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- ☀️ Morning Exec 06-07
☀️ Morning Exec 06-07
Psychedelics as a insurance opportunity, the P&C sector bounces back, and much more.
Good morning. It's Friday, June 7, and we're covering psychedelics' as a insurance opportunity, the P&C sector bounces back, and much more.
A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.
MARKETS
Nasdaq | 17,133.12 | -0.23% |
S&P | 5,346.99 | -0.11% |
Bitcoin | $69,351.90 | 0.04% |
Progressive | $212.53 | -0.31% |
Berkshire Hathaway | $413.72 | 0.64% |
UnitedHealth Group | $490.69 | -2.24% |
State Farm | $119.00 | 3.57% |
NEWS & INSIGHTS
Daniel Wood talks about potential insurance opportunities in emerging industries such as climate tech, bio tech, and artificial intelligence. CEO Joseph Ziolkowski of Relm Insurance is focusing on coverages for emerging industries, particularly alternative therapeutics like psychedelic drugs. Ziolkowski highlights the advancements in using psychedelics to treat neurological diseases and the increasing investments in this sector. The regulatory frameworks for psychedelics are evolving globally, with some regions legalizing or decriminalizing certain aspects of these drugs for medical use. Overall, there is a growing interest in insuring companies involved in alternative therapeutics, presenting a significant opportunity for insurance brokers.
The CEO of TransRe, Ken Brandt, warned of a potential liability crisis in the reinsurance industry in the coming years due to significant losses from past accident years. He highlighted the challenges in the U.S. casualty market as a major concern for the industry. Brandt expressed uncertainty about the future profitability of recent accident years and mentioned tough negotiations in the current renewal season for casualty covers. Reinsurers are facing unexpected claims emergence and questioning the outlook for the industry, with potential implications for a future liability crisis. Brandt emphasized the need for careful assessment and justification of capital investments in light of these challenges.
The US property and casualty insurance sector showed a significant improvement in the first quarter of 2024 after experiencing losses in the same period of 2023. The sector’s combined ratio dropped to 94.2 from 102.5, with catastrophe losses contributing to this improvement. Pre-tax operating income increased by 332.9% to $30 billion, driven by underwriting gains and a rise in earned net investment income. The industry’s net income more than quadrupled to $39.9 billion, with industry surplus reaching $1.1 trillion.
A new Florida law now requires Brazilian butt lift clinics to carry medical malpractice liability insurance, following infections and patient deaths in south Florida. The law mandates liability coverage of at least $250,000 per claim and $750,000 annually for clinics transferring more than 1,000 cubic centimeters of fat. Physician offices must register with the state Department of Health, regardless of the type of fat transfer procedure. The law also increases penalties for non-compliance, enhances inspections, and enforces safety procedures at clinics to regulate the troubled butt-lift business in Florida.
The commercial property insurance market is more stable and capitalized in 2024 compared to the challenging conditions of the previous year. Rate increases have subsided, with most renewals seeing single-digit increases and some even experiencing rate decreases. Trends to watch in the second half of 2024 include reinsurance market stabilization, wildfire concerns, and updated catastrophe models impacting insurer appetite and pricing. The casualty insurance sphere remains competitive for workers compensation, with mental injury claims and catastrophic injuries identified as important trends to monitor in the coming months.
The U.S. personal insurance sector is expected to see improved underwriting performance in 2024 due to a decrease in claims severity and significant rate increases. Despite enduring underwriting losses in 2023, the sector’s combined ratio improved to 107% from 110% in the previous year. The personal auto line experienced volatility in recent years, with substantial rate increases leading to a better ratio of 105% in 2023. Personal auto premium rates have been rising, but a return to underwriting profits may lead to a drop in momentum.
Guidewire has made a significant investment in Indico Data, a company that automates critical workflows for industries like insurance and financial services. The funding round was led by .406 ventures and will enhance Indico Data’s AI platform to expand its global reach. Indico Data is set to launch an integration with Guidewire PolicyCenter to help underwriters manage unstructured data in broker submissions more effectively. The partnership between Guidewire and Indico Data aims to transform underwriting and claims processes for P&C insurers by providing innovative solutions.
INSURTECH
Generative AI is revolutionizing the insurance industry by reducing paperwork, speeding up processing times, and providing personalized interactions. Simplifai highlights the benefits of generative AI, including enhanced customer support, actionable insights from data, and cost reduction through automation of routine tasks like underwriting and claims processing. Common uses include improving claims processing efficiency, enhancing customer interactions, and refining risk assessments in underwriting. While promising, the implementation of AI faces challenges such as integration with legacy systems and ensuring data privacy. The future of generative AI in insurance looks promising, with the potential for more personalized and efficient services.
Katapult, an e-commerce financial technology company, has launched Katapult Layoff Insurance, powered by Harmonic Financial Technology. This product aims to provide financial security for consumers facing involuntary job loss, offering a cash benefit of up to $2000. Available through Katapult’s mobile app and website, the insurance requires a low monthly fee and has a 90-day waiting period before claim eligibility. Andrew Drake, CEO of Harmonic Financial, and Orlando Zayas, CEO of Katapult, emphasized the importance of addressing consumers' financial vulnerabilities with this new income protection insurance.
Continuity, a Paris-based firm specializing in AI and external data for P&C insurers, has secured a €10m Series A funding round led by 115K, with additional backing from Elaia and Bpifrance. This follows a €5m initial investment in 2021. The funding will enhance Continuity's technology, which improves risk selection and monitoring for insurers, addressing inaccuracies in risk assessment. Continuity’s SaaS solutions, used by over 500 underwriters for one million contracts, are trusted by major insurers like AXA and Crédit Agricole. The company plans to expand its team and European presence with the new funds.
USI Insurance Services launched PATH, a technology-enabled risk control platform that provides tailored solutions based on industry-specific data. The Baldwin Group introduced Cyber Navigator, an API-connected underwriting platform that offers instant quote options and competitive cost analysis. CLARA Analytics launched CLARA Fraud, an AI-based fraud detection product for workers’ compensation claims to increase visibility into suspicious claims. CLARA Fraud utilizes AI to analyze case details, billing records, and medical transcripts to identify fraudulent activity with limited false positives.
Property catastrophe reinsurance rates are expected to decrease by 5% on average at the upcoming June 1 renewal date, attributed to higher levels of capital in the sector. Despite this, there are concerns about potential reinsurance losses due to an anticipated active hurricane season in the Atlantic basin. The industry has seen rate increases in recent years due to rising losses from natural catastrophes, leading some insurers to withdraw from high-risk areas like California and Florida.
OTHER NEWS
The Boston Celtics beat the Dallas Mavericks in game 1 of the NBA finals 107-89.
SpaceX’s Starship successfully completed its first return from space, demonstrating potential for future reuse in space exploration as part of Elon Musk’s vision.
A study found that software projects adopting Agile practices are 268 percent more likely to fail compared to those that do not, highlighting the importance of clear requirements documentation before development starts.
AI is increasingly being used in software engineering at Google, with advancements in machine learning and AI-powered improvements leading to widespread enthusiasm among software engineers for how AI is helping write code.
The bankruptcy trustee for Synapse reports an $85 million shortfall in customer savings, leading to a major meltdown in the U.S. fintech sector with over 100,000 customers locked out of their accounts.