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Shaping Tomorrow's Business Landscape
Essential Updates on Insurance: Insights, Trends and History of Fire Insurance
Hello insurance execs in M&A and beyond!
Insurance 150 is a newsletter serving insights to executives in the insurance industry, with a mission to help you do more deals better.
In this issue, you can find:
📚 Data Dive
Property Insurance Trends: Navigating a Changing Landscape
As property insurance rates in the USA gradually slow down, the global market is undergoing a profound transformation driven by economic, technological, and environmental changes. This shift is fueled by solid underwriting practices and a stable reinsurance market.
Key Topics:
Insurance rates have decreased by 2% due to strong underwriting, impressive financial results, and stability in the reinsurance market. These factors enhance capacity and improve offerings, making the market more favourable for policyholders.
Secondary perils are contributing to $10 billion in losses per event, emphasising the need for stakeholders to adapt their risk strategies accordingly.
By 2025, 99% of insurers will upgrade to AI and ML technologies, revolutionizing customer interactions and claims processing.
The full article breaks down the latest trends and what they mean for property stakeholders. Catch the full breakdown here:
📈 Trend of the week
The Rise of Usage-Based Insurance
According to Markets and Markets, Global Usage-Based Insurance (UBI) market is projected to grow from $30.6 billion in 2023 to $80.7 billion in 2028E (+164%), at a CAGR of ~21.4%.
Sub-segment Deep Dive: The Rise of Usage-Based Insurance for On-Demand Marketplaces
On-demand marketplaces like Uber and Airbnb have transformed how consumers access services, driving the need for flexible insurance solutions such as Usage-Based Insurance (UBI). UBI, or pay-as-you-go insurance, adjusts premiums based on actual use rather than fixed rates, catering to the unpredictable nature of gig work. Enabled by advancements in technology, such as telematics and IoT, UBI offers cost savings, flexibility, and personalized coverage for gig workers, enhancing their participation in the gig economy. It also boosts trust and safety within on-demand platforms and provides a competitive advantage for marketplace operators. However, challenges such as data privacy, consumer awareness, and regulatory compliance remain. As the gig economy grows, UBI is set to play a crucial role in shaping the future of work and insurance.
Source: Bunker
💻 Insurtech Insight
How GenAI is Impacting the Insurtech Space
Insurers increasingly use AI to manage risks and costs linked to climate change, offering data-driven insights to prepare communities for potential disasters and making insurance more accessible in high-risk areas.
Chatbots improve efficiency by streamlining claims processing, providing adjusters with timely information, and aiding in rapid data collection.
Prediction and Prevention: AI analytics predict claims surges based on weather trends and provide policyholders with data-informed recommendations to prepare for emergencies.
Marketing: Generative AI enables better customer segmentation by identifying patterns, allowing insurers to target customers more efficiently.
Fraud Detection: AI models use synthetic data to enhance fraud detection by training on a more extensive dataset of atypical claims.
An example is Better view’s "Roof Age AI," which accurately calculates a roof's age, reducing $1 billion in annual lost premiums due to incorrect estimates and revealing overlooked risks like structural weaknesses and environmental damage.
⌚ This Day in History
How The Fire of 1666 Changed The Insurance Industry
On September 2, 1666, a devastating fire erupted in London, quickly spreading due to strong winds and destroying 80% of the city. Initially, foreigners and Catholics were wrongfully blamed for the blaze, but it was eventually found to have begun by accident in a bakery on Pudding Lane. This calamity prompted major improvements in fire safety, such as the formation of fire brigades, the introduction of fire codes, and the installation of fire hydrants.
Following the destruction, Nicholas Bardon, a physician in London, established the first fire insurance company, providing coverage against future fires and deploying a private fire brigade to safeguard the properties of those insured. This development signified the inception of the modern fire insurance industry, meeting the increased demand for protection following the disaster.
“Insurance always looks easier than it is.”
-Warren Buffet