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Time-Tested Loss Reserving Methods Challenged: AM Best

Article 0 Comments Reflecting on one of the trends that surfaced as property/casualty insurers announced 2023 financial results recently, AM Best expects reserve strengthening for accident years 2015-2019 to continue, the rating agency said in a new report. As companies “finished reporting their results for fourth-quarter and full-year 2023, the numbers and the stories behind them indicate worsening reserve risk,” according to the special report published yesterday, “Heightened Risk Landscape Create New Challenges for Reserve Management.” The trend of boosting reserves for the 2015-2019 accident years is expected to “hold over the short to medium terms, depending on an individual insurer’s reserving philosophy,” analysts wrote in the report listing the following challenges to time-tested actuarial reserving methods: Distorted loss payment patterns created by a COVID-driven “hiatus in the economic and insurance ecosystem.” Spiking economic inflation. Worsening public attitudes toward large corporations. More litigation financing firms. Ubiquitous chemicals like PFAS and microplastics fueling lawsuits. Describing the impact of COVID-19 on loss development histories, the report notes that construction, travel, education, commerce and the work environment went through radical changes. “The historical payment patterns that actuaries depend on to make decisions about the future were distorted by the main COVID years (2020-2022),...

Best Buy, Google Cloud and Accenture Partner to Create a Better Customer Support Experience with Generative AI 0

Best Buy, Google Cloud and Accenture Partner to Create a Better Customer Support Experience with Generative AI

Best Buy selects Google Cloud as its AI innovation and strategic partner for several of its key customer care initiatives Minneapolis, MN (Apr. 9, 2024) – Best Buy, Google Cloud and Accenture are pleased to announce a new collaboration that will involve deploying generative AI to greatly improve the experience for Best Buy customers looking for support services. By leveraging Google Cloud’s generative AI technology, Best Buy is creating new and more convenient ways for customers to get the solutions they need. This work will provide customers a self-service option, allowing them to find solutions more independently and will also allow Best Buy customer service agents to better serve customers by providing them with new tools that make interactions more efficient and personalized. It is anticipated that Best Buy’s U.S. customers will be able to connect with a gen AI-powered virtual assistant for self-service support starting in late summer 2024. The assistant can help with things like troubleshooting product issues, rescheduling or combining order deliveries, or managing software, Geek Squad subscriptions and My Best Buy Memberships. Customers will be able to access all of these services while shopping on BestBuy.com, using the Best Buy mobile app, or calling the customer...

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Can This Annuity Ease Social Security Claiming Pressure?

The thinking: Tyler said the two-income-level annuity strategy has been a great niche product and works well for many middle-income clients as well as more affluent clients. “We found a lot of adoption of the Personal Income Annuity in the federal worker space,” he said. At the U.S. Postal Service, for example, many workers can retire at 58, and, especially on the East Coast, they might be in couples with a total household income of about $200,000, he noted. For many of those workers, he said, the dominant view of income and investment risk is, “I need income now; I’d like to give the risk to somebody else.” The median premium paid is about $100,000, and the average is about $155,000. The amount of premium paid tends to correlate with what a worker has saved in a 401(k) plan account, Tyler said. The advice: Tyler said one challenge for Nassau has been persuading financial professionals to consider offering a new type of annuity. When confronted with change, “agents pause, even when it’s something good,” Tyler said. “Agents are used to the concept of selecting one check forever. Now they have to explain two checks.” He said the major challenge for...

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Britain’s Insurers Under Pressure Over Spike in Car Insurance Premiums

Article 0 Comments The rising cost of car insurance has triggered a barrage of complaints in the cost of living crisis, Britain’s financial watchdog told lawmakers on Wednesday, as the sector insisted that prices remain at 2018 levels in real terms. Matt Brewis, director of insurance at the Financial Conduct Authority (FCA), said he has heard “heartrending stories” from people trying to make ends meet as costs such as insurance rise. “It is clear there is a significant increase in pricing of motor and home insurance over the last two to three years,” Brewis told parliament’s Treasury Committee hearing on the insurance market. “Motor insurance is the one where we are seeing the greatest level of complaints,” Brewis said, adding that price increases were due to supply chain issues, complexity of vehicles, and the number of claims. The sector had also not done a good job in forecasting inflation and its impact, prompting it to recoup significant underwriting losses and price in future inflation, Brewis said. “It is a very competitive sector,” Brewis said, adding there are over 48 active insurers. The committee said inflation in car insurance, which all motorists have to buy, hit a high of 50% in...

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Trump Pushed to Embrace 17% Income Tax for All

They say they meet with the former president approximately every six weeks to brief him on policy ideas, share economic data and suggest names for key political appointee posts. Laffer last month floated himself in a list of names to serve as Federal Reserve chair. In an interview Wednesday, he said he would rather serve as a White House adviser than Fed chair. On the campaign trail, Trump has often said he would pass the “biggest” tax cuts and claims that if he is not elected, taxpayers will see their IRS bills increase under Biden. Trump has not detailed what his tax plan would look like. “President Trump proudly passed the largest tax CUTS in history,” Trump campaign spokeswoman Karoline Leavitt said in a statement. “When President Trump is back in the White House, he will advocate for more tax cuts for all Americans and reinvigorate America’s energy industry to bring down inflation, lower the cost of living, and pay down our debt.” Forbes advocated for no taxes on savings and eliminating the estate tax, both changes that would disproportionately benefit the wealthiest Americans. State and Local Taxes The advisers are also advocating to maintain or reduce the $10,000 cap on state...

