22nd November 2023

Research, Publications, and Surveys-Editor's highlight extracts from Insurance Newslink articles in the last 3 months

-The non-life insurance industry is adjusting rapidly to the new higher interest rate era ushered in by the most intense monetary policy tightening since the 1980s. Swiss Re Institute expects 2023 to be a transition year–with improving profitability for non-life insurance globally, as the industry continues to adapt prices to an elevated risk landscape, while higher portfolio yields boost net investment income-according to the sigma study "Raising the bar–non-life insurance in a higher risk, higher return world", despite the stronger profitability outlook, non-life insurers' profitability is expected to remain lower than their increased cost of capital in 2023. This suggests that further rate hardening and constraints on capacity are likely to continue throughout 2024.
-Asia's reinsurers continued to experienced hard market conditions in 2023 to offset the impact of inflation-induced rising claims, climate change and financial market volatility, Fitch Ratings said in a new report. Retrocession rates also increased with limited capacity and, therefore, reinsurers are likely to enlarge their retention and will have to reshape their risk appetite-capitalisation and leverage metrics for Fitch-rated reinsurers in APAC remain commensurate with their ratings. Several regulators in the APAC region have been strengthening their regulatory capital requirements for reinsurers.
-The global modelled insured average annual loss from natural catastrophes is $133bn, a new high captured in the latest analysis using Verisk’s extreme event solutions models. Not only should the insurance industry be prepared to experience total insured losses from natural catastrophes well in excess of $100bn every year, but annual losses greater than $200bn are also plausible. These values are up significantly over the decade, according to the 2023 Global Modeled Catastrophe Losses Report published by Verisk.
-In its new report, "A turning point for offshore wind", Allianz Commercial highlights growth opportunities, tech innovations, risk trends, and loss patterns for the global industry-Damage to cables is the top cause of insurance claims, followed by turbine failure-Speed of build-out is creating pressure on materials and supply chains, port infrastructure, and available construction and maintenance vessels-bigger turbines and new technology drive bigger exposures for insurers which need to be understood in partnership with developers-weather and natural catastrophe risks are increasing as sector expands into new territories.
-Juniper Research has found that the use of CDPs(Customer Data Platforms) will generate an additional $70bn in retail spend by 2028; rising from $6.7bn in 2024-CDPs collate first-party consumer data from a variety of sources to target high-value customers. Specifically, tailored recommendations and customer segmentation are leveraged to increase customer lifetime value; thus driving a significant growth of 1,700% in additional consumer spend over the next five years.
-The Lloyd’s Market Association(LMA) released an updated managing agent Blueprint Two Playbook. The Playbook has been created to provide managing agents with the tools and knowledge required to implement the Blueprint Two market transformation initiatives-Blueprint Two is a pivotal moment for the London Market, as we take a major step to a digital-first mindset across the sector-Blueprint Two implementation and adoption will deliver substantive and value-creating change across the Lloyd’s and wider London Market through digitisation-the Playbook aims to inform managing agents on what they ‘must do’ and ‘should do’ by when-it is complementary to the recently published adoption guide and has been prepared in collaboration with Lloyd’s and Velonetic.
-The London Market Group(LMG) has launched its report into the role that insurance plays in helping to unlock the potential of net zero projects-aimed at parliamentarians and other influencers, it aims to showcase the role of the London Market in unlocking, promoting and facilitating the transition to net zero.
-The proposed unleashing of investment from the insurance industry as part of the Government's Solvency II reforms may face steep implementation and governance challenges according to new analysis by PwC UK-the analysis follows the publication of the PRA’s consultation paper CP19/23 on reforms to the solvency regime for Matching Adjustment(MA) portfolios (a key valuation feature that supports the balance sheets of UK annuity providers). It accompanies CP12/23 released in June 2023 and these two CPs aim to enact HMT’s November 2022 statement. The new consultation paper outlines wide ranging and significant impacts on insurers’ balance sheets, reporting requirements and the personal responsibilities of senior management. The combination of these proposals are expected to impact the level of the MA that firms currently achieve. The refresh of the Solvency II rules should unlock the insurance industry’s investment power, and for this to be used to fuel the UK economy. However, the planned adjustments, including a widening of the assets and liabilities that are eligible for the MA, could see high costs of implementation and a potential reduction in the benefit of the MA for some assets that are used to back annuity business.
-The average price paid for UK comprehensive car insurance continued its upward trend, after soaring by a record 58% (£338) during the last 12 months. UK motorists are now paying £924 on average as insurers battle sustained cost pressures, according to the latest Confused.com Car Insurance Price Index in association with WTW.
-Driven by a 25.5% quarter-on-quarter surge in P&C InsurTech investment, new funding for the global InsurTech sector edged past a billion dollars to $1.1bn during the third quarter of 2023, up 19.8%, according to the latest Global InsurTech Report from Gallagher Re. The rise occurred even as average deal size fell 16.4% quarter on quarter to a six-year low of $10.3m, and Life & Health InsurTech investment slipped a further 4.5% quarter-on-quarter to $166.6m.
-Insurance payouts to help businesses survive bad debts rose by 23% in the first half of the year, to their highest first half yearly figure since 2018 according to figures from the Association of British Insurers(ABI). The rise reflects the continued challenging trading environment faced by many UK firms.

Research, Publications, and Surveys Trends-(6,511 articles)