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Insurance Industry

US Consumers See Link Between Attorney Involvement in Claims and Higher Auto Insurance Costs: New IRC Report

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According to a new survey conducted by the Insurance Research Council (IRC), most consumers believe attorney advertising increases the number of claims and lawsuits and the cost of auto insurance.

The report, Public Opinions on Attorney Involvement in Claims, analyzes consumer opinions on attorney involvement in insurance claims and expands prior research. Overall, 60 percent of 2000 respondents in this latest nationwide online survey from IRC said that attorney advertising increases the number of claims, and 52 percent said that advertising increases the cost of insurance. Most respondents (89 percent) reported seeing attorney advertising in the past year, and about half reported seeing an increase in the amount of attorney advertising.

The IRC endeavored to gauge perceptions of attorney advertising and its impact on the cost of insurance, consumer awareness and understanding of litigation financing practices, and decisions about consulting attorneys about auto insurance claims. The main lines of inquiry in the survey revolved around:

  • How has the public experienced attorney advertising, and what do they think of the impact?
  • Are they aware of litigation financing, and after being given a description, what do they think of it?
  • Would they be more likely to hire an attorney to help settle an insurance claim or to settle directly with an insurer?
  • What was their previous history with auto insurance claims and their experience with consulting a lawyer to help settle an injury claim?

Results indicate that consumers are exposed to more attorney advertising across most mediums – particularly in outdoor ads, with auto accident advertisements being the most prevalent medium – compared to three years ago. While billboard advertising has experienced the most growth over the past three years, TV is the most recalled medium, with 65 percent of respondents recalling seeing TV ads in the past year.

The study reveals the awareness of litigation financing has risen significantly, but most respondents remain neutral in their opinions. Nonetheless, results show consumers want transparency around the involvement of third-party litigation funding in a case. When asked, “To what extent do you agree or disagree that the participants in a lawsuit should be informed when outside investors are financing the litigation,” 69 percent said they agree.

How might increased attorney advertising fuel legal system abuse?

IRC’s findings support a “significant statistical correlation between whether respondents consulted an attorney and their exposure to advertising. Among those who reported seeing attorney advertising, 74 percent consulted an attorney, compared to 48 percent among those who had not seen attorney advertising.”

The American Tort Reform Association (ATRA) estimates that in 2023, over $2.4 billion was spent on local legal services advertising through television, radio, print ads, and billboards across the United States.  Meanwhile, only 47 percent of respondents in a 2023 American Bar Association (ABA) survey said their firm had an annual marketing budget – a decline from 57 percent in 2022. About 80 percent of the solo practitioners in the study did not have a marketing budget, and only 31 percent of firms of 2-9 lawyers had one. 

Therefore, excessive advertising isn’t universal across the legal industry, and the saturation of advertising channels can more likely be attributed to large firms reaping substantial profits from certain practice areas or firms bolstered by third-party litigation financing. In many instances, both of these conditions factors may be involved. For example, data that ranks the leading legal services advertisers in the United States in 2023 by spending reveals a list dominated by large law firms and attorney conglomerates specializing in mass tort, accident, and personal injury litigation.

The Wall Street Journal reported earlier this year on the ties between advertising surge and the growth in mass product-liability and personal-injury cases, along with the rising involvement from a particular segment of the investment industry in these types of litigation. Nearly 800,000 television advertisements for mass tort cases ran in 2023, costing over $160 million. According to the WSJ, the ads shown most frequently that year included those soliciting individuals who might have been exposed to contaminated water at the Camp Lejeune Marine base. This particular mass tort ranks high on the previously mentioned list of top spenders.

The average dollar amount of third-party litigation funder (TPLF) loans provided to individual law firms ranges from $20 million to $100 million. Given that prospective returns for TPLF loans reportedly reach as high as 20 percent for the riskier mass tort litigation, connecting the surge in advertising for recruiting plaintiffs to the TPLF cash stream may not be such a big leap. Yet, over the years, studies have shown that attorney involvement can increase claims costs and the time needed to resolve them, even while reducing value for claimants.

Insurance claims litigation is a growing concern in several states, including Georgia, Louisiana, and Florida, threatening coverage affordability and availability. In Georgia, for example, data indicates that auto coverage affordability for Georgians has been waning faster than in any other state. An August 2024 report, Personal Auto Insurance Affordability in Georgia, issued by IRC, ranked Georgia 47th in terms of auto insurance affordability, while the state tops the most recent list of places that the American Tort Reform Foundation (ATRF) believes judges in civil cases systematically apply laws and court procedures generally to the disadvantage of defendants.

