Latest Studies - June 2017

Each month the Insurance Information Institute compiles recent studies from industry, government, academic and other sources. Topics include consumer issues, industry trends, climate and environment, and studies covering individual lines of business like automobile liability and workers compensation.

1. U.S. Insurance Shopping Study
J.D. Power; Page N/A
April 1, 2017

The J.D. Power 2017 U.S. Insurance Shopping Study concludes that over the last two years, auto insurers have come to depend increasingly on customer service, personalized advice and strong agents to attract new customers, to offset decreased shopping amid modest rate increases. The study notes the crucial role that communications continues to play and emphasizes that a significant factor in customer satisfaction is their full understanding of their coverage. Greg Hoeg, vice president of U.S. insurance operations at J.D. Power, said that for auto insurers to survive the period of price stagnation, they must develop strategies to allow them to be differentiated not only to acquire new customers, but to acquire customer with risk profiles that will allow the insurer to maintain profitability. The article lists the key findings of the 2017 study and notes the insurers that ranked highest on its customer satisfaction rankings. Press Release


2. 2017 RIMS Benchmark Survey
RIMS and Advisen; Page N/A
April 1, 2017

The annual RIMS survey, produced with Advisen Ltd., tracks changes in insurance policy renewal prices, retained loss costs and administrative costs as reported by North American corporate risk managers. The survey found that despite rising uncertainty and increasingly more complex risk profiles, businesses saw a decline in the total cost of risk for the third year in a row. Technological advances have caused a seismic shift in the risk landscape, creating new types of claims and forcing insurers to consider new products and solutions for customers. Insurers ended 2016 with average capital and surplus at its highest level in 10 years. However, excess capacity is undermining profitability, as seen by falling net income and return on average equity. The personal insurance space is undergoing a consumer-centric revolution, offering customers new transaction platforms, better metrics and more flexible pricing and coverage options. Commercial insurance is expected to adopt a similar focus, transforming the way business is transacted. Predicted rate increases for cyber, E&O and workers’ compensation failed to materialize across the board. Projections for 2017 are more moderate, with property and most liability lines flat to down 10 percent. Emerging trends in the 2017 risk landscape include the tech revolution, security issues, natural catastrophes and political upheaval. The survey is available for purchase from RIMS/Advisen.


3. Injury Facts 2017
National Safety Council ; Page N/A
April 1, 2017

The National Safety Council's annual statistical compendium on unintentional injuries and deaths covers workplace, home, and motor vehicle injuries and their related costs on a state, community and international levels. This edition reports that unintentional poisoning deaths in the adult population have skyrocketed to become the number one cause of accidental death in the United States, driven by unintentional drug overdose - predominantly from prescription painkillers. Other significant findings from this edition include: the number of deaths from car crashes peak among young adults, poisonings peak among the middle-aged, and falls peak for older adults; the number of accidental workplace fatalities increased by 1 percent in 2015; the agriculture, forestry, fishing and hunting sector topped the death rates chart in 2015 with 22.6 fatalities per 100,000 workers, higher than transportation and warehousing (12.8), mining (11.3) and construction (9.8). The report is available from the National Safety Council.


4. Inequalities In Life Expectancy Among US Counties, 1980 To 2014
Laura Dwyer-Lindgren et al.
JAMA Internal Medicine; Page N/A
May 8, 2017

This study published May 8 in JAMA Internal Medicine concludes that while overall life expectancy in the United States is rising, the death rate is rising in many pockets of the country. The report, by researchers at the University of Washington's Institute for Health Metrics and Evaluation, is based on a study of death certificates from 1980 through 2014. The researchers found that life expectancy is greatest in Colorado’s Rocky Mountain region, but life expectancy is more than 20 years lower in many counties across the United States. The study found that of the 10 counties where life expectancy declined the most since 1980, eight are in Kentucky and the other two are in Oklahoma and Alabama. Central Appalachia, the Mississippi Delta and areas in the Dakotas with large Native American populations were found to be among areas with the worst mortality metrics. The list of counties with the most improved life expectancy includes several remote locations in Alaska, the New York boroughs of Manhattan and Brooklyn, as well as San Francisco. The study concludes that geographic disparities in life expectancy among U.S. counties are large and increasing. Much of the disparity among counties can be explained by a combination of socioeconomic and race/ethnicity factors, behavioral and metabolic risk factors and healthcare factors. Policy action targeting socioeconomic factors and behavioral and metabolic risk factors may help reverse the trend of increasing disparities in life expectancy in the United States. Full Report


5. Quarterly Insurtech Briefing Q1 2017
Willis Tower Watson and CB Insights; Page N/A.
April 1, 2017

This Willis Towers Watson and CB Insights report found that investment in insurance technology startups declined sharply during the first quarter of this year, suggesting that the new market might be nearing maturity. The data show that the sector received $283 million in investments during the first three months of this year, compared with $783 million during the first quarter of 2016. The report notes that while digital distribution platforms have achieved limited market penetration to date, research suggests that up to 25 percent of total small business insurance premium could be digitally underwritten by 2020. Several independent platforms have successfully raised capital with the goal of accelerating small business insurance market disruption. The report uses the activities of Munich Re’s Digital Partners global venture as a case study of an incumbent partnering with disruptors. A chart tracks all the technology companies that Munich Re has either partnered with, acquired or invested in since 2015. Full Report


