A.M.BestTV: Homeowners Insurers Tap Predictive Analytics

OLDWICK, N.J.--()--In this second of five “First Monday” episodes, A.M. Best Senior Financial Analyst Maurice Thomas discusses how U.S. homeowners insurers are increasingly harnessing advanced predictive models to smooth operating volatility in their line of business. Click on http://www.ambest.com/v.asp?v=fmhomeowners815 to view the video program.

The remaining “First Monday’ episodes will focus on how the Middle East is ripe for mergers and acquisitions; how insurers have increased their overall risks and reduced their liquidity in investments; and how fluctuating oil prices are hampering Nigeria’s insurance market. “First Monday” is A.M. Best’s monthly program featuring commentary by the company's leading analysts.

Underwriting profitability in U.S. homeowners insurance is volatile. Combined ratios ranged from a high of 158.4% in 1992 to a low of 89.0% in 2006, compared with the private passenger automobile line, which typically hovers in the mid-90s; however, in the last two years, the homeowners insurance sector has been profitable, posting a combined ratio of 90.4% in 2013 and 92.4% in 2014.

“This could be a game changer for homeowners’ profitability in the long term,” said Thomas. “In the past, companies have relied on their automobile line results to obtain their profitable goals; however, now these companies are looking to gain more stability in their homeowners line to achieve their overall profitable goals and margins.”

In addressing the issue of pricing sophistication, Thomas said that it continues to evolve and gain traction in the performance of the homeowners line, and those carriers that do not utilize it are going to find themselves at a competitive disadvantage.

Recent episodes of A.M.BestTV include:

  • ‘First Monday’: Rated U.S. Captives Show Some Stress in 2014: Assistant Vice President Steven Chirico said that despite U.S. captive insurers continuing to outperform the commercial insurance sector, industry results are showing some decay: http://www.ambest.com/v.asp?v=fmcaptives815.
  • How Katrina Changed Today’s Insurance Industry: Hurricane Katrina has brought to insurance new understandings and ways of dealing with catastrophe risks and complex losses 10 years after it devastated Louisiana: http://www.ambest.com/v.asp?v=katrina715.
  • Analytics Continue to Transform Insurance Industry: How big data and analytics continue to play an ever increasing and important role in the insurance industry. Two just released industry reports from Novarica and Capgemini explore how insurers are looking to harness data across all facets of business: http://www.ambest.com/v.asp?v=bigdata715.
  • Insurers Develop New Ways to Trigger Disaster Coverage: Brokers and insurers are borrowing from the catastrophe bonds world by developing coverage against natural perils that are triggered by measurable parameters rather than traditional claims reporting: http://www.ambest.com/v.asp?v=parametric715.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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Contacts

A.M. Best
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
lee.mcdonald@ambest.com

Contacts

A.M. Best
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
lee.mcdonald@ambest.com