Best's Review - January 2023 Edition

< Previous58BEST’S REVIEW • JANUARY 2023 Underwriting & Loss Control Maple Syrup Producers Concerned About Impacts of Climate Change Best’s Underwriting Reports and Best’s Loss Control Reports provide insight into the lines of coverage, exposures and loss control for maple syrup producers. People love to put maple syrup on their breakfast pancakes, and it’s almost time for producers to begin harvesting that sweet, sticky elixir. Producers collect the sap from sugar maple trees from February to April each year, but they are becoming concerned about the impacts climate change could have on their industry. Changing weather patterns are resulting in earlier and more unpredictable tapping seasons, according to the Ontario Maple Syrup Producers’ Association. Very short production seasons are likely to become more frequent, and the availability of labor is likely to be impacted as a result of the seasonal fluctuations. “Syrup producers are also concerned about the impacts that extreme weather events, such as wind and ice storms, may have on the health of their sugarbushes,” the U.S. Department of Agriculture said in a report on the issue. “In adapting the maple industry to climate change, it will be important to utilize and promote adaptation strategies that can meet immediate as well as long term needs.” David Lutz, a research assistant professor of environmental studies at Dartmouth College, told Forbes in 2019 that maple syrup producers may want to adapt their technologies and collections logistics sooner rather than later to tackle the issues likely caused by climate change. The OMSPA recommends in its report that producers should invest in technology to reduce the amount of sap that needs to be boiled and use electric tools such as chainsaws and utility task vehicles to reduce the use of secondary fuels. It says that in the United States, the Proctor Maple Research Center at the University of Vermont is exploring the use of technology to produce better yields. Best’s Underwriting Reports has identified eight lines of coverage for maple syrup producers and has ranked the risk exposures associated with the challenges facing the industry. Those lines are Automobile Liability; General Liability: Premises and Operations; General Liability: Products - Completed Operations; Workers’ Compensation; Crime; Property; Business Interruption; and Inland Marine. Best’s Hazard Index ranks the risk exposure for the Lines of Business as Low (1-3), Medium (4-6) and High (7-9). Following are excerpts of the Lines of Coverage reports that have the highest hazard index rankings. Lines of Coverage Property The Property exposure for maple syrup producers will be substantial. Fire is the biggest source of loss for this industry because boiling and other heating processes are typical steps in making maple syrup. Most sugarhouses (i.e., buildings where maple syrup is produced) are made of wood, and many are located in or near the maple grove where sap is collected. Given the high temperatures at which the sap must be boiled, and the subsequently high chance of fire in a wooden building located amid trees, there will be a possibility of a catastrophic loss. General Liability: Products - Completed Operations The General Liability: Products — Completed Operations exposure for maple syrup producers will be moderate. Pure maple syrup has a fairly long shelf life if properly produced and packaged. Possible causes of loss and complaints from consumers could include foreign bodies, such as pieces of bark, small insects or other microorganisms in the product, and chipped or cracked bottles or other defective containers (such as decorative tins). Best’s Hazard Index Line of CoverageBest’s Hazard Index Property7 General Liability: Products - Completed Operations5 Business Interruption5ELEVATE YOUR INSURANCE INDUSTRY RESEARCH Strengthen your assessment of public and private insurer performance and industry trends with Best’s Financial Suite —the source for unparalleled ratings, data and analytics covering the insurance industry worldwide. 