On May 18 the Insurance Information Institute (Triple-I) announced
the launch of the Future of American
Insurance & Reinsurance (FAIR) campaign. FAIR will focus on ensuring the
insurance industry is able to sustain its longstanding role as the country’s
backbone of economic growth and stability.
FAIR is being set into motion as the country seeks a pathway
to economic recovery in the wake of the COVID-19 pandemic. As communities
reopen and restart, insurers will play a critical role in the process,
continuing to provide financial protection for the millions of Americans who
depend on them for indemnification from risks they rightfully insured. Yet the
industry is threatened with growing calls to retroactively alter insurance
policies, cover the economic cost of widespread closures, and adjust workers’
compensation criteria, among other new developments.
Sean Kevelighan
“FAIR was created to safeguard the ability of the
insurance industry to support its customers at a time when policymakers, the
business community, and the general public are searching for solutions to our
ongoing economic turmoil. And while we recognize the need for financial relief
is severe, any attempts to make insurers retroactively responsible for a global
pandemic puts the solvency of many insurers at risk,” said Sean
Kevelighan, CEO, Triple-I.
“While the insurance industry has been doing its part
to step up and support their communities in this time of crisis, pandemics are
fundamentally uninsurable events. The federal government remains the only
entity with the financial resources to help businesses recover from a systemic
event of this magnitude. With the support of the public sector and the
innovation of groups like insurers in the private sector, we can come together
to work toward recovering from this catastrophe and build a more resilient
future,” he added.
Insurance carriers are an integral part of local communities
across the country, employing over 2.7 million Americans and contributing
nearly $565 billion to the nation’s Gross Domestic Product (GDP) in 2018. The
industry has cumulatively offered consumers more than $10 billion in premium
relief on auto insurance this spring and made over $220 million in charitable
donations to COVID-19-related causes.
FAIR will serve as a go-to educational resource for the
media, business community, and broader public in the coming weeks and will
actively engage in a variety of insurance and COVID-19-related developments
across America.
For more information visit fairinsure.org and follow @FAIRInsure on
Twitter.
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry. This month Kris Maccini, director, social media, Triple-I, interviewed Demetrius Gray, Founder & CEO of WeatherCheck.
WeatherCheck, an insurtech that analyzes
weather data to help insurers predict severe weather impact to properties, was
a finalist in 2019’s Resiliency Innovation Challenge.
Demetrius shared insights for building and growing his innovative business, and how he’s advising on severe weather prep amid the pandemic.
Demetrius Gray
Name: Demetrius Gray
Current
Role: Founder
& CEO
Years
at WeatherCheck:
3.5
Tell
us about WeatherCheck? What led you to found this company and build your career
in insurance?
I
was a storm contractor. I chased hailstorms across the continental United
States. Most of my work was around understanding insurance losses, and it gave
me an intimate knowledge, which I used to create WeatherCheck. While there are
numerous weather-related sources, there wasn’t a great place to assess whether
something was damaged or not. For example, would an event at a particular
property rise to the level that the insured should file a claim?
The
insurance industry today is already thinking about creating efficiencies in the
claims process. We allow property owners to sign up on WeatherCheck, type in
any address in the country, and it exposes severe weather loss associated with
that property. We work from the premise that informed people make informed decisions.
At our core, WeatherCheck works to give people quality information so that they
can make the right decision at the right time.
We’re
in the middle of a significant global catastrophe. How has this impacted your
business and conversations around severe weather?
When
the shutdown started happening [throughout the stay at home orders], we had
conversations with emergency managers around the country on what does emergency
management look like for people at home. Normally, they would be at their office
and those structures are built and fortified better than the average
single-family home in the country. What we have seen is an increase in overall
hazard-related deaths this year. The 2020 tornado season has killed more people
than it has in the past few years because people are sheltering in place at
home and risk is greater. We are preparing for these insights now, and we
expect to see even greater risks heading into summer heat waves.
There
is also an infinite question about the current infrastructure. Normally, people
are placed into shelters post event, but that infrastructure has been displaced
largely because the volunteers have been displaced. The inverse of that
conversation is that the risk has been shifted to commercial enterprises and
hotels. If the hotels are closed, then it’s where do we shelter people who have
been displaced? We’re encouraging community partners to have conversations with
stakeholders around planning, including reopening hotels for evacuations
quickly.
Over
the next year, what is top of mind as you grow your business?
