Willis Towers Watson | May 08, 2020
Willis Towers Watson projects will see a $51 billion reduction in claims costs this year, while returning an estimated $16 billion to consumers through refunds.
Refunds estimated so far are estimated at $10 billion and insurers will likely kick more back to customers if stay-at-home orders continue.
COVID-19 may add $16.7 billion to U.S. workers’ compensation losses and increase losses in the U.S. and U.K. by $11 billion for business-interruption.
If the novel COVID-19 pandemic is brought under control soon, the disease’s impact on the insurance industry as a whole may be pretty much a wash.
It not, the industry may be on the verge of an historic catastrophe.
A report by Willis Towers Watson projects that personal and commercial auto insurers in the United States and United Kingdom will see a $51 billion reduction in claims costs this year, while returning an estimated $16 billion to consumers through refunds. Refunds estimated so far are estimated at $10 billion and insurers will likely kick more back to customers if stay-at-home orders continue, the analysis says.
On the other hand, COVID-19 may add $16.7 billion to U.S. workers’ compensation losses and increase losses in the U.S. and U.K. by $11 billion for business-interruption and event-cancellations, $4 billion for credit and sureties, $1.5 billion for employment practices liability and $1.5 billion for directors and officers insurance, the report says.
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Calculating the net decrease in losses for auto ($35 billion) and comparing that to the sum of the increased losses in the other lines ($34.7 billion) results in the two numbers pretty much cancelling each other out.
Moderate Scenario
Those projections follow Willis’ “moderate scenario,” which assumes that four months of strict and two months of light social distancing will be effective at controlling the spread of the novel coronavirus fairly quickly. The moderate projection also assumes economic growth will resume before this fall and consumer confidence will return by winter.
There are reasons to be skeptical as to whether strict social distancing will last that long. As of Friday, more than half of the U.S. states had allowed some businesses to reopen. In Georgia, consumers can even go get a tattoo or a haircut.
Severe’ Scenario
If a “severe” scenario projected by Willis plays out, the insurance industry could be in dire straits. While social distancing will reduce U.S. and U.K. auto claims by $77 billion, the pandemic could increase costs for other lines — primarily workers’ compensation and general liability — by $140 billion. That is more than a third of the entire $365 million in premiums reported by U.S. property and casualty insurers in 2018.
The severe scenario assumes that social distancing lasts for 12 months and a global economic contraction continues until early next year.
For true doomsday believers, Willis offered a “limited success” scenario that assumes governments lift social distancing rules after three months because of the catastrophic economic cost and the virus spreads until finally controlled by “herd immunity.” If that plays out, Willis projects $92 billion increase in workers’ compensation losses, a $27 billion increase for general liability and $22.7 billion more in event cancellation losses, as well as increases in losses to other lines.
Optimistic’ Picture
Willis also offers an “optimistic” scenario for those who see the glass as half full. That assumes government mitigation measures are highly effective and are able to control COVID-19 within three months, while consumer demand for get-away time returns within four months. In that case, auto claims drop by only $28 billion, offset by an additional $1.1 billion in business interruption and event cancellation claims and $600 million more for directors and officers claims. A $3.3 billion increase in workers’ compensation claims from the health care sector is largely wiped out by a $3.1 billion decrease in claims from workers outside of health care in the optimistic scenario.
“We have not associated probabilities with these scenarios, but we we regard all of them as possible and at his point should not be considered extreme tail scenarios (although some of them may have been before the COVID-10 outbreak),” the report says.
Workers’ Comp Losses
Workers’ compensation line will suffer the greatest losses from the pandemic compared to other lines in each of the scenarios. Ultimate losses will vary greatly depending on how many workers are infected, and what share of those who’re infected must be hospitalized or eventually die.
Willis estimated that each COVID-19 claim will bring $35,000 in medical treatment costs and $3,000 in temporary disability. Some of those will be death claims that cost an average of $1 million for physicians and $750,000 for other health care workers, the study says.
In its moderate scenario, Willis assumed that 20% of hospital-employed physicians and nurses will be infected and 12.5% of other healthcare workers will be infected. That amounts to 1.1 million infected workers, with. 9.5% of them requiring hospitalization and 9,300 of them dying from the disease.
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In the worst-case, “limited success” scenario, Willis projects a 75% infection rate for all health care workers, resulting in 7.9 million cases and 129,000 deaths.
The broad range of scenarios that Willis included in the report mirrors an analysis released earlier this month by the National Council on Compensation Insurance. That report projected losses ranging from $2 billion to $81 billion, depending on infection rates and the number of claims that are deemed to be compensable.
In conclusion, Willis said the cumulative impact of the pandemic could “substantially exceed” losses from the Sept. 11, 2011 terrorist attack on the World Trade Center. Along with those losses, the industry faces a serious risk that its reputation will suffer, the report says.
A good portion of these losses will probably be considered to have been unintended, arising from broad wordings in smaller commercial policies, It will also beg a question however as to the full extent this should be transferred into the industry, which after all exists to provide continuity for just this type of event.
- A report by Willis Towers Watson projects.
AboutWillis Towers Watson
Willis Towers Watson (NASDAQ: WLTW ) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has more than 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance.
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INTELLECTUAL PROPERTY
Majesco | September 03, 2021
Majesco, a global leader of cloud insurance software solutions for insurance business transformation, today announced the launch of Majesco Digital Underwriter360 for P&C, a next-gen insight driven underwriting workbench for commercial and specialty lines. Majesco Digital Underwiter360, powered by Majesco Digital1st® Insurance is an intelligent, insight-driven cloud-native SaaS, that enhances underwriting efficiency and profitability, drives underwriter productivity and profitability, and creates greater transparency and collaboration with brokers.