Triple-I and key insurance industry stakeholders define legal system abuse as policyholder or plaintiff attorney practices that increase costs and time to settle insurance claims, including situations when a disputed claim could have been fairly resolved without judicial intervention. Insurers’ legal costs for claims can mount with the increasing number of lawsuit filings, extended litigation, and outsized jury awards (awards exceeding $10 million).

To join the discussion, register for JIF 2024. Follow our blog to learn more about trends in insurance affordability and availability across the property and casualty market.

Insurance Industry

Triple-I launches campaign to highlight challenges to insurance affordability in Georgia

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By Dale Porfilio, Chief Insurance Officer, Insurance Information Institute

As part of its ongoing work to raise awareness of the impacts of legal system abuse, the Insurance Information Institute (Triple-I) launched a multi-faceted campaign focusing on Georgia. The campaign includes an Interstate 20 billboard in Downtown Atlanta and digital billboards on bus stops and other urban panels across the Metro Atlanta area.

Georgia tops the most recent list of places that the American Tort Reform Foundation (ATRF) calls “judicial hellholes,” states and counties where the organization believes judges in civil cases systematically apply laws and court procedures generally to the disadvantage of defendants. According to ATRF, Georgia earned this ranking due to continued “high nuclear verdicts and liability-expanding decisions by the Georgia Supreme Court.” The state made the list for the first time in the report for 2019-2020, debuting at number 6. 

Triple-I and key insurance industry stakeholders define legal system abuse as policyholder or plaintiff attorney practices that increase costs and time to settle insurance claims, including situations when a disputed claim could have been resolved without judicial intervention. Insurers’ legal costs for claims can mount with the increasing number of lawsuit filings, extended litigation, and outsized jury awards (awards exceeding $10 million). Data from the Insurance Research Council (IRC) indicates that attorney involvement can increase claims costs and the time needed to resolve them, even while reducing value for claimants.

Auto insurance litigation, for example, is a growing concern in Georgia as data reveals coverage affordability for Georgians in this product area has been significantly waning faster than in any other state. An August 2024 report, Personal Auto Insurance Affordability in Georgia, issued by IRC, ranked Georgia 47th in terms of auto insurance affordability. Personal auto insurance expenditures accounted for 2.0 percent of Georgians’ median household income, compared with a 1.5 percent share nationwide. Auto insurance spending in Georgia grew at 5.6 percent annualized between 2014 and 2022, compared with 3.3 percent in the country overall.

Meanwhile, legal service providers spent over $160 million on advertising in Georgia in 2023, according to preliminary data from the American Tort Reform Association (ATRA). 

Earlier this year, a Triple-I issue brief, Legal System Abuse: State of the Risk, highlighted aspects of legal system abuse, including how law firm advertising spend for mass tort cases might play a role in increased filings nationwide. Trial attorneys and third-party litigation funders seeking more profits may use advertising to amp up recruitment for lawsuits with big payouts at the expense of policyholders. A 2023 Triple-I study, Impact of Increasing Inflation on Personal and Commercial Auto Liability Insurance, estimates that increasing inflation drove loss and DCC (defense containment costs) higher in both insurance lines – by 6.5 percent ($61 billion) of total loss and DCC for personal auto and by 19 to 24 percent ($35 to $44 billion) for commercial auto.

Triple-I’s multi-faceted awareness campaign to help educate Georgians about the mounting costs of legal system abuse in the state also includes content such as a video statement by CEO Sean Kevelighan and interviews capturing the opinions of consumers about legal system abuse.

Coverage affordability is a growing concern for many policyholders nationwide. While several factors may impact insurance premiums, unnecessary and excessive litigation can drive higher loss ratios while posing formidable challenges to prediction and mitigation. Triple-I is committed to advancing conversations with business leaders, government regulators, consumers, and other stakeholders to attack the risk crisis and chart a path forward.

We invite you to join the discussion by registering for JIF 2024. Follow our blog to learn more about trends in insurance affordability and availability across the property and casualty market.

Corporate Social Responsibility, Health & Safety, Insurance Industry

Insurers Help Victims
of Domestic Abuse With Financial Resilience

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By Loretta Worters, Vice President – Media Relations, Triple-I

When you think about domestic violence, insurance typically isn’t top of mind.  However, financial security and access to resources can make all the difference to victims when deciding to leave an abusive relationship. And insurance is an important component of financial planning that can help survivors move forward.

One frequently hidden form of abuse perpetrated within intimate partner relationships is economic or financial abuse, a common tactic abusers use to gain power and control. The forms of financial abuse may be subtle or explicit, but generally include tactics to conceal information, limit the victim’s access to assets, or reduce accessibility to the family finances. Financial abuse – along with digital, emotional, physical, and sexual abuse – includes behaviors to intentionally manipulate, intimidate, and threaten the victim to entrap that person. In some cases, financial abuse is present throughout the relationship; in others, financial exploitation becomes present when the survivor is attempting to leave or has left.