Partnerships
are important. We have been working with partners across all sectors to
continue to grow the product itself. How do we help individuals who don’t
necessarily understand their risks or the policies that they’ve purchased to
get what they need? The way we’ll do that well over the next 12-24 months is by
partnering with stakeholders who also have interest in that same asset. Whether
that’s mortgage companies, cities, or banks–that’s where we’ll be focused while
continuing to represent the interests of the insurers.
What
setbacks have you faced in building your business and how did you move past
them?
We’re
the only black-owned meteorology company in the entire country. You get a whole
lot more ‘no’s’ than ‘yes’s’ and those answers are based on unconscious biases.
We had to be very honest with ourselves about what are bias
characteristics–whether it’s race, gender, location–and we had to decide in the
business plan how we were going to overcome those biases. For us, it meant that
maybe venture capital (VC) wasn’t going to be a strong path for us because the
data doesn’t prove out that they would invest in a woman or minority-run
company. We built a profitable business with strategy based on data and that
also influenced what the product looked like.
Through
this process, we decided to go direct to policyholders. The data showed us that
policyholders are largely unbiased and that they want what they want when they
want it. If you have what they want, they will forgo internal biases to make
their buying decisions. By focusing on the data and taking out the emotion, it
allowed us to see viable prospects up front.
What
are your goals for the future in terms of where you want to take your career
and your business?
In
the future, I could see WeatherCheck offering other products and services to
get the insured at a place of homeostasis that is far better than what it is
today. If we look at the number of individuals who are underinsured for flood
or underinsured for fire–the system really sits at the nexus of being able to
drive some of that. We’ll probably see some unique boutique offerings come out
of selling new insurance products geared at solving those challenges. We’ll be
driving better data to continue to inform decisions. We’d like to empower
agents and brokers throughout the country to do an even better job of keeping
the insured better informed. Agents and brokers will play an impactful role in
continuing to drive value. It is very personal when people have a loss from an
event and that personal pipeline is a far better approach than a chatbot or AI.
On May 14 the Insurance Information Institute (Triple-I), co-hosted a
webinar with ResilientH20 Partners that focused on managing
extreme weather events in the midst of the COVID-19 pandemic. The panelists discussed
the changing role of stakeholders across the private sector, governments and
non-profit/NGOs.
The panelists drew from their backgrounds across government, business and insurance to discuss the immediate challenges stemming from the COVID-19 pandemic, the downturn in the economy, and near-term flood and storm threats.
Dr. Michel Léonard,
Vice President & Senior Economist, Triple-I
Richard Seline,
Managing Director, ResilientH20 Partners
Panelists:
Dr. Daniel Kaniewski,
Managing Director, Public Sector Innovation, Marsh & McLennan
Jeff Moseley, CEO,
Texas Association of Business
Katie Sabo, State and
Local Leader, Managing Director, Public Sector Partnership, Aon
Moderator:
Chris Tomlinson,
Business Columnist, Houston Chronicle
Some of the key
takeaways include:
Having
a business continuity plan is a must-have for any business
Flooding
can occur anywhere (not just high-risk zones) – so getting flood
insurance is crucial
In
the midst of the pandemic, we can’t lose sight of the importance of investing
in mitigation and resilience, which will help on a material level post-event
The
COVID-19 crisis is putting unprecedented pressure on local governments – if private
investors have ideas for disaster mitigation, especially ones where return on
investment can be shown – now is the time to bring them, and they will be heard
Insurers
are and will be playing bigger roles in partnering with local governments to
build public/private solutions to disaster resilience
This
webinar is the first in a new series of thought leadership sessions that aims
to be a catalyst for public-private-partnerships focused on enhancing
pre-disaster risk mitigation at each step of the resilience value-chain, from
financing to development, management, technology selection and
crisis-management.
The Atlantic
hurricane season starts on Monday, June 1, but could get an early start this weekend with Tropical Storm Arthur.
The U.S. Treasury Department issued a letter to members of
Congress on May 8 which argued that proposals to force insurers to retroactively
change business interruption (BI) policies to pay losses arising from the
COVID-19 pandemic threaten the ability of the industry to serve policyholders
and might lead to the insolvency of the industry.
In the letter, Principal Deputy Assistant Secretary for Legislative Affairs Frederick Vaughan writes: “While insurers should pay valid claims, we share your concerns that these proposals fundamentally conflict with the contractual nature of insurance obligations and could introduce stability risks to the industry.”
He goes on to say that the Treasury will collaborate with insurer groups, federal lawmakers and states on “addressing losses attributable to the current and potential future pandemics.”