22.FIN001D Our Insight, Your Advantage ™ Learn More: sales@ambest.com www.ambest.com • (908) 439-220060BEST’S REVIEW • JANUARY 2023 Underwriting & Loss Control Business Interruption The Business Interruption exposure for maple syrup producers will be moderate. In the rare instance that an insured’s entire sugarbush (i.e., orchard) burns down, the loss would likely be total. A more likely exposure is damage to or the loss of the insured’s sugarhouse (i.e., where maple syrup is made through processes that generally require high heat). Most losses will occur during the peak sugaring season, roughly from February into April (depending upon the local climate), because that is the only time the sugarhouse, with its heat-producing equipment, is in use. Loss Control On-Site Inspection: • What are the age, construction and condition of the insured’s building(s)? • Are hazards posed by any adjacent buildings? • What is the insured’s layout? • Where is the sugarhouse (i.e., building where maple syrup is produced) located? How close is the structure to a water source that could be used for firefighting? • Types and amounts of products made and sold by the insured • Does the insured also sell other edible items, such as pancake mixes, cheeses and crackers, and gift baskets with gourmet foods? • Production equipment—number, age, type, condition • Does the insured operate a retail store or a roadside stand on the premises? • What type of equipment does the insured use as part of its operation? • What is the construction of the insured’s sugarhouse? —Anthony Bellano BRING UNSEEN RISKS TO THE SURFACE Expand your knowledge of the businesses and industries you are evaluating with Best’s Underwriting Reports and Best’s Loss Control Reports . Written from an underwriter’s and loss control professional’s perspective, these detailed, yet concise reports include the information you need to eﬃciently assess risk and exposures. 21.BUG007FA Our Insight, Your Advantage ™ Learn more: sales@ambest.com 333Ȑ)!/0Ȑ+)ˏȼˏȬȏȅȎȭˏȊȈȏȥȇȇȅȅ For more on this and other risk classifications, visit Best’s Underwriting & Loss Control Resources.61BEST’S REVIEW • JANUARY 2023 State Rate Filings California Grants Allstate First Auto Rate Hike in Nearly Five Years Private passenger auto rate hikes slowed dramatically in 2020 in California and ground to a halt in 2021, AM Best state rate data shows. The California Department of Insurance, which had been withholding action on automobile insurance rate requests since the early weeks of the COVID-19 pandemic, has approved a 6.9% personal auto rate increase for an Allstate subsidiary. The increase, sought by Allstate Northbrook Indemnity Co., was the first California auto rate increase for Allstate in almost five years, the company said. Insurance Commissioner Ricardo Lara earlier said he has been holding off on rate requests for private passenger auto as he claimed a number of carriers overcharged consumers who cut back on their driving during the pandemic. Insurers facing higher claims costs have sought widespread increases because of increased claims severity, but Lara pushed back. Allstate said the company worked closely with the department to obtain approval for the rate hike, adding the company believes it is “a positive first step to address auto profit challenges in California.” Earlier, CDI spokesman Michael Soller said Lara was holding off on auto rate changes because he wanted to protect consumers and hold carriers to account. “Many private passenger auto insurers … overcharged their policyholders during the pandemic and haven’t given enough back to consumers,” Soller said in August. “The California Department of Insurance is reviewing data from auto insurance companies deemed to have the largest gaps between what was owed and has been refunded to determine how best to close the gap on auto-insurance premiums owed to drivers.” – Timothy Darragh For the full list or to get more on this and other state rate filings, visit Best’s State Rate Filings. STAY AHEAD OF THE CURVE Best’s State Rate Filings ® helps you keep up with US P/C program innovations, ﬁnd out which competitors are entering which markets, and create targeted product development strategies. 22.BSRF012 Our Insight, Your Advantage ™ Learn More: sales@ambest.com www.ambest.com • (908) 439-220062BEST’S REVIEW • JANUARY 2023 State Rate Filings Best’s Rankings California Private Passenger Filings by Rate Impact Greater Than 1% Based on disposition dates from Jan. 1 to Dec. 31 covering years 2020 and 2021. For 2022, disposition date was from Jan. 1 to Dec. 1. 