Research indicates that financial abuse occurs in 99 percent of domestic violence cases. Surveys of survivors reflect concerns over their ability to provide for themselves and their children – one of the top reasons for staying with or returning to an abusive partner. As with all forms of abuse, financial abuse occurs across all socio-economic, educational, and racial and ethnic groups.

Survivors struggling to get back on their feet may also be forced to return to their abuser.  That’s why it’s so important survivors understand how insurance works and what a critical role it can play in gaining financial freedom and economic self-sufficiency.

Since 2005, The Allstate Foundation has been committed to ending domestic violence through financial empowerment by helping to provide survivors with the education and resources needed to achieve their potential and equip young people with the information and confidence they need to help prevent unhealthy relationships before they start. 

The Allstate Foundation offers a Moving Ahead Curriculum, a five-module program that helps prepare survivors as they move from short-term safety to long-term security. Modules of the curriculum include: Understanding Financial Abuse; Learning Financial Fundamentals; Mastering Credit Basics; Building Financial Foundations and Long-Term Planning.

In support of Domestic Violence Awareness Month, Triple-I offers financial strategies to protect victims before and after leaving an abusive relationship. They include securing financial records, knowing where the victim stands financially, building a financial safety net, making necessary changes to their insurance policies, and maintaining good credit. 

The National Coalition Against Domestic Violence (NCADV) reports that 10 million people are physically abused by an intimate partner each year, and 20,000 calls are placed to domestic violence hotlines each day. In addition, 85 percent of women who leave an abusive relationship return because of their economic dependence on their abusers. Furthermore, the degree of women’s economic dependence on an abuser is associated with the severity of the abuse they suffer.

“Home is frequently a dangerous place for survivors of domestic violence, and remote work exacerbates the circumstances, due to the abusers’ ability to further control,” said Ruth Glenn, author, survivor, and leader in the movement to end domestic violence for over 30 years. “Tactics abusers use include ruining the victim’s credit, as well as financial abuse,” said Glenn, who is president of Survivor Justice Action (SJA) and the former CEO of the NCADV.

Digital abuse is another tactic used by abusers.  It can come in many forms, with partners reading emails, checking texts and locations of social media posts, controlling who you can connect and speak with on social media; and keeping constant tabs on you through social networks, spyware, or tools like location sharing; and stealing your passwords, which can also impact you financially.

“One of the most powerful methods of keeping a survivor trapped in an abusive relationship is not being able to support themselves financially,” Glenn explained. “That’s why insurance and financial education are crucial,” she said.  “Education can save a life.”

Emerging Risks, Insurance Industry, Insurance News

Multi-Family Affordable Housing Market Challenged by Surges in Insurance Premiums

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urban apartment buildings

With ​​nearly half of all homes in the United States at risk of “severe or extreme” damage from events like flooding, high winds, and wildfire, the perfect storm of climate risk and legal system abuse creates obstacles for homeowners. It also threatens a more financially vulnerable segment of the housing market, as increased premiums and waning coverage for affordable housing providers can put millions of renters at risk of becoming rent-burdened (paying more than 30 percent of gross monthly income in gross monthly rent) or unhoused.

In June of this year, about two dozen real estate, housing, and nonprofit organizations — self-describing as a “broad coalition of housing providers and lenders” —  wrote a letter to Congress and the Biden administration urging them to address the issue of property insurance affordability. Although the coalition declared its intent to represent all stakeholders in the housing market, it called attention to special concerns of affordable housing providers and renters.

The letter referenced an October 2023 survey and report commissioned by the National Leased Housing Association (NLHA) and supported by other affordable housing organizations. The survey involved more than 400 housing providers that operate 2.7 million rental units — 1.7 million of which are federally subsidized. Findings mentioned in the letter and report about the affordable housing market include:

– Rate increases of 25 percent or more in the most recent renewal period for one in every three policies for affordable housing providers.

– Over 93 percent of housing providers said they plan to mitigate cost increases, with three most commonly cited tactics: increasing insurance deductibles (67 percent), decreasing operating expenses (64 percent), and increasing rent (58 percent).

– Respondents cited limited markets and capacity as the cause for most premium increases, followed by claims history/loss and renter population.

According to the U.S. Department of Housing and Urban Development (HUD) guidelines, affordable housing is generally defined as housing for which the occupant is paying no more than 30 percent of gross income for housing costs. These units are often regulated under various regional and nationwide programs, which typically offer some form of government subsidy to the property owners – usually either through tax credits, government-backed financing, or direct payments. Rising insurance premiums for affordable housing properties have come at a particularly challenging time for both renters and affordable housing property owners, a large share of which are non-profit organizations.

