Commercial insurance buyers in North America should see relief from the hard market next year with a few lines seeing flat renewals or even decreases, according to a report from Willis Towers Watson PLC. Last week you were reading Property, Liability Reinsurance Rates Still Headed Upward. This week we’re bringing you:
Insurtech Funding On Track for New Record After Hitting $5.3B in Q3*
Insurtechs continue to attract significant investor cash, pulling in a near-record $5.3 billion for the 2021 third quarter, representing a total of 472 deals.
U.S. companies nailed down most of the cash, according to a Forrester report. Approximately 70% of Q3 venture capital and other investments went to U.S.-based companies.
Insurtech funding levels for the sector are approaching record territory so far this year. As of Q3, new financings surpassed $15 billion, more than 2019 and 2020 combined. It came in at a record $6.5 billion in Q1 2021, and almost $3.8 billion in Q2.
According to Forrester, those 472 funding rounds came from 296 investors. Half of the funding went to “enablers” – companies that promote operational improvement. The other half targeted disruptor insurtechs such as digital insurers and comparison marketplaces. This is a reversal from past periods where disruptors drew the bulk of financings.
Median funding raised hovered around $20 million and at least 12 deals were at $100 million or more.
Here are other findings from the report:
- Most of the funding went to early-stage startup but the two largest transactions were private investment in public equity (PIPE transactions), with employee benefits platform Alight raising $1.6 billion and digital home insurer Hippo pulling in $550 million as part of its reverse merger transaction.
- Other major transactions during the quarter include Coalition ($205 million), Envelop Risk ($130 million), and Marshmallow ($85 million).
North America is the least prepared to fight global insurance fraud – report*
Anti-insurance fraud efforts in North America are not up to the task of combatting global crime rings, a new report has found.
The report, “Globalization of Insurance Fraud,” was authored by the Coalition Against Insurance Fraud, in partnership with IBM and Luxoft. It surveyed “fraud fighters” – which refers to financial crime experts, data security analysts, government regulators, and insurance professionals – in 33 countries across North America, the Middle East, Europe, Asia, and Africa.
Of the various regions surveyed for the report, the Coalition Against Insurance Fraud found that most fraud fighters – 56.8% – said that they do not have dedicated resources or a fraud department specialized in dealing with globalized fraud. This is especially the case in the North America region, the report noted. On the flip side, it was the EU/UK region that was more likely to have dedicated internal resources to fight global fraud.
According to the Coalition, there were also “preparedness gaps” in planning against coordinated fraud attacks among fraud fighters across the globe. There was a “lack of confidence in the tools, resources and knowledge organizations have in place to combat globalized insurance fraud,” the report noted. Less than half of the survey’s respondents felt “somewhat confident” that their organizations were equipped to address global fraud, while only 4% said they were “extremely confident.”
Insurance rate hikes expected to moderate as capacity rises*
Commercial insurance buyers in North America should see relief from the hard market next year with a few lines seeing flat renewals or even decreases, according to a report from Willis Towers Watson PLC.
Several lines, such as cyber liability, though, remain tough and buyers should still expect significant rate increases, according to the report released Tuesday.
The hard commercial insurance market continues but with a deceleration in rate increases, Jon Drummond, head of broking, North America, said in the report.
“Supply, in the form of additional capacity provided by insurance carriers, is up, and a rise in supply is doing what it does best: lowers prices,” he said.
For 2022, property rates are expected to rise 2% to 10%; general liability rates are forecast to increase 5% to 12.5%; auto rates will likely be 5% to 15% higher; excess casualty will be flat to 15% higher for low to moderate hazard risks and 15% to 30% higher for high hazard; workers compensation rates will likely be down 2% to up 4%, according to the Willis report. Most of the lines saw higher rate increases last spring.
Directors and officers liability primary rates for public companies will be flat to up 25% and flat to up 20% for excess layers; private company D&O rates will be 5% to 40% higher, according to the report.
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