On May 8 the Labor Department reported that the U.S. labor market lost a historic 20.5 million
nonfarm jobs in April, sending the unemployment rate to 14.7 percent. The worst
affected sectors are leisure and hospitality, which lost 7.7 million workers.
Dr. Steven Weisbart,
Triple-I’s chief economist, points out that the employment data for March 2020*
for the insurance industry are startling largely because they are at odds with
employment changes in many other lines of work.
Employment
at property/casualty carriers held steady in March 2020 at 559,100–the same as
in January and only 800 fewer than February.
Employment
at life/annuity carriers held essentially
steady in March 2020 at 347,600–the same as in October 2019 and down a bit
from the 348,000-349,000 in November 2019 through February 2020.
Employment at health and medical insurance carriers rose in
March 2020 to 585,100–its highest-ever level, up 1,500 from February 2020.
Employment at agencies and brokerages rose in March 2020 to
852,400–its highest ever level, up 1,700 from February.
* The insurance industry/sector-specific data are not seasonally adjusted and are one month behind the national data.
U.S. auto insurers will return over $10 billion to their
customers nationwide, according to an Insurance Information Institute estimate, in response to reduced driving during the
pandemic.
We’ve listed many of the companies that are offering refunds here and here. These lists are not
exhaustive, so be sure to check with your insurer to see if they are offering
refunds or credits. All
premium and rate adjustments are subject to regulatory approval.
On May 5, Allstate
Corp. CEO Tom Wilson said the
insurer would probably grant another rebate to auto insurance customers. The second round of rebates would vary
according to region. On April 6, the insurer announced that it would return
more than $600 million in premiums to its policyholders because the nation’s
drivers were traveling 40 percent to 55 percent fewer miles following
stay-at-home orders. Wilson noted that American drivers are now traveling more
miles than in mid-April, but the total is still 30 percent to 40 percent lower
than before the pandemic. Wilson said the next refund would be more precise and
that Allstate is now distributing the initial payback, which represents 15
percent of monthly premiums in April and May.
Horace Mann, a provider of affordable insurance for educators,
is giving customers a credit of 15 percent of two months of auto premiums, as
well as a grace period through June on auto, property, supplemental and life
insurance payments; enhancing coverages, including extending personal auto
coverage to those delivering food, medicine, and other essential goods; and
including Identity Fraud Advocacy Services with its Educator Advantage Program
for all home, condo, and renters customers to protect against the increased
risk due to increased online activity.
Other customer support programs
Erie
Insurance is
adding gift card and gift certificate reimbursement coverage to the company’s
ErieSecure Home® policies, in response to the recent changes affecting
businesses across the United States. The additional feature, included at no
additional cost, would reimburse customers for remaining balances on eligible
gift cards that no longer can be used at independently owned and operated local
businesses due to business closures.
Supporting communities
Foremost Insurance and Bristol West Insurance, members of
the Farmers Insurance Group of Companies, announced they have
contributed $500,000 to the Trusted
Choice COVID-19 Relief Fund established by the Independent Insurance
Agents & Brokers of America, Inc. (IIABA – Big “I”). The Fund
provides economic aid to independent insurance agencies, brokerages, and their
owners and employees affected by the COVID-19 pandemic.
Horace Mann donated $100,000 to DonorsChoose “Keep Kids
Learning” fund, an initiative to help teachers equip the most vulnerable
students with educational materials at home. The company provides free online
teaching resources, to help teachers adapt to remote learning, and it supports
a number of foundations in its home state of Illinois.
Reach out to us in the Comments section and let us know what
your company is doing to help ease the impact of COVID-19.
Since people are driving less in the midst of COVID-19
related stay-at-home orders, many auto insurers have responded with premium
refunds totaling about $10 billion.
How are consumers reacting to these refunds? A May 5 webinar
co-hosted by Cambridge Mobile Telematics’ (CMT) VP of Insurance &
Government Affairs, Ryan McMahon, and J.D. Power’s VP of Insurance
Intelligence, Kyle Schmitt, shed light on this question.
J.D. Power has been conducting consumer sentiment surveys since March 24. Schmitt said that one key takeaway is that in light of pandemic related layoffs, customers are thinking pragmatically about auto insurance, so the timing of the premium relief announcements was excellent. However, it’s important to note that auto insurance is not top of mind for many consumers struggling to keep the lights on or food on the table, and not everyone is aware of refunds.