Census Data indicates that in total renters comprise around 36 percent, or about 44.2 million of the 122.8 million Census captured households. The number of rent-burdened households nationwide has hit an all-time high. The latest rental housing market figures, taken from a report issued by the Joint Center For Housing Studies Of Harvard University, counts 22.4 million rent burdened households in this category, amplifying the dire need for more affordable units. That report also reveals the proportion of “cost-burdened renters rose to 50 percent, up 3.2 percentage points from 2019.” 

Additionally, homelessness increased 12 percent in 2023. More than 650,000 people were unhoused at some point last year — the highest number recorded since data collection began in 2007. A Wall Street Journal analysis reveals the most recent counts for 2024 are already up 10 percent, putting the total number of unhoused persons on track to exceed last year’s amount.

Meanwhile, the affordable housing stock is aging and the cost of debt to acquire or build multifamily properties has risen, too. As interest rates have been high in recent years, developers must offer investors greater returns than treasury notes. The problem is complex, but the outcomes can be brutally straightforward.

Higher insurance premiums on rented properties increase costs, which, in turn, get passed on to renters. Market-rate landlords can usually raise rents to cover the increasing costs of capital and insurance premiums. However, affordable housing providers are locked into rents set by the government. These amounts are tied to regional incomes, which can be depressed by wage stagnation. Thus, renters who rely on affordable housing can experience the impact of rising premiums in the form of decreased services and lapsed maintenance (as housing providers dip into other parts of the operating budget to make up the shortfall) or a decrease in the number of units on the market as housing providers extract units or leave the market.

In July of this year, HUD convened a meeting with various stakeholders to discuss policies and opportunities to address this and related challenges while managing potential risks to the long-term viability of affordable housing. HUD has modified its insurance requirements for apartment buildings with government-backed mortgages, now allowing owners to set their deductible for wind and storm events as high as $475,000, up from $250,000. This tactic may reduce premiums but can also raise out-of-pocket costs after a storm or severe climate event. Another approach in progress is the revision of HUD’s methodology for calculating the Operating Cost Adjustment Factors (OCAF), parameters for annual percentile increases in rent, for eligible multifamily properties to better account for increasing insurance costs.

Triple-I is committed to advancing conversations with business leaders, government regulators, and other stakeholders to attack the risk crisis and chart a path forward. To join the discussion, register for JIF 2024. Follow our blog to learn more about trends in insurance affordability and availability across the property and casualty market.

Industry Awards & Events, Insurance Industry, Risk Management

Predict & Prevent Podcast Honored By Inclusion Among ‘Insurance Luminaries’

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The Institutes’ Predict & Prevent® podcast has been named to PropertyCasualty360’s Insurance Luminaries Class of 2024 in the category of Risk Management Innovation. This annual recognition celebrates people and initiatives driving meaningful progress within the insurance sector, highlighting key advancements and forward-thinking approaches.

The podcast explores new ways to respond to some of the biggest risk challenges facing society today by working to better predict and prevent losses before they occur. This proactive approach is crucial in a rapidly changing world in which traditional risk-management methods – which focus on risk financing and responding after a loss – are becoming less sufficient.

By exploring new technologies and resilience strategies, the podcast addresses the urgency of mitigating current risk landscapes and paves the way for future advancements in risk prevention.

The Institutes is a nonprofit organization made up of diverse affiliates – including Triple-I – that educate, elevate, and connect people in the essential disciplines of risk management and insurance.

As the podcast rounds out its second year, its focus remains to empower the risk-management and insurance community with actionable insights and forward-thinking strategies. Those interested in exploring innovative technology and resilience solutions can listen to podcast episodes, access articles, and subscribe to the Predict & Prevent newsletter here.

Emerging Risks, Insurance Industry, Market Conditions

Prodigious growth continues for the excess and surplus market, but how long will it last?

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The Excess and Surplus (E&S) market has grown for five consecutive years by double-digit percentage rates. While expansion appears to have slowed, ample growth likely to continue if major trends persist, according to Triple-I’s latest issue brief, Excess and Surplus: State of the Risk.

As reported by S&P Global Intelligence, total premiums for 2023 reached $86.47 billion, up from $75.51 billion in 2022. The growth rate for direct premiums in 2023 climbed to 14.5 percent, down from the peak year-over-year (YoY) increase of 32.3 percent in 2021 and 20.1 percent in 2022. The share of U.S. total direct premiums written (DPW) for P/C in 2023 grew to 9.2 percent, up from 5.2 percent in 2013.

The brief summarizes how these outcomes are driven by the niche segment’s capacity to take advantage of coverage gaps in the admitted market and quickly pivot to new product development in the face of emerging or novel risks. Analysis and takeaways, based on data from US-based carriers, highlight dynamics that may support continued market expansion:

  • The rising frequency of climate disasters and catastrophes that overwhelm the admitted market
  • The increasing number and amount of outsized verdicts (awards over $10 million)
  • The sustainability of amenable regulatory frameworks
  • Outlook for the reinsurance segment

These factors can also converge to enhance or aggravate conditions.