6. Excellence In Risk Management. Ready Or Not, Disruption Is Here
Marsh and RIMS; 20 pages
June 1, 2017

This is the 14th annual Excellence in Risk Management report by Marsh and the Risk and Insurance Management Society (RIMS). A survey conducted for the report found that a surprisingly high number (24 percent) of risk managers are unaware that companies are already using or planning to use any of 13 common technologies such as wearables and Internet of Things devices. In fact, other studies have found that more than 90 percent of companies are either already using or evaluating such technologies. Since disruptive technologies can make or break a business, the survey authors were also surprised to learn that survey respondents identified the top impediment to understanding disruptive technology risks as “other areas have greater priority.” About 55 percent of the respondents said they have not conducted risk assessments around disruptive technologies. Another matter of concern is that half of all organizations do not have a cross-functional risk committee. Risk professionals are advised to educate themselves about disruptive technologies, including what is already in use at their organizations and the respective risks and benefits of using such technology. Full Report


7. Is Cyber Risk Systemic?
American International Group (AIG); 8 pages
May 1, 2017

Nine out of 10 global cybersecurity and risk experts surveyed by AIG believe that cyberrisk is systemic and that simultaneous attacks on multiple companies are likely in 2017. More than one-third estimate the likelihood of a simultaneous attack on as many as 50 companies at greater than 50 percent. Twenty percent see an even greater threat, predicting greater than 50 percent chance that as many as 100 companies will be attacked. The survey was conducted to gain a better understanding of the likelihood and impact of a globally systemic cyberattack. The leading industries identified by experts as most likely to experience a systemic attack in 2017 are: financial services (19 percent); power/energy (15 percent); telecommunications/utilities (14 percent); healthcare (13 percent); and Information technology (12 percent). When asked to rank specific scenarios, respondents chose a mass distributed DDoS attack on a major cloud provider as the most likely cross-sector mega event. Flaws in hardware or software widely used by the industry are most concerning for data theft or destruction scenarios. Full Report


8. 2016 Motorcycle Theft and Recovery (through 02/28/2017) Report
The National Insurance Crime Bureau (NICB); Page N/A
May 1, 2017

This NICB report on motorcycle thefts in the United States for 2016 states that a total of 46,467 motorcycles were reported stolen in 2016 compared with 45,555 reported stolen in 2015—an increase of two percent. Although 2016 delivered another slight increase in motorcycle thefts, motorcycle thefts are down considerably since 2006. They have dropped from 66,774 in 2006 to 46,467 in 2016—a decline of 30 percent. The top 10 states with the most reported motorcycles thefts in 2016 were California (7,506), Florida (4,482), Texas (3,692), South Carolina (2,057), North Carolina (1,847), New York (1,731), Indiana (1,397), Georgia (1,296), Missouri (1,195), and Nevada (1,177). The top 10 cities for motorcycle thefts in 2016 were New York (1,209), San Diego (849), Las Vegas (818), Los Angeles (760) San Francisco (616), Miami (610), Houston (607), San Antonio (411), Phoenix (347), and Austin, Texas, (343). The top 10 most stolen motorcycles in 2016 by manufacturer were American Honda Motor Co., Inc. (9,052 thefts), Yamaha Motor Corporation (7,723), American Suzuki Motor Corporation (6,229), Kawasaki Motors Corp., U.S.A. (5,221), Harley Davidson, Inc. (4,953), Taotao Group Co. Ltd (2,673), KTM Sportmotorcycle AG (762), Ducati Motor Holding (521), Genuine Cycle (463), and Kymco U.S.A., Inc. (453). Full Report


9. Global Insurer Mergers & Acquisitions In 2016
Conning; Page N/A
May 1, 2017

This study analyzes trends and drivers responsible for recent mergers and acquisition (M&A) activity, as well as individual transactions, to identify patterns pointing to the future landscape of the insurance industry. Global insurance M&A activity slowed in 2016. For the year, there were fewer transactions with values more than $1 billion, and two key health transactions from 2015 were either cancelled or are very unlikely to be completed. Completed transactions tended to be focused on companies repositioning themselves to address shareholder and regulatory pressures, or seeking specialized capabilities or new market opportunities. With the entire health insurance industry focused on how the ACA (Affordable Care Act) might change, M&A transactions involving Medicare and Medicaid continued. The insurance industry continues to innovate rapidly and transform itself in response to pressures created by the development of technology. The study includes a table listing the largest global insurance M&A in 2016 as well as a graph comparing global insurance M&As in 2015 with 2016 for property/casualty, life/annuity and health insurance/managed care sectors. “Global Insurer Mergers & Acquisitions: Activity Slows, but Pressures Remain” is available for purchase from Conning by calling (888) 707-1177 or by visiting www.conningresearch.com. 


If you have a suggestion for a study to be included in this section please email info@iii.org.