Large Insurers Embrace Digital Exchanges, Selling Their Own and Other Policies

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Welcome to iLeads Insurance Market Minute, where we bring you the latest, most relevant news regarding the insurance market. Last week you were reading How One Firm is Boosting the User Experience for Insurance Agents. This week we’re bringing you:


Global P&C premiums anticipated to more than double by 2040 – report*



A new report from Swiss Re Institute has forecasted that global P&C premiums are expected to more than double to US$4.3 trillion in 2040, from US$1.8 trillion in 2020.

In its study, ‘More risk: the changing nature of P&C insurance opportunities to 2040’, Swiss Re Institute suggested that this jump in premiums is anticipated as the P&C portfolio composition is also expected to shift from lower-risk motor insurance towards higher-risk property and liability lines.

The institute also noted that property insurance is forecasted to become the fastest-growing line of business. And while its share is shrinking, motor insurance is expected to remain the largest of all P&C lines, with premiums anticipated to nearly double by 2040.

Property insurance is expected to grow by 5.3% annually with global insurance premiums increasing to US$1.3 trillion in 2040, Swiss Re Institute said, from US$450 billion in 2020. According to the institute, economic development will remain a key driver of rising property premiums, contributing 75% or up to US$616 billion of new premiums.

Meanwhile, climate-related risks are expected to result in a 22% increase in global property premiums, or up to US$183 billion over the next 20 years as the severity and frequency of weather-related catastrophes increase.

Find out more in-depth here.


Global reinsurance rates to keep rising next year: Moody’s*



(Reuters) — Global reinsurance rates are likely to continue rising next year, in the low- to mid-single-digit percentage range, Moody’s analysts said Tuesday.

Reinsurance rates have been rising in the past few years due to natural disasters such as hurricanes and wildfires, as well as from the impact of the COVID-19 pandemic.

“We expect this (price) trend to continue,” Moody’s insurance credit analyst Helena Kingsley-Tomkins told a media briefing.

Insurers and reinsurers face the risk of future natural catastrophes, with climate change making them harder to predict. Moody’s said demand for insurance and reinsurance is also rising as the global economy recovers.

The ratings agency also raised its outlook on global reinsurers to stable from negative on Tuesday, citing rising premium rates amid a global economic rebound.

Reinsurers share the burden of large losses such as from hurricanes with insurers, in return for part of the premium.

Insurance losses as a result of the pandemic have amounted to around $37 billion so far, Ms. Kingsley-Tomkins said, far below initial industry projections of as much as $100 billion.

Fitch also said on Tuesday the outlook for the sector was improving due to higher prices, an economic rebound and lower pandemic-related losses.

Find out more in-depth here.


Large Insurers Embrace Digital Exchanges, Selling Their Own and Other Policies*



Major U.S. insurers are joining new digital exchanges to sell not only their own policies but also those of rivals, a fresh twist in an industry known for fierce competition.

The powerful new platforms, including Semsee, bolttech, Bold Penguin and Uncharted, pull data from many carriers, allowing agents to see multiple quotes for policies, much the way travel agents see competing air fares.

Chubb Ltd., Travelers Companies Inc. and Liberty Mutual have signed on recently as have agencies that also sell policies, executives said.

“The eyeballs are enormous and important to them,” said Philip Charles-Pierre, New York-based co-founder and chief executive officer of Semsee, which focuses on commercial policies. Many insurers have recognized that “if a large agency is using the platform, you need to be on that platform.”

The growth of digital distribution represents a shift in how insurers compete in markets for auto and homeowner coverage as well as business and commercial lines worth hundreds of billions of dollars annually, experts said.

Carriers also benefit from being able to meet more of a customer’s needs, even if they are not selling their own policy.

“It’s all about who owns the customer relationship,” said Mark Breading, a partner at Strategy Meets Action, a management consulting firm in New York.

The industry has been moving away from “captive” agents who sell only one firm’s policies, but digital exchanges are accelerating the trend, said Matt Leonard, an Oliver Wyman partner who works on insurance.

“The whole process is now supercharged by technology and a broader marketplace of players,” he said.

Partnerships with the exchanges have grown over the past five years. Despite digital revolutions in other industries, many insurance customers – especially small businesses – prefer to work with agents who can explain policies and find the best prices. As a result, the online tools insurers created on their own did not take off as expected.

Find out more in-depth here.


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