Here are a few other key takeaways:
McMahon noted that while miles travelled are
down, speeding and distraction both peaked in April based on CMT’s analysis,
and fatalities are up.
Schmitt said that changes in price stability
driven by broad market conditions (such as accident frequency) are not well
received by consumers who will shop around in response; in contrast to price
increases driven by a life event or an accident which consumers tend to take in
stride.
When it comes to telematics, value is key.
Consumers expect to continue to not drive as much in the foreseeable future and
are thinking about the cost savings offered by telematics programs, therefore
interest in telematics has spiked according J.D. Power surveys.
Of those that think their driving rates will
remain low 40 percent are interested in telematics.
The panelists were also asked to speculate about possible
increases in fraud, and McMahon said that fraud activity always comes with
economic reductions, however it’s possible that fraudulent claims may be easier
to spot because there are fewer claims.
When
you think of winemaking, you picture grapes on the vine and a hearty glass of
red on your table. But you probably don’t think of all the steps involved in
the production of wine and the fact that those grapes – and later, the finished
product – travel long distances to reach our palates.
That’s
where marine insurance comes in: to protect businesses along the supply chain
from the unexpected.
The
American Institute of Marine Underwriters (AIMU) drew a robust
crowd to its recent webinar, “From Vine to Wine and the Fire In Between,” where
participants learned of the risks associated with wine production and the
coverages that are designed to mitigate losses. The two-hour session is part of
AIMU’s extensive and popular educational series, and drew a crowd of
underwriters, claims experts and brokers from the ranks of marine insurers and
beyond.
“One
of the biggest roles we perform is education, and it’s not limited to our
members,” says John Miklus, President of AIMU. “Marine touches so many aspects
of business that there’s a real thirst for knowledge in the broader insurance
community and we try to quench that thirst.”
Pamela Schultz, Jonathan Thames and Erik Kowalewsky of Hinshaw & Culbertson opened by discussing the effects of the
2017 wildfires on the Napa and Sonoma wine growers and wineries, where 10
percent of the harvest was still on the vine when the fires started.
There
are nearly 20 steps involved in wine production, including include growing,
harvesting, fermenting, storage, barreling, aging, blending, bottling, labeling
and distributing. Each presents opportunities for things to go wrong.
Thames
explained that Stock Throughput is a form of marine coverage that insures goods
in all their physical states along the supply chain with the exception of damage
caused by the processes of turning the raw materials into the finished
products. He said policies are generally very broadly worded and cover all
risks.
Schultz
pointed out how marine insurance comes into play during shipment. Stock
Throughput policies are designed to cover supply chains and anything that moves
inventory against loss due to:
Extreme weather and
natural disasters can cause supply chain interruptions and even loss of product.
Transportation:
Obviously, wine has to get from the vineyard to the table and that table may be
anywhere in the world.
Trade
problems/disruption: This affects imports and exports, especially delays due to
current COVID-19 crisis.
Lack of Control: Products
are sometimes shipped long distances, and it’s difficult to know everything
about every link of the supply or travel chain.
Invaders: Yes, pests
have been known to get into wine and cause damage and so can fumigation.
CTL: Constructive Total
Loss becomes an issue if the wine is stolen. Most policies exclude consumption
of wine, but Schultz said that hasn’t stopped some insureds from trying to
claim it on that basis.
The
2017 California wildfires brought into focus the issue of smoke taint. The smoke
that lingers for weeks after the fires are extinguished can taint the grapes,
rendering a wine unpalatable, or worse, undrinkable.
Thames
noted that smoke taint claims don’t arise until after fermentation, after the
wine has been tasted, and the grower must prove damage with scientific evidence
and serve notice of potential loss within 60 days. However, he said there are
cost effective processes winemakers can put in place beforehand to mitigate the
effect.
The
presenters discussed the difference between crop insurance and whole farm
revenue protection, both of which offer only limited protection to the grower. Crop
insurance is not a 100 percent indemnity product; it only covers the grapes
pre-harvest, so there will always be a gap. Limits are based on past yields so it’s
difficult to expand limits in the first few years.
As a result of the 2017 fires in Oregon, one winemaker now requires
its growers to carry crop insurance and pays half the premium.
Whole
farm revenue protection insures against lost revenue, but doesn’t protect
particular crops as it is not a property policy. To make a claim on this policy
the insured must establish that farm revenue is down as a result of the winery
rejecting the grapes.
