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Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.
To subscribe to the I.I.I. Daily email daily@iii.org.
Each month we summarize the latest studies, reports and surveys whose findings have relevance to the insurance industry.
Highlights from the August issue include:
And much more…..
On Monday August 5th Colorado State University (CSU) hurricane researchers issued a news release in which they continue to predict a near-average 2019 Atlantic hurricane season.
The CSU team is predicting a total of 12 additional named storms to form after August 1st . Of those, six are expected to become hurricanes and two to reach major hurricane strength (Saffir/Simpson category 3-4-5) with sustained winds of 111 miles per hour or greater. These forecast numbers do not include Subtropical Storm Andrea and Hurricane Barry which formed prior to August 1.
The scientists, led by I.I.I. non-resident scholar, Dr. Phil Klotzbach, cite both near-average sea surface temperatures in the tropical Atlantic and a weakening El Niño event in the tropical Pacific as the primary reasons for the near-average prediction.
El Niño tends to increase upper-level westerly winds across the Caribbean into the tropical Atlantic, tearing apart hurricanes as they try to form. While El Niño has weakened over the past several months, they anticipate that lingering warming in the central tropical Pacific should be a slight inhibiting factor for the remainder of the hurricane season.
The tropical Atlantic currently has near average sea surface temperatures. A warmer tropical Atlantic provides more fuel for developing tropical cyclones. Increased tropical Atlantic warmth is also associated with moister air and a more unstable atmosphere, both of which foster organized thunderstorm activity necessary for hurricane development. Vertical wind shear was slightly stronger than normal across the Caribbean in July. This tends to be associated with quieter Atlantic hurricane seasons.
The team based this forecast on 40 years of historical data that include Atlantic sea surface temperatures, sea level pressures, vertical wind shear levels (the change in wind direction and speed with height in the atmosphere), El Niño (warming of waters in the central and eastern tropical Pacific), and other factors.
So far, the 2019 hurricane season is exhibiting characteristics similar to 1990, 1992, 2012 and 2014. “1992 and 2014 had below-average Atlantic hurricane activity, 1990 had near-average hurricane activity, and 2012 had above-average Atlantic hurricane activity.” said Dr. Klotzbach.
The full forecast report is available here.
It’s always interesting to know which of our blog posts get the most views. Here are the top five most viewed in July:
Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.
To subscribe to the I.I.I. Daily email daily@iii.org.
Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.
To subscribe to the I.I.I. Daily email daily@iii.org.
Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.
To subscribe to the I.I.I. Daily email daily@iii.org.
As insurance professionals, we’re always talking about harnessing new data streams to improve our products. The benefits are obvious, we tell ourselves – think of the potential to align prices with real risks! But sometimes, we also need to ask ourselves: do our customers actually want us to use these data? Do they like the idea of us scouring their social media footprints to help price their insurance coverage?
A recent J.D. Power survey asks exactly these questions – and found that we have a long way to go before our customers get comfortable with their personal insurance company collecting troves of their data. The survey found that 55 percent of customers don’t trust their insurance company to collect and use “alternate data”. Only 22 percent affirmatively trust their insurer. (Alternate data includes anything from driving behavior to social media; basically, anything that goes beyond what we traditionally consider insurance-relevant data, like age.)
But the issue is somewhat more nuanced than that. Customers are, unsurprisingly, more comfortable sharing data that they already share. Thirty-nine percent are okay with sharing utility, phone, or rent payment information. And 45 percent are willing to share their driving data with an insurer.
This could actually be good news for insurers. It shows that customers might change their perceptions of trust regarding their insurer as they become more used to sharing the data. J.D. Power notes that “Initially, customers are more comfortable sharing alternative data they are more accustomed to sharing elsewhere. Driving data and its use in telematics or usage-based insurance programs is fairly common knowledge among customers.”
It’s when the data becomes more personal, like social media posts, that customers grow wary. Only 15 percent and 14 percent were willing to share online activity and social media data, respectively. And a sizable chunk (35 percent) isn’t willing to share any alternative data at all.
Additionally, insurance customers are sensitive about what their insurers are using their data for. For example, 65 percent think it’s reasonable for an insurer to use alternative data to help recover stolen vehicles; 63 percent for an insurer to tailor coverage; and 60 percent for more accurate premium pricing. But they become less accommodating when it comes to using data for things like marketing – 55 percent don’t think that’s a reasonable use of their data.
According to J.D. Power, customers are “jaded by the current overwhelming state of marketing, [so] insurers need to underscore the value” of the data their collecting to the customer. That means the responsibility lies with insurers to prove to their customers that the data collection is worth it.
Not surprisingly, even if a customer thinks it’s okay for an insurer to collect their data, the odds are good they’re worried about privacy. Fully 85 percent consider the risks of privacy and security breaches a disadvantage to sharing their data – even if they’re okay with sharing to begin with. And 74 percent think insurers should ask their customers before collecting and using their alternative data.
The upshot is that customer acceptance of alternative data is a gradual process. Customers want to know what data is being collected. They want to know how it’s being used. And if insurers can connect the dots for them – can demonstrate the value that the alternative data is bringing – then their trust and acceptance will grow. As the J.D. Power survey shows, this has already started happening with driving data. How this will play out with other alternative data will largely be up to how well insurers can prove themselves trustworthy data custodians.
Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.
To subscribe to the I.I.I. Daily email daily@iii.org.
Dr. Phil Klotzbach, an atmospheric scientist at Colorado State University (CSU), and his team released their updated forecast for the 2019 Atlantic Hurricane season which began on June 1 and continues through November 30.
The team adjusted their original forecast which predicted a slightly below average season, and now call for an average season. The new estimate calls for about 6 hurricanes (average is 6.4), 14 named storms (average is 12.1), 55 named storm days (average is 59.4), 20 hurricane days (average is 24.2), 2 major (Category 3-4-5) hurricanes (average is 2.7) and 5 major hurricane days (average is 6.2). These numbers include Subtropical Storm Andrea which formed in May.
“We …believe that 2019 will have approximately average activity. There remains considerable uncertainty as to whether El Niño conditions will persist through the Atlantic hurricane season. The tropical Atlantic has warmed slightly faster than normal over the past few weeks and now has near-average sea surface temperatures. We anticipate a near-average probability for major hurricanes making landfall along the United States coastline and in the Caribbean,” said Dr. Klotzbach.
As is the case with all hurricane seasons, coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them. They should prepare the same for every season, regardless of how much activity is predicted.
Dr. Phil Klotzbach is a non-resident scholar at the Insurance Information Institute.