“In order for insurers to elevate the customer experience, they must make the underwriting processes more efficient, profitable and responsive,” says Manish Shah, President and Chief Product Officer for Majesco. “Built on Majesco Digital1st® Insurance no code/low code platform, Majesco Digital Underwriter360, leverages today’s leading technology to increase efficiencies and effectiveness, maximize underwriter’s expertise and improves collaboration between underwriters and brokers. Our relationship with KPMG to develop and deliver another next-gen digital solution built with the customer in mind brings a new level of innovation and capability to the industry.”
SMA research highlights the expectations of insurance executives regarding the magnitude of changes coming… 80% of insurance executives expect underwriting to be significantly different than it is today within 5 years and 94% expecting significant change in 10 years. The expected changes expose the gaps between today’s capabilities and those required in the future and which Majesco Digital Underwriter360 addresses.
"The potential for underwriting transformation in P&C is tremendous,” stated Deb Smallwood, Senior Partner at Strategy Meets Action. “Our research indicates significant recognition that this will take a new solution and set of technologies separate from policy management solutions. To make this great leap forward, insurers need new thinking on roles and processes coupled with a new digital platform that is advanced beyond the portals and workbenches of the past. Majesco Digital Underwriter360 represents an innovative new solution that will help revolutionize underwriting.”
Majesco engaged KPMG LLP in the experience centric design and development of the solution using Majesco Digital1st® Insurance, a no code / low code platform with robust insurance content. This new, innovative solution focuses on better insights, increased productivity, and driving more seamless interactions for the underwriter.
Some of the key capabilities include:
Insight driven: Multi-level risk view, across the portfolio and line of business for digitally optimized risk assessment and management.
Just in time, relevant information: Data and information pushed to the underwriter’s fingertips at the exact moment they need it to optimize underwriting.
Intelligent data ingestion and extraction: Refine rules and leverage technologies like AI to collect, automate and analyze the data to provide a full picture of the exposures for a given submission.
Portfolio Optimization: Prioritize, assess, and reinforce risk appetite across the portfolio of business through the use of data and a holistic view of risk.
Broker Collaboration: Increased and predictable collaboration between broker/agent and underwriter creating full transparency and speed for quote.
Streamline underwriter workflow and improve risk assessment: Automated, efficient workflow, routing and case management capabilities to optimize underwriting and improve risk assessment leading to better outcomes.
Automated data prefills: Using a growing array of structured and unstructured data sources from InsurTech and traditional third-party data providers to optimize the underwriting process and maximize underwriter’s knowledge.
Underwriting control and oversight: Using authority management to monitor and manage underwriting limits, risks and more to align to company guidelines and strategy.
Core Integration: Pre-integrated with Majesco Core Suite for P&C and can easily be integrated with any other core solutions.
“We're seeing a lot of activity in digital underwriting as a lynchpin component of modernization and transformation efforts,” stated Jeanne Johnson, Principal at KPMG LLP. “Leveraging a platform solution that connects insights across the underwriter’s interactions, and more easily integrates a rich mix of relevant data offers a path to more sustained value. Productive data, alongside digital enablement, machine learning, and Underwriter360, can address some longstanding pain points to better equip the underwriter talent - to better segment, predict, service, and deliver profitable growth that will continue to be a competitive differentiator.”
As insurers continue to adopt the latest digital technologies, tedious and time-consuming underwriting processes still make it difficult to quickly respond to customer needs and expectations. Without a holistic and unified view, underwriters cannot access risk information to facilitate quick and calculated underwriting management. Majesco Digital Underwriter360, digitally enables technology and data proliferation that transforms how underwriters collect risk data, analyze it, perform multi-level risk assessment, and make decisions resulting in reduction of underwriter’s administrative workload.
The increased efficiency and effectiveness in the underwriting process enables underwriters more time to be utilized in making key decisions and increase collaboration with distributors as opposed to spending time in core processes due to technologically challenged systems. It delivers a profitable underwriter process through centralized digital solutions that provide aggregation and mediation of business as well as system services, so underwriters don’t have to depend on multiple sources of disparate data. Underwriter360 is currently available for commercial and specialty lines with other lines of business to be considered in the future.
About Majesco
Majesco is the leading software partner to both the P&C and L&A insurance markets to modernize, optimize and innovate their businesses at speed and scale. Over 330 insurers, from greenfields, start-ups and MGAs to the largest insurers, reinsurers and brokers use Majesco’s next generation SaaS platform solutions of core, data and analytics, digital, distribution, absence management and a rich ecosystem marketplace of established and InsurTech partners to build the future of insurance. Our technology, expertise and leadership help insurers innovate and connect to build the future of their business. With over 825 successful implementations and over 65% of our customers on Cloud with Majesco platform solutions, together we have an amazing track record of innovation and real-world results.
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Cision PR Newswire | September 18, 2020
Novacap, one of Canada's leading private equity firms, announced today that it has entered into a definitive agreement for the acquisition of a majority interest in GroupAssur Inc., a Canadian managing general agent ("MGA") specializing in the Property and Casualty ("P&C") insurance lines, and offering distinctive insurance products across Canada. Headquartered in Montreal, QC, with additional services offices, located in Quebec City and Brossard, QC and Markham, ON, GroupAssur provides comprehensive, innovative, and efficient insurance solutions to its country-wide network of Canadian brokers.
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