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The Problem Is Not the Life Insurance Products, or the Illustrations

No court would ever expect that Emma should have remembered it all. Chances are there are lots of these situations out there waiting to emerge, and it’s going to cost carriers a lot of money. The Real Solution So, what is the solution? The main problem is that these products with complicated, nonguaranteed elements are just not “set it and forget it” types of products. They need maintenance. Here’s an outline of what I think is needed: 1. Emphasize simple, short disclosures, both at issue and on an ongoing basis. Pages and pages aren’t going to cut it. The disclosures really need to be read and understood. 2. Make disclosures verifiable and ongoing. We need a method that, as much as possible, can be verified as having occurred. Require a sign-off by the customer, and, if that’s not possible, solid documentation that disclosures and options are delivered regularly. 3. Provide adequate disclosure at issue. This should be a short, simple paragraph that explains, at a high level, that the product the customer bought has nonguaranteed elements that are, to some degree, subject to the discretion of the carrier. Note that even the “index formula” in indexed universal life products usually...

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Triple-I: Insurance Economic Drivers Outperform Overall US GDP

Article 0 Comments The economic drivers of the U.S. property/casualty (P/C) insurance industry are growing faster than the nation’s Gross Domestic Product (GDP) and are expected to gain further momentum in the event of Federal Reserve monetary rate cuts, according to the Insurance Information Institute’s (Triple-I) latest Insurance Economics Outlook. “We’ve been forecasting that P/C underwriting growth would catch up on overall GDP and it has,” said Michel Léonard, chief economist and data scientist, Triple-I. “Triple-I forecasts P&C underlying growth to increase to 3.4% in 2024, 1.2% above the Fed’s GDP forecast of 2.2%. It will likely take at least another year for this economic rising tide to lift the P/C industry’s overall growth and performance,” added Léonard. P&C underlying growth is expected to continue outperforming overall GDP growth into 2025 and 2026, he said in the report. Comparing the P&C industry performance to the Fed’s GDP forecast, underlying insurance growth is expected to outperform overall U.S. growth by an average of 2% over the next three years, the report said. “Different economic stress scenarios may reduce or widen the spread between P&C underlying growth and overall GDP growth, or even reverse the overall trend of P&C underlying growth outperforming...

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Supplemental Claims Don’t Need to Include Damage Estimates, Fed Appeals Court Says

Article 0 Comments A federal appeals court has, at least for now, put an end to lingering questions about some property insurance claims litigation: The insured does not need to submit a competing damage estimate when filing a supplemental claim if the policy does not require it. But one of the underlying cases that the decision rests on could soon be taken up by the Florida Supreme Court, and that court’s opinion could ultimately impact Monday’s 11th U.S. Circuit Court of Appeals ruling. The 11th Circuit said in Great Lakes Insurance vs. Concourse Plaza A Condominium Association that the association had waited almost three years to provide a damage estimate and supplemental claim after Hurricane Irma. But that did not violate Florida’s supplemental claims statute, the court said. “…Great Lakes concedes that the insurance policy by itself ‘does not impose a requirement to provide an estimate of damages,’” the 11th Circuit judges wrote. Concourse Plaza’s September 2020 letter “therefore qualifies as a notice of a supplemental claim under Fla. Stat. § 627.70132. Because it was sent within three years of the date Hurricane Irma made landfall, the provisions of Fla. Stat. § 627.70132 were satisfied.” The ruling reversed a lower...

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DOL Seeks Feedback for ‘Retirement Savings Lost and Found’ Database

What You Need to Know EBSA is seeking information from plan administrators to establish an online search tool to help workers locate lost retirement savings. Secure 2.0 directs EBSA to establish the online tool by Dec. 29. Enforcement efforts have recovered more than $6.7 billion for missing participants and beneficiaries since 2017, according to EBSA. The Labor Department said Monday that its Employee Benefits Security Administration is seeking information from plan administrators to establish an online search tool to help America’s workers locate lost retirement savings. The Secure 2.0 Act directs EBSA to establish a search tool to help missing participants and their beneficiaries find their retirement benefits by Dec. 29. “The agency needs assistance from plan administrators to populate its online ‘Retirement Savings Lost and Found’ database,” Labor said Monday. Retirement plans, including pension and 401(k) plans, sometimes lose track of people owed benefits due to incomplete recordkeeping, people changing employers and other reasons, EBSA explained. In other cases, “workers may lose track of their retirement plans after their former employer goes out of business or when companies merge. People in these situations are considered ‘missing participants,’” EBSA said. The notice of proposed information collection asks plan administrators to provide the information voluntarily on...

Canadian economy to see modest growth in first half of 2024: CFIB forecast 0

Canadian economy to see modest growth in first half of 2024: CFIB forecast

Canadian Federation of Independent Business (CFIB) Main Street Quarterly report Toronto, ON (Apr. 12, 2024) – The Canadian economy is expected to see positive growth in Q1 and Q2 2024, according to the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB). Key highlights of the Main Street Quarterly report for Q1 2024: CFIB’s forecasts in partnership with AppEco suggest the Canadian economy rebounded to 0.8% in Q1 2024 and will grow to 0.9% in the second quarter on a year-to-year basis. Consumer Price Index (CPI) inflation, both total (2.8%) and excluding food and energy (2.9%), continued its downward trend in Q1 and this trend is expected to persist in Q2. Driven by low long-term small business confidence, private investment contracted for the third consecutive quarter in Q1. It’s expected to keep declining in Q2, although at a slower pace. The national private sector job vacancy rate declined to 3.5% in Q1. This represents 496,700 unfilled positions. Our special analysis on insufficient demand this quarter shows that it is at the highest level since the pandemic, affecting half of SMEs. Businesses facing a lack of demand are also more cautious with their price increase plans. The...