August, 26 2021
Rate hikes and non-renewals in response to extreme weather
What: Ford, Lyft, and Argo AI are teaming up to launch self-driving cars in Miami this year. The vehicles will still have someone at the steering wheel for safety, but this initial test will be key in gathering real world data in advance of adding more cities next year.
Why it matters: Autonomous vehicles create a new litigation problem that is yet to be faced by the insurance industry: among the driver, the AI, the manufacturer and the operator, who will be responsible when something goes wrong?
As a parent, I would love to have an autonomous car. Constant focus is something that computers can do that we can’t and should mean enhanced safety on the road.
President Biden’s tax plan could cause significant premium hikes for everyone
What: One often overlooked part of President Biden’s tax plan is a tax increase on global reinsurance, which could have a knock-on effect of increasing insurance premiums across the board. The Made in America Tax Plan replaces BEAT with SHIELD, which introduces a global minimum tax rate. BEAT fell far short of expected tax revenue as insurers moved business around to avoid the new tax.
One market likely to be affected is the Florida homeowners’ policy market. Florida has the highest rates in the country for homeowners’ insurance, and about a third of written premiums use reinsurance.
Vaccine incentives shifting from carrots to sticks
What: While some companies are following in the footsteps of the US military and requiring vaccinations, other employers are considering charging unvaccinated people more for their health insurance.
Why it matters: Behavioral economics holds that incentive design is a huge part of managing behavior, creating a fascinating case study in how incentives are being structured around vaccines. It’s an interesting experiment in incentive design.
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