For example, some states, such as Florida and California, are dealing with significant obstacles to P/C affordability and availability in the admitted market posed by catastrophe and climate risk while also experiencing large respective shares of outsized verdict activity. Also, 13 of the 15 largest U.S. E&S underwriters for commercial auto liability experienced a YoY increase in 2023 direct premiums written. In contrast, eight of the largest 15 underwriters of commercial auto physical damage coverage experienced a decline. Given 2023 research from the Insurance Information Institute showing how inflationary factors from legal costs amplify claim payouts for commercial auto liability, it appears that E&S is flourishing off the struggles of the admitted market.              

At the state level, the top three states based on E&S property premiums as portion of the total property market were Louisiana (22.7 percent), Florida (21.1 percent), and South Carolina (19.4  percent) in 2023. The states experiencing the highest growth rates in E&S share of property premiums were South Carolina (9.0 percent), California (8.8 percent), and Louisiana (8.3 percent).

Since the publication of Triple-I’s brief, AM Best released its 2024 Market Segment Report on U.S. Surplus Lines. One of the key updates: after factoring in numbers from regulated alien insurers and Lloyd’s syndicates, the E&S market exceeded the $100 billion premium ceiling for the first time, climbing past $115 billion. The share size in the P/C market has more than tripled, from 3.6 percent total P/C DPW in 2000 to 11.9 percent in 2023. Findings also indicate that DPW is concentrated heavily within the top 25 E&S carriers (ranked by DPW), with about 68% of the total E&S market DPW coming from this group.

The E&S market typically provides coverage across three areas:

  • Nonstandard risks: potential liabilities that have unconventional underwriting characteristics
  • Unique risks: admitted carriers don’t offer a filed policy form or rate, or there is limited loss history information available
  • Capacity risks: the customer to be insured seeks a higher level of coverage than most insurers are willing to provide

Thus, E&S carriers offer coverage for hard-to-place risks, stepping in where admitted carriers are unwilling or unable to tread. It makes sense that the policies typically come with higher premiums, which can boost DPW.

However, the value proposition for E&S policyholders hinges on the lack of coverage in the admitted market and the insurer’s financial stability – especially since state guaranty funds don’t cover E&S policies. Therefore, minimum capitalization requirements tend to higher for E&S than for admitted carriers. Ratings from A&M Best over the past several years indicate that most surplus insurers stand secure. Robust underwriting and strong reinsurance capital positions will play a role in the market’s capacity for continued expansion.

To learn more, read our issue brief and follow our blog for the latest insights.

Cyber Risk, Insurance Industry

FBI: Elder Fraud Up; Bolsters Case for Personal Cyber Insurance

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By Neil Rekhi, Personal Cyber Product Lead, HSB

Targeting of the demographic with the most to lose increases.

In 2023, total losses reported to the FBI’s Internet Crime Complaint Center (IC3) by people over the age of 60 topped $3.4 billion, an almost 11 percent increase in reported losses from 2022. The number of complaints, the highest attributed to a single age group, increased by 14 percent. The average dollar loss per complaint was $33,915, with nearly 6,000 people losing over $100,000 per claim.

The IC3 report outlined several common cyber fraud activities that impact individuals over 60, including:

  • Call Center/Tech Support Scam
  • Confidence/Romance Scams
  • Cryptocurrency Scams
  • Investment Scams

The IC3 notes the actual figures around these and other cyber crimes targeting the elderly may be higher since only about half of the more than 880,000 total complaints it received (with total losses exceeding $12.5 billion) included age data.

A major reason for the proliferation of elder fraud may simply be that members of this age group are plentiful while also having comparatively the most to steal. Adults 65 and up are expected to make up 22 percent of the US population by 2024. Federal Reserve data indicates that their asset accumulation outpaces that of other age groups, with median and average net worth figures for adults 65-74 at $409,900 and $1.8 million, respectively, and for adults 75 and over, $335,600 and $1.6 million respectively. 

Increasing digital lives and advancing technology create new threats.

The transition to the smart mobile and app economy, along with the rise of big data and predictive analytics/AI, and (due to the pandemic) remote working, have transformed the way we engage with the world on a social, professional, and financial level. The Internet of Things (IoT) and each person’s expanding network of personal devices — smart TVs, video game consoles, appliances, home climate control systems, etc. — have propelled the digitization of our existence. All these advancements can make life easier but also increase points of cybersecurity vulnerability for people of all ages.

