Last week, with surprisingly little fanfare as America was winding down for the holiday weekend, President Obama signed the JOBS (Jumpstart Our Business Startups) Act into law. The law is certainly among the most promising pieces of bipartisan legislation introduced during this term and is certain to increase President Obama’s chances for re-election, especially given that his presumptive opponent’s strong suit is his success in business and his promise to repair the economy. It is said that a rising tide lifts all boats. The U.S. insurance industry stands to benefit as much, and perhaps even more, than its counterparts in … Continue Reading →

The performance of the U.S. property & casualty insurance industry is more counterintuitive and potentially troubling today than ever before. And yet, across all products — including in personal and commercial lines — in a static market with paltry investment returns, in a soft pricing environment where price increases are hard to come by, and with year-over-year industry growth in 2011 of little more than 1%, most of the largest P&C carriers have continued to grow and profit. Unless you live under a rock like Rick in one of GEICO’s offbeat commercials, it is hard not to have noticed that the biggest auto … Continue Reading →

On the surface, the U.S. property and casualty (P&C) insurance industry received good news on Valentine’s Day, during Chinese Vice President Xi Jinping’s visit to the United States. U.S. Vice President Joe Biden announced the “Joint Fact Sheet on Strengthening U.S-China Economic Relations,” under which China agreed to open up its US$65 billion auto insurance market to foreign competition. The Chinese insurance market had 2010 annual premiums exceeding US$236 billion, including US$150 billion in life and US$86 billion in P&C, of which foreign life and general insurers hold insignificant market shares of roughly 4% and 1%, respectively. Non-China-based insurers, originally lured to … Continue Reading →

January 31, 2012 has come and gone, and the Federal Insurance Office (FIO) Report on insurance industry modernization — clearly mandated by Dodd-Frank to have been delivered to the U.S. Congress no later than that date — is now officially late. Although the report may just be another in a string of late Dodd-Frank deliverables, could its delay indicate something more foreboding than a blown bureaucratic deadline? As I have articulated in detail in prior blog posts on this subject (“FIO Report to Congress: The Moment of Truth Approaches” and “The U.S. Federal Insurance Office: McRaith Takes the Reins”), numerous large and … Continue Reading →

The Federal Insurance Office (FIO) is busy finalizing its eagerly awaited report and recommendations on modernizing and improving insurance regulation, which — mandated by the 2010 Dodd-Frank Act — is required to be delivered to the U.S. Congress this month. The industry stakeholders involved in the submissions process leading up to this report have been numerous and diverse, which, in my view, is both positive and negative. As a refresher, under Dodd-Frank, the U.S. Department of the Treasury formed the Federal Stability Oversight Council (FSOC), which in turn created the Federal Insurance Office (FIO), which has now appointed members to … Continue Reading →

In spite of a global recession now heading into its fourth year, mergers-and-acquisitions (M&A) activity in the Property & Casualty (P&C) insurance industry continues unabated, extending the uptick that began last year. Including the IT services, software, and technology vendors that serve the broader insurance industry, more than 300 M&A transactions have already been completed. The majority of M&A transactions have taken place in the distribution space, where the 10 largest global retail and wholesale insurance brokerage firms have made the majority of all acquisitions. For the insurance companies themselves, the big have gotten and will continue to get bigger … Continue Reading →

Recent natural catastrophes in the Northeastern United States have brought a renewed focus to an issue that has dogged the North American Property & Casualty (P&C) insurance industry for years. On the surface, the problem is about the denial of some claims for water- and weather-related damage. The deeper issue relates to the lack of transparency insurance companies provide about coverage details. A recent article in the Wall Street Journal calls attention to the fact that, contrary to common belief, policy language in property insurance policies is not at all standard. The author advises consumers to ask a lot of … Continue Reading →

It is well understood that the U.S. healthcare system is under tremendous pressure from all directions. Government fee reductions, declining private-sector program enrollments, provider and supplier cost and price increases, and uncertainties of impending regulatory change are simultaneously impacting healthcare economics. What is not so well understood are the repercussions of this pressure beyond the healthcare system. One relevant and glaring case in point is the significant and growing practice of cost shifting — charging the nation’s property and casualty (P&C) insurance companies, specifically the automobile insurance segment, for medical-provider services. This leakage has been masked until now by lower-than-usual … Continue Reading →

Last week, State Farm Insurance, the largest automobile insurance company in the United States, joined a small but growing number of insurers in announcing a usage-based insurance program for drivers willing to have their personal driving habits monitored in exchange for insurance discounts. The technology involved in these programs is generically known as telematics, and includes both embedded (factory-installed) and aftermarket devices that plug into the data port found, as legislated, in all vehicles manufactured after 1995. State Farm is going the aftermarket route, giving participating drivers a small device that connects to the On-Board Diagnostic (OBD) port located near the steering wheel, along with a companion … Continue Reading →

Yes, the United States does have a Chief Technology Officer — our first ever — and after hearing Aneesh Chopra speak, one could easily conclude that President Obama created the position specifically for him. As noted on the White House website, “our mission is to assist the President in harnessing the power and potential of technology, data and innovation to transform the Nation’s economy and improve the lives of everyday Americans.” And that is exactly what he is doing. The affable Mr. Chopra energized a packed room of Chicago’s tech faithful with his keynote speech Friday at the Chicago Techweek conference. … Continue Reading →