2022 GroupCompany NameAMB# Overall % Rate ImpactProgramDisposition DateEffective Date Allstate Ins GroupAllstate Ins Group0000086.90%Various Sublines10/30/202212/28/2022 Allstate Ins GroupAllstate Northbrook Indemnity Co0037916.90%Various Sublines10/30/202212/28/2022 2021 GroupCompany NameAMB# Overall % Rate ImpactProgramDisposition DateEffective Date 2020 GroupCompany NameAMB# Overall % Rate ImpactProgramDisposition DateEffective Date Hartford Ins GroupHartford Ins Group0000484.90%Mature/Senior Operators 5/20/20205/20/2020 Hartford Ins GroupTrumbull Ins Co0026104.90%Mature/Senior Operators 5/20/20205/20/2020 Hartford Ins GroupHartford Ins Group0000483.70%Mature/Senior Operators 5/20/20205/20/2020 Hartford Ins GroupHartford Underwriters Ins Co0022323.70%Mature/Senior Operators 5/20/20205/20/2020 Markel Corp GroupMarkel Corp Group01846812.30%RVs/Motor Homes/ Travel Trailers 4/7/20204/1/2020 Markel Corp GroupMarkel Amer Ins Co00060212.30%RVs/Motor Homes/ Travel Trailers 4/7/20204/1/2020 Markel Corp GroupMarkel Corp Group01846812.30%Motorcycles4/7/20204/1/2020 Markel Corp GroupMarkel Amer Ins Co00060212.30%Motorcycles4/7/20204/1/2020 CSE Ins GroupCSE Ins Group0030239.90%Various Sublines3/30/20204/1/2020 CSE Ins GroupCSE Safeguard Ins Co0019639.90%Various Sublines3/30/20204/1/2020 CSE Ins GroupCSE Ins Group0030239.90%Various Sublines3/30/20204/1/2020 CSE Ins GroupCSE Safeguard Ins Co0019639.90%Various Sublines3/30/20204/1/2020 Mercury Gen GroupMercury Gen Group0045243.00%Non-Standard3/20/20203/20/2020 Mercury Gen GroupOrion Indemnity Co0009803.00%Non-Standard3/20/20203/20/2020 Auto-Owners Ins GroupAuto-Owners Ins Group0043546.90%Various Sublines3/17/20203/17/2020 Auto-Owners Ins GroupCalifornia Capital Ins Co0031366.90%Various Sublines3/17/20203/17/2020 Auto-Owners Ins GroupEagle West Ins Co0031256.90%Various Sublines3/17/20203/17/2020 Kemper PC CompaniesKemper PC Companies0189085.84%Various Sublines3/13/20203/13/2020 Kemper PC CompaniesAlliance United Ins Co0122075.84%Various Sublines3/13/20203/13/2020 Tokio Marine US PC GroupTokio Marine US PC Group0187336.20%Various Sublines2/11/20202/11/2020 Tokio Marine US PC GroupTokio Marine America Ins Co0123406.20%Various Sublines2/11/20202/11/2020 Tokio Marine US PC GroupTrans Paciﬁc Ins Co0028826.20%Various Sublines2/11/20202/11/2020 Aegis Security Ins Co00371614.80%Motorcycles3/2/202011/1/2019 Progressive Ins GroupProgressive Ins Group0007804.20%RVs/Motor Homes/ Travel Trailers 2/4/20202/4/2020 Progressive Ins GroupProgressive Cas Ins Co0024074.20%RVs/Motor Homes/ Travel Trailers 2/4/20202/4/2020 Progressive Ins GroupProgressive Direct Ins Co0006494.20%RVs/Motor Homes/ Travel Trailers 2/4/20202/4/2020 Aspire Gen Ins Co02203011.50%Various Sublines1/15/20201/15/2020 Sterling Casualty Ins Co0138084.60%Various Sublines1/13/20201/13/2020 Source: Best’s State Rate Filings; data as of Dec. 2, 2022.GET THE BEST PERSPECTIVE FOR NAVIGATING RISK Best’s Financial Strength Ratings • Best’s Issuer Credit Ratings Best’s Issue Credit Ratings • Best’s Rating Evaluation Service Best’s Rating Assessment Service • Best’s Preliminary Credit Assessment Best’s Performance Assessment for Delegated Underwriting Authority Enterprises Our Insight, Your Advantage ™ Learn More: www.ambest.com (908) 439-2200 22.MK132E64BEST’S REVIEW • JANUARY 2023 Book Store Cyberinsurance Policy: Rethinking Risk in an Age of Ransomware, Computer Fraud, Data Breaches, and Cyberattacks The number of data breaches and other types of cybersecurity incidents continues to rise, and many businesses are turning to cyber insurance to provide coverage for any resulting liability, business interruption, regulatory fines and repairs to result from those attacks. But while cyber insurance is a vital tool in providing those coverages, it has neither improved cybersecurity nor reduced cyberrisk, said Josephine Wolff, an associate professor of cybersecurity policy at the Fletcher School of Law and Diplomacy at Tufts University, in her book, Cyberinsurance Policy: Rethinking Risk in an Age of Ransomware, Computer Fraud, Data Breaches, and Cyberattacks. Following is an edited transcript of an interview with AM Best TV. Why do you believe cyber insurance has not improved cybersecurity or curbed those losses? This is one of the most controversial parts of the book and it’s something I think insurers feel is a lot to put on them. I’ve had insurers say, “Why should we be improving cybersecurity? That’s not our job. Our job is to spread losses so nobody goes bankrupt responding to a cyberattack.” One of the problems we have in cybersecurity is there is a very small set of incidents that must be reported. We don’t know where these attacks are happening, how frequently and how much they cost. Insurers collect data about their customers and the losses and claims they file. Insurers say they can use that data to generate empirically grounded results about what people should be doing for cybersecurity. Also, they believe policy renewal is a good time to find effective security practices, such as “if you want to renew a policy, you have to implement these 10 things that we found work to drive down the rate of cyberattacks.” That’s the piece of this that has been missing for many years. What can insurers, governments, and others do to make cyber insurance a more effective tool for cyberrisk management? It’s important for those buying and