been problematic in Florida.
Key Quote: “Pressures remain for market participants, particularly for those struggling to fully place their reinsurance programs ahead of what is predicted to be another active hurricane season,” AM Best analysts wrote Friday.
Why it matters: Florida might be the canary in a coal mine if we’re not careful. We continue to see insolvencies and the rest of the industry should pay attention. It’s a bad time to be stuck in the market with no exit opportunity.
Read: Southern Fidelity Loses Rating; Heritage, People’s Trust Complete Re Programs
Dais Research Report
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