News TUESDAY
17.10.17
Technology should mean evolution
US homeowners’ premiums increased from
$89 billion in 2015, to $91 billion in 2016,
and are expected to reach $93 billion in 2017,
according to Aon Benfield’s annual Homeowners’
ROE Outlook report, which forecasts continued
growth in direct US homeowners’ insurance
premiums for 2017 despite a decreasing return
on equity (ROE) for insurers.
The study highlights that the top 20 US
homeowners’ insurers secured an average
countrywide rate increase of 3 percent during
the 18 months to August 2017, with the highest
average rate increase of 7 percent being achieved
in the Texas and North Carolina.
Meanwhile, Florida insurers achieved an
average rate increase of 5 percent during
the period, which will likely be insufficient to
maintain their current ROE levels given the
increased costs facing the state’s carriers from
benefits and claims adjustments.
According to the report, prospective 2017
after-tax ROE for US homeowners’ business
was 4.5 percent on a countrywide average
(2016: 6.7 percent), and 9.1 percent excluding
the state of Florida.
Challenges to the ROE projections include
a slowdown in insurers’ rate increases against
a backdrop of loss and expense inflation, and
an increased AM Best capital charge resulting
from insurers’ premium and exposure growth—
which is currently being offset by reduced
reinsurance costs.
Greg Heerde, head of Americas Analytics
for Aon Benfield, said: “Given the year-onyear
increase in premiums, US homeowners’
insurance can be considered a growth engine
within the industry. However, we continue
is about. There will be different types of affinities,
different organisational forms and therefore
different risks that will need to be managed.”
Mang agreed that the insurance industry
needs to become more agile in addressing these
new risks, adding that the practical matter was
that those new forms of organisations will still
need things such as retirement services and
healthcare delivered to them.
“There are all kinds of topics we take for
granted that are part and parcel of being a
part of an organisation,” he said. “If more of
the economy shifts to this new form—and we
don’t even have a name for it—then we’ll have to
organise things in a very different way.”
According to Mang the insurance industry
should not be looking at these new organisations
or technologies as being disruptive, as that word
implies a form of displacement.
Instead, he said, they should be treated more as
a form of evolution, concluding that in 10 years’
time the market will be fundamentally different
from where it is now, and that individual companies
will have to come to terms with those changes. n
to monitor this line business carefully, as it is
difficult to say at this stage whether insurers’
approved rate increases will be sufficient to
match their loss and expense inflationary
pressures of the future.”
Parr Schoolman, head of Aon Benfield’s
Risk and Capital Strategy team, added: “Using
advanced data and analytics, we are continuing
to develop tools and services that provide clients
with insight, at a granular level, into which
homeowners’ risks are most likely to be profitable
and are in alignment with their overall capital
strategy.”
Developed by Aon Benfield Analytics and
updated annually, the Homeowners’ ROE Outlook
report provides a comprehensive analysis of
the US homeowners’ insurance sector, based on
industry aggregate state level statutory financial
filing information along with rate filings and
supporting actuarial information for the 20 top
US homeowners’ insurance groups by state. n
Re/insurers should view technology as providing
the means to evolve and not view it as
something that will disrupt the industry, Paul Mang,
global CEO of analytics at Aon, told PCI Today.
Mang said that technology was changing
things on an organisational level to an extent
that has never been seen before, and that the
old traditional way of operating therefore had to
change in order to cope.
“Uber is the largest transportation company
and it doesn’t own a single car,” he pointed out.
“Airbnb is the largest hospitality company in the
world and it doesn’t own a single building. They
have no assets.
“Those are exceptions at the moment.
Most things are like this hotel that’s hosting
PCI—someone owns them. But over time that
will change; the normal corporate form of
organisation will yield to some degree to a more
independent form of network.
“That doesn’t mean that insurance risks go
away, it just means that they are shifted around.
We need products that better address these new
risks, and that’s what this new community concept Paul Mang
$93bn premium forecast in US homeowners’ insurance
“US homeowners’ insurance
can be considered a growth
engine within the industry.”
www.intelligentinsurer.com | www.bermudareinsurancemagazine.com DAY 3: Tuesday October 17 2017 | PCI TODAY | 17