However, data indicates that different age groups can be susceptible to different methods of targeting by cyber scammers. For example, phishing, which relies on the human tendency to repay what another person has provided, can be more effective for targeting older vs younger adults. Also, today’s consumer under age 25 may never have the need to write a paper check, but many over 65 today have spent a significant portion of their lives handling their financial affairs that way. Thus, the trust placed in tech support people and other personnel whom they are supposed to rely on for assistance is understandable.

Unfortunately, according to the IC3, people over 60 lost more to call center and tech support scams than all other age groups combined, with this group reporting 40% of these incidents and 58% of the related financial losses (about $770 million). Common schemes involved using phone calls, texts, emails, or pop-up windows (or a combination of these) to connect with victims, manipulating them to download malicious software, reveal private account information, or transfer assets. The fallout included remortgaged homes, emptied retirement accounts, and, in some cases, suicide.

New tools and methods increase cyber security threats.

A financial services professional at a Hong Kong-based firm sent US$25 million to fraudsters after she believed she was instructed to do so by her chief financial officer on a video call that also included other colleagues. Deepfakes, one of 2024’s increasingly common cyber risks for businesses and organizations, is on track to become a major threat to personal cyber liability. A technology known as “deep” learning (hence the name) can generate images, videos, texts, or sound files specifically designed to be highly convincing despite being entirely made up.

This content can turn up anywhere on social media, the internet, or even in emails and phone calls, fooling unsuspecting humans, and, all too often, even detection software. Deepfakes aren’t always produced for malicious activities; some are used widely for entertainment. However, the growing sophistication of deepfakes and the availability of the technology needed to make it may have serious implications for cyber risk.

Cyber criminals can leverage this technology to trick victims into divulging sensitive information, transferring money, or performing other activities. Reputations can be damaged by fabricated images of victims engaged in illegal or controversial acts. This type of deep fake can also enable blackmail in exchange for not releasing the material. In addition to impersonating individuals, cyber criminals can use deep fakes to bypass biometric verification or create false advertising.

The options for managing personal cyber risk can differ in crucial ways.

Personally identifiable information (PII) is the primary driver of identity theft and most other cyber fraud. Major data breaches are becoming common place, such as the incident that happened in 2023 (but wasn’t reported until August 2024) that credit exposed 2.7 billion records. Bad actors exploit this kind of information to directly engage in fraudulent transactions or create trust with their targets in more complex schemes.

Thanks to heavy marketing and wide availability from banks and card issuers, consumers tend to be familiar with Identity Theft Protection (ITP). As the name implies, such plans revolve around the risk of stolen identity and can alleviate some of the work and costs related to monitoring and mitigating the fallout from identity theft.

In contrast, Personal Cyber Insurance (PCI) offers coverage for a broader range of losses. Covered risks, in addition to ITP, can include cyber extortion, online fraud and deceptive transfers, data breaches, cyberbullying, and more. An important aspect of PCI is that it can help provide financial reimbursment from covered “cyber scams” or related social engineering risk not directly tied to identity theft, cyber crimes which are on the rise. It also offers assistance and financial reimbursment for compromised devices. For example, if a policyholder is hacked, personal cyber insurance may help cover the costs of hiring a professional to reformat the hard drive, reinstall the operating system, and restore data from the backup.

“Social engineering and other cyber-related threats against consumers continue to grow and evolve, and insurance carriers are offering affordable personal cyber coverage that can be easily added to a homeowners or renters insurance policy,” says James Hajjar, Chief Product Officer at Hartford Steam Boiler (HSB).

HSB, which has been offering personal cyber insurance since 2015, has evolved its coverage multiple times over the years to stay ahead of cyber risk trends and the dynamic threat landscape. Given the increasing complexity of cyber risks and the rise of sophisticated scams — such as phishing and ransomware — that kind of protection shouldn’t be limited to identity theft. Robust PCI coverage safeguards against a range of other cyber-related issues and provides critical support to ensure policyholders aren’t left to deal with the financial aftermath of a cyber incident alone.

“It’s crucial that cyber insurance is specifically designed to help individuals protect themselves against these evolving threats and provides financial security and additional programs and services if someone is hacked,” Hajjar says.

Historically, ITP has been widely offered through banks, credit unions, credit card issuers, and credit reporting agencies. Either product type may be purchased as either standalone or optional add-on coverage for homeowners, rental, or condo insurance policies.

The IC3 says it receives about 2,412 complaints daily, but many more cybercrimes likely go unreported for various reasons. Complaints tracked over the past five years have impacted at least 8 million people. The 2023 Data Breach Report, which details the larger dataset of cyber crime complaints to the FBI’s Identity Theft Resource Center (ITRC), reveals that last year delivered a bumper crop of cybersecurity failures – 3,205 publicly reported data compromises, impacting an estimated 353,027,892 individuals.

A new conversation about personal cyber insurance begins.