selling cyber insurance to have more clarity and certainty about what it does and doesn’t cover. It’s about concretely specifying what’s an act of war when talking about cyberspace, or what’s going to be excluded as a state-backed cyberattack. It’s also about questions like: What is a computer crime? What kinds of cyber-related risks will be covered under each piece of these policies? —Lori Chordas Author: Cyber Insurance Ineffective in Curbing Cybersecurity Losses Josephine Wolff examines how insurers and others can make cyber insurance a more effective cyberrisk management tool. Go to Amazon to ﬁnd these and other books. Send us your book recommendations at bestreviewcomment@ambest.com. AM Best Business Trilogy AM Best details the history of AM Best, the history of credit rating agencies, and the life of Alfred M. Best. The Company—A History of AM Best The Industry—A History of Credit Rating Agencies The Man—A Biography of Alfred M. Best T h e A M B e s t B u s i n e s s T r i l o g y The Industry The Company The Man Industry Theeee A History of the Credit Rating Agencies AM B est T h e A M B e s t B u s i n e ss T r i l o g y The Industry The Company The Man AM B est A History of AM Best Company Theee T h e A M B e s t B u s i n e ss T r i l o g y The Industry The Company The Man AM B est A Biography of Alfred M. Best Man Theee AM Best TV Visit bestsreview.ambest.com to watch the interview with Josephine Wolff. Lori Chordas is a senior associate editor. She can be reached at lori.chordas@ambest.com.65 BEST’S REVIEW • JANUARY 2023 App Store Car Insurance App In inflationary times, one of the biggest concerns insurers and their policyholders have is rising car insurance premiums. Cars cost more to repair and parts can be more difficult to get amid supply chain disruptions. Shanna Barlow, manager of digital products at The General, an agency that focuses on auto insurance and a subsidiary of PGC Holdings Corp., an affiliate of American Family Insurance, spoke about her company’s app and how it’s intended to make the whole car- insurance-buying experience more efficient, as well as serve as a model for an industry that’s working to hold the line on premiums. Following is an edited transcript of the interview. What is the inspiration for the app? The inspiration for the app is really quite basic: to make things and processes easier for customers. We want to be there to serve our clients and our customers where they want to do business with us, when they want to do business with us. How does the app automate claims processing and streamline the whole insurance purchasing process? From a claims perspective, our customers have the ability to go out and submit their first notice of a loss. When they do have a claim, they can easily access our app and their policy information. How is The General specifically equipped to provide this tool? Specifically, we do have some technologies that are at play, but mostly it’s around the data prefill that we have for our customers. Enabling our customers to log in through very simple means, whether that’s their password and ID, or fingerprint ID, or social logins. Making that intuitive to access our authenticated space. From a business standpoint, this obviously helps The General because it makes it more accessible for everybody to purchase insurance. Is that fair to say? It does help The General in twofold, that we do see some growth in the sales application for that, in addition to allowing our customers to self service when they want, how they want. It really does help us reduce overall expenses inside the company, as well as provide valuable benefits for our customers that they want and that they’ve asked for. Given the situation with inflation and the rise in premiums, how does it help in that regard? Having that automation at hand really does help facilitate that process and close our window from a claims perspective of how long those are open and get our claim adjusters the information that they need right away in order to continue to process that claim. —Tom Davis The General: App Helps Make Car Insurance Choices Amid Inﬂation The General hopes to reduce its own expenses allowing people to self-manage their car-insurance-buying experience. 