Participants
were invited to vote on their favorite wine, and the overwhelming choice was
Red, at 70 percent. White garnered 17 percent of the vote and Rose 12 percent.
By Kris Maccini, Director, Social Media, Insurance Information Institute
Triple-I
Employees Share Pet Adoption Stories
April 30 is
National Adopt a Shelter Pet Day–a day created to raise awareness for the
millions of animals waiting in shelters to find their forever homes.
According to
the Humane Society, 6-8 million animals enter shelters
in the US annually with 28 percent of dogs and 31 percent of cats completing
adoptions each year.
Several employees of the Insurance Information Institute (Triple-I) have also chosen to adopt rather than shop. These four-legged family members are an important part of our lives, and we’d like to share their stories with you in honor of #NationalAdoptAShelterPet day.
Name: Happy Age: 9 years old
Happy was adopted from a shelter in August 2010. He was the smallest and quietest dog of the bunch. His mom Katrina noticed his big brown eyes, big ears, and cotton bunny-like tail. It was love at first sight. Happy likes to go on walks and will take his leash to “walk himself” out the door. He’s very particular about his squeaky toys and filter water and will insert himself into conversations by “politely” barking.
Name: Mellie Age: 2 years old
Mellie was a rescue from a puppy mill and was unnamed when adopted by her family. Her dad Scott named her after his paternal grandmother. Mellie is a very curious dog who has a fascination with TV remotes–10 replaced and counting! She loves being around people and shares her home with her older fur brother Maxwell.
Name: Maxwell Age: 4 years
Maxwell was adopted at 10 weeks from a litter of 10 puppies. His dad adopted him from a rescue organization. Maxwell loves swimming, walking, running, visiting the dog park, and eating treats. He knows exactly where the biscuits are and how to train humans to get what he wants.
Name: Snickers Age: Almost 6 years old
Snickers was adopted by her family around 3 months. She officially turns 6 in June 2020. Snickers appears to be head of household keeping her human family and dog brother in line. No beasts are victorious under her neighborhood watch including birds, hornets, and wasps.
Name: Bauer Age: 8 years old
Bauer was a rescue from Nairobi, Kenya and moved to the US with his dad a year after his adoption in 2014. Bauer has a playful personality. He loves lining up his toys and stockpile of biscuits every night before he goes to bed. Bauer is big in size with an even bigger heart.
Name: Bandit Age: Almost 2 years
Bandit was adopted from a shelter at six months old. He was rescued from a private home in 2018 along with 100 other dogs. After nearly two years with his family, Bandit has settled into a routine – greeting his mom Rita when she comes homes from work and cuddling with his human brother before bed. His mom says that, although he was shy at first, Bandit’s found a respected place in his family and is affectionately referred to as the “King of the Castle.”
These are some of the stories of animals who have joined the Triple-I family. We hope these brought joy during these uncertain times. If you have recently adopted a pet, we have some resources available to answer questions on insurance, sheltering in place with your pet, dog bite prevention, and pet care.
As the federal and state governments discuss plans for “reopening
the economy,” it’s important to recognize and plan for the fact
that the impacts of the virus and our responses to it will be playing out for
some time to come.
Were auto insurers too quick to give back?
Despite record-low vehicle miles traveled, Digital
Insurance reports, severe and fatal
crashes in U.S. cities have increased since COVID-19. There have been more
speeding and more severe and deadly crashes than before the business shutdowns
and sheltering in place instituted in response to the pandemic.
In New York City, traffic volume decreased between 78% and 92%
compared to January, but there was a 57% increase in speeding violations in the 10 days following the governor’s stay at home
orders. And there were six deadly crashes from
March 2 to April 8, which is more deadly crashes than the same time period in
any of the previous five years.
Numbers like these suggest the auto insurers that have returned
more than $10 billion to policyholders
through premium relief – on the premise that fewer cars on the road would mean
fewer crashes and claims – might have acted prematurely.
A.I. to enforce social distance, limit liability
Reuters reports that stores and other workplaces eager to avoid spreading the virus that causes COVID-19 are equipping existing security cameras with artificial intelligence software that can track compliance with health guidelines including social distancingA. and mask-wearing.
The software will allow them to show not only
workers and customers, but also insurers and regulators, that they are
monitoring and enforcing safe practices.
“The last thing we want is for the governor to shut all our
projects down because no one is behaving,” said Jen Suerth, vice president at
Chicago-based Pepper Construction, which introduced software this month to
detect workers grouping at a project in Illinois.