Triple-I and HSB are teaming up to uncover ways to enhance support and resources for insurance agents while improving personal cyber insurance options for policyholders. If you are an agent, please take three minutes to help by participating in our survey. Your contribution will be invaluable in shaping the future of personal cyber insurance.

Insurance Industry

Insurers Tackle Food Insecurity in 30th Year
of Philanthropy

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By Loretta Worters, Vice President, Media Relations, Triple-I

One in five U.S. children is unsure where they will get their next meal, according to the U.S. Department of Agriculture. In 2022, 33 percent of single-parent families experienced food insecurity, and the problem is especially acute for families of color and households headed by single mothers.

The Insurance Industry Charitable Foundation is observing Hunger Action Month – a nationwide effort held every September– by raising funds in its ongoing fight against childhood hunger throughout its 30th anniversary year in 2024.

On average, IICF provides up to five meals for every dollar contributed, working with 11 nonprofit partners that serve communities across the United States and United Kingdom.  Donors to the IICF 30th Anniversary Celebration are recognized on its website as IICF Children’s Champions for contributions of $1,000 or greater and all donors contributing $30 or more.

Donors giving $30 or more can enroll for a complimentary year of IICF Global Membership, which provides exclusive volunteer opportunities and a network of philanthropically minded insurance professionals, noted IICF CEO Bill Ross.

 “We convened an IICF 30th Anniversary Committee of 35 industry leaders in the new year to help lead and advance our 30th campaign to raise funds for hungry children,” Ross said. “Seven insurance companies are leading internal company campaigns in support of IICF’s 30th, raising and matching funds for hungry children: CNA, Burns & Wilcox, Falvey Insurance Group, Lockton, Markel, RT Specialty and The Hartford. We hope more companies and individuals will participate.”

The IICF has approximately 400 individual donors to date.  For every 100 new donors, at only $30 each, that’s thousands of meals they can deliver to children in need.

“As we look back at 30 years of the IICF, it is encouraging to know we have grown from an effort primarily serving California, with approximately 20 board members, to now expanding as a national and growing international industry foundation with more than 800 insurance professionals, providing personal leadership and volunteer support, serving on IICF’s international and local boards and committees,” said Ross. 

“Throughout our 30 years, IICF has maintained a focus on children at risk, education and food insecurity. Each of our divisions encompasses these focus areas, as well as additional areas of need specific to each region, including military veterans, the environment, and social mobility,” he said.

“It is always important to recognize where we started as a foundation, and our vision remains the same today. The IICF is here to represent the insurance industry in a united philanthropic effort by providing grants in local communities, industrywide volunteer service and ongoing opportunities for leadership in our communities and our industry.”

More Work Needs to be Done

Since 2020, IICF has raised $1.8 million and delivered three million meals through its Children’s Relief Fund, which was launched in response to the global pandemic. But more needs to be done.  For those that wish to donate, the IICF is grateful to these acts of kindness. 

Ross summed it up best: “When we unite to help others, great things happen for everyone – communities, our neighbors in need and our industry!”

Auto Insurance, Insurance Industry

Report: No-Fault Reforms Improved Michigan’s Personal Auto Insurance Affordability

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By Max Dorfman, Research Writer, Triple-I

Michigan personal auto insurance affordability improved markedly after enacting substantial auto insurance reform in 2019, according to a new report by the Insurance Research Council (IRC) – like the Triple-I, a division of The Institutes

The study, Personal Auto Insurance Affordability in Michigan, found that personal auto insurance expenditures accounted for 1.9 percent of the median household income in Michigan in 2022 (the last year the data is available), a decline of half-a-percent from the pre-reform peak. Michigan’s expenditure share remains higher than the percentage in the overall U.S. and forty-four other states.

Other key findings from the report include:

  • Before the reforms, Michigan drivers were required to purchase unlimited personal injury protection (PIP) coverage; in comparison, the second highest mandated amount of PIP coverage was $50,000 in New York. The unlimited medical benefits and other features, such as attendant care benefits and no medical fee schedule, led to Michigan’s extremely high average auto injury claim severity, which has been the primary cost driver in the state.
  • In 2022, Michigan households spent $1,319 to insure each vehicle, nearly 20 percent above the national average. However, in the years since reform, expenditures have fallen in Michigan while increasing in almost every other state. From 2019 to 2022, the average expenditure for auto insurance in Michigan fell 12 percent compared with an increase of five percent in the U.S. overall.
  • Uninsured and underinsured motorists are both a symptom and cause of affordability issues. In 2019, Michigan had the highest rate of uninsured drivers in the country, with more than one in four motorists lacking the required liability coverage. The uninsured motorist rate in Michigan dropped by 5 percent between 2020 and 2022.