22.MK147 Our Insight, Your Advantage ™ Learn More: www.ambest.com/mobileapp www.ambest.com • (908) 439-2200 BEST’S CREDIT RATINGS MOBILE APP Instant Access to Best’s Financial Strength Ratings COMING SOON: ENHANCED VERSION WITH NEW FEATURES AM Best TV Visit bestsreview.ambest.com to watch the interview with Shanna Barlow. Tom Davis is managing editor. He can be reached at tom.davis@ambest.com.66BEST’S REVIEW • JANUARY 2023 Trending: Best’s News Trending: Best’s Review 1. Automakers Build New Insurance Future 2. Whittling Down: In 2023, Cuna Mutual Group Prepares to Rebrand and Focus on Middle Market 3. Top Global Insurance Brokers — 2022 Edition 4. At a Glance — Auto Insurance Initiatives 5. Top 25 US Commercial Auto Writers —2022 Edition Trending: BestWire $ 1. Kemper Lays Off 3% of Workforce, Cites Inflation and Other COVID-19 Impacts 2. Best’s Rankings: Progressive Surpasses State Farm to Become Largest US Total Auto Writer in 2021 3. Berkshire Hathaway 3Q Insurance Underwriting Loss Widens to $962 Million, Led by Geico 4. Cincinnati Financial Posts $418 Million Third-Quarter Net Loss on Stock Valuation Drop, Combined Ratio Up Due to Hurricane Ian 5. Florida Citizens Reports $3.8 Billion in Ian Losses; NFIP Losses Could Reach $5.3 Billion Trending: AM Best Webinars 1. How Imagery Models Are Delivering Ground Level Truth for Underwriting Risk 2. How Insurers Are Improving Auto Claims Experience by Focusing on Customer Satisfaction 3. Working Together to Mitigate Nat Cat Risk in Challenging Climate Times 4. How Insurers Can Navigate Economic Downturns Through Modern Product Management 5. Generational Effects on Juries and Litigation Outcomes Trending: AM Best TV - News Coverage 1. Philly I-Day Cyber Panel: It’s Less About the Information and More About Defenses 2. IOA’s Bridges: Rates, Cyberrisk, Weather Challenge Agribusiness 3. IGI’s Jabsheh: Reinsurers Coming to Grips With Volatility, Changing Risk Landscape 4. HSB’s Riggs: Insurers Increasingly Employ Sensor Technology to Mitigate Risk 5. Conner Strong’s Tiagwad Honored by Peers at ISOP Gala Risk Automaker Initiatives Remain at Top of List of Best’s Review Articles Other trending content includes top global brokers, coverage of industry layoffs and Berkshire Hathaway’s third-quarter underwriting loss. These were the top trending items from Sept. 23-Nov. 23, 2022. Features, news articles and videos were based on page views. Webinars were based on webinar attendance. The above content can be viewed on demand at bestsreview.ambest.com, or by visiting AM Best’s home page at www.ambest.com. $ Payment or subscription required. Visit www.ambest.com/advertising to learn more about how to advertise in Best’s Review, BestWire, AM Best Webinars and AM Best TV. Automakers Layoffs Cyber67BEST’S REVIEW • JANUARY 2023 Trending: Best’s Research Trending: Best’s Special Reports 1. Rising Interest Rates Leading to Large Unrealized Losses on Fixed Maturities $ 2. Private Equity Continues to Make Inroads in Life/Annuity Segment $ 3. ID Theft and Personal Cyber Coverage Becoming Essential $ 4. Declining Yields Leading to P/C Insurers’ Investments in Riskier Assets $ 5. Private Placements, Structured Securities Now a Bigger Part of Fixed-Income Portfolios for Health Insurers $ Trending: Best’s Market Segment Reports 1. Hints of Trouble Resurface for Commercial Auto After Bright 2021 $ 2. US Homeowners Line Well Capitalized but Weather Events Pose Significant Uncertainty $ 3. Solid Results for Title Insurers Amid a Volatile Landscape $ 4. US Workers’ Compensation Generates Solid Profits but the Future Remains Uncertain $ 5. NFIP Adrift but Private Flood Insurance Gains Traction $ Trending: Best’s Commentary 1. Hurricane Ian Will Test Florida’s New State-Run Reinsurance Program 2. Impact of Rising Interest Rates on Insurers’ Balance Sheets Will Depend on Accounting Method Used 3. UK Life Insurers’ Balance Sheets Resilient Amid Gilt Market Turbulence 4. UK Solvency II Reform Likely to Drive Investment Portfolio Restructuring 5. Reinsurer Losses Related to Florida Specialists Continue to Climb Despite No Significant Storms Trending: AM Best TV - Research Coverage 1. AM Best: Insurance Growth in Some Asia Markets Could Outperform the Economy 2. AM Best: Hurricane Ian Expected to Test Florida’s New State-Run Reinsurance Program 3. AM Best: Inflation in Asia Will Have Greater Impact on Longer-Tailed Lines 4. AM Best: Workers’ Comp Generates Solid Profits Despite Uncertain Future 5. AM Best: Private Equity Continues to Make Inroads in Life/Annuity Segment Trending Research Includes Reports on Commercial Auto and ID Theft/Personal Cyber Coverage Other trending research includes reports on the U.S. homeowners line, title insurance and private flood insurance. These were the top trending research and commentary reports from Sept. 23-Nov. 23, 2022. $ Payment or subscription required. Best’s News & Research Service subscribers can download PDF copies of all Best’s Special Reports, Best’s Commentaries and Best’s Market Segment Reports along with supporting spreadsheet data at www.ambest.com. Asia Florida Commercial Auto Interest RatesNext >