“Efforts to improve auto insurance affordability in Michigan must begin with the underlying cost drivers: injury claim severity and litigation,” said Dale Porfilio, FCAS, MAAA, president of the IRC. “The average amount paid per auto claim for auto injury insurance is dramatically higher in Michigan, more than double the U.S. average and one and a half times the second highest state.”

Porfilio, who is also Chief Insurance Officer of the Insurance Information Institute (Triple-I), noted that the 2022 affordability data does not fully reflect many recent countrywide challenges to affordability, such as economic inflation, higher replacement costs, legal system abuse, and deteriorating driving behavior. “However, the movement of several key indicators illustrate the positive effect of the Michigan policymakers’ efforts to improve affordability in their state.”

Industry Financials, Insurance Industry, Insurance News

Reinsurance Buyers See More Balanced Market at July 1 Renewals: Gallagher Re

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Reinsurers experienced near-record returns in 2023, and continued to post strong results in the first quarter of 2024, with up to a 12% improvement in combined loss ratios, according to Gallagher Re’s 1st View report.

The report attributes these positive outcomes to several factors, including relatively benign natural catastrophe activity, adjustments in the reinsurance market, improved conditions in primary markets, and higher reinvestment rates. Improved results have created a more favorable market for reinsurance buyers, with sufficient capital available to meet increased demand, Gallagher Re observed.

“This more comfortable market for buyers has been underpinned by an increasing supply of capital to meet increased demand as reinsurers balance sheets have expanded on the back of strong 2023 and Q1 2024 results,” commented Gallagher Re CEO Tom Wakefield.

Non-life insurance-linked securities (ILS) capital reached a record level of $107 billion at the end of 2023 and continued to grow in the first half of 2024, driven by successful catastrophe bonds and increased investor interest.

However, ILS capacity became less abundant by midyear, as the Atlantic hurricane season approached,  Gallagher Re noted.

“ILS capacity became scarce as ILS investors were ‘unnerved’ by forecasts of an active hurricane season,” the report stated.

Property outlook

The property reinsurance market has experienced increased competitiveness and capacity due to reinsurers’ strong performance in recent years, the report noted.

While reinsurers were not significantly impacted by natural catastrophe losses in Q1, there were an estimated $43 billion of economic losses and $20 billion insured losses in Q1 with both numbers being near the 10-year average.

The first quarter is not traditionally a major driver of the annual natural catastrophe loss burden, historically only representing 14% of the full-year total. Losses in Q1 have been dominated by severe convective storm losses (34% of insured losses) and other secondary perils of wildfire, drought and flood making up another 29%.

At July 1 renewals, risk-adjusted catastrophe pricing for Florida property was down 0% to 10% on average, and additional capacity demands of $3 billion to $5 billion in Florida were all met.

“Following three consecutive years of double-digit risk-adjusted rate increases, reinsurers were looking to hold the line from a procing perspective,” the reinsurance intermediary said of the Florida property catastrophe market.

The report also highlighted that buyers of property catastrophe insurance have been able to negotiate better terms and conditions on their reinsurance contracts due to the “risk on” approach taken by reinsurers. Risk-adjusted catastrophe placements in the U.S. generally were down 0% to 12% at July 1, Gallagher Re reported.

Non-catastrophe property pricing in the U.S. was down 0 to 10% for loss free accounts, but up 5% to 15% with losses.

Casualty outlook

“Casualty underwriters appear less confident than property underwriters outlined above, although this warrants its own caveat. The issues driving stakeholder concerns are regionally nuanced as the frequency and severity of casualty losses are driven by local societal, economic, judicial, legislative, and behavioral factors,” the report stated.

In the casualty insurance sector, concerns over rate adequacy in the U.S. have increased, following adverse development reported by liability insurers in the fourth quarter of 2023 and the first quarter of 2024. The lengthening and deteriorating tail of liability claims have exacerbated reinsurers’ concerns, as the market is already dealing with economic and non-economic loss inflation.

At July 1 renewals, risk adjusted excess of loss rates for U.S. general liability business were up 5% to 10% with no losses, and up 5% to 15% with emerging losses.

For U.S. health care liability, increased loss severity was seen across the health care sector. Excess of loss rates were up 0 to 5% for limited-exposed layers, and up 3% to 8% for catastrophe layers, without emerging losses. Rate increases were greater — up 5% to 20% — for layers with emerging losses.

Professional liability lines with no emerging losses saw excess of loss rates decline 0% to 5%, while accounts with losses experienced 0% to 10% increases.

Workers compensation has seen continued pressure for increases, even on loss-free layers, Gallagher Re noted. Excess of loss rates with no loss emergence were up 0 to 5% and with loss emergence, increased 5% to 10% at July 1.

The full report can be downloaded on the Gallagher Re website.