Golden arches, golden growth and the gold standard in workers' comp

麦当劳 has been in the news a lot this week, with a certain presidential hopeful slinging fries from a drive-thru window. Maybe that's a contributing factor as to why the Insurance Innovation Reporter decided to run a timely story about how insurance is taking a page out of the fast-food giant's playbook with self-service tech! At McDonald’s, kiosks have boosted order accuracy and revenue by making cross-selling easier. In insurance, the move to self-service has similarly trimmed costs and increased efficiency in back-office tasks, all while changing workforce dynamics. And we're just scratching the surface.

"As technology advances race forward, and questions about how AI and related deployments will take place, carriers will have a new round of decisions to make," RPM Ventures CEO Robert McIsaac, FLMI, LLIF, MBA wrote in IIR. "The utilization of these capabilities in operational areas has significant upside potential. And, like many other innovations, there will be consequences that won’t be understood at the outset."

Meanwhile, risk is back on the boardroom menu, according to Beazley , which found that about 23% of execs name employer risk as their top concern this year — a jump from last year’s 18% — as hybrid schedules, workplace dynamics and "misconduct watch" pile on the pressure. "Businesses and their executives are feeling the heat, with D&O liability extending beyond the realms of financial performance, with litigation now being brought against executives following cyberattacks, supply chain disruption and employment-related issues," Bethany Greenwood , Beazley's head of risk, explained in the report.

Shifting gears (see what I did there?), car-insurance giant State Farm has kept its crown as the largest insurer worldwide, according to S&P Global Market Intelligence 's latest ranking, with a staggering $87.6 billion in direct premiums earned for 2023 – a jump of over 18%! Only two companies – Arch Capital Group Ltd. and Covéa Insurance – managed to turn stronger growth numbers among the top 50 biggest insurers. See the full report.

But what about an uninsurable future? According to FERMA | Federation of European Risk Management Associations and PwC, 53% of risk managers believe that some risks, activities or locations will become uninsurable in the near future, up from just 41% in 2022. "The fact that over half of respondents believe that critical business risks and regions may become uninsurable is of significant importance,” FERMA CEO Typhaine Beaupérin explained in the report. “It is imperative that in an expanding and more volatile risk context, insurance remains a core component of organizations’ risk management strategies. Our results, however, demonstrate that risk manager concerns are focused on many exposures that companies have traditionally relied upon insurance markets to cover.”

Wait... an insurance apocalypse? With catastrophic weather events piling up — from Australian floods to U.S. hurricanes and more — some observers are entertaining the notion: Could the industry actually collapse? Actuaries Institute’s CEO Elayne Grace was recently asked that very question at a government inquiry in Australia. Her response: "The insurance industry provides one-year policies. In that sense, they are just being exposed, they can always walk away from the market.” She added that she's concerned this means it'll fall on governments to deal with climate-driven disasters, and it's important for the government, insurers and the community to work together to reduce risk.

Enough with all that pessimism...

The workers’ comp market is showing encouraging signs in 2024, building on the solid performance from 2023, according to NCCI ’s latest State of the Line Report. Despite a slight dip in premium volume early in 2024, the sector remains financially strong. In 2023, the industry reported a combined ratio of 85.9%, marking a decade of underwriting profits. Key drivers of this stability include a continued drop in claim frequency and steady payroll growth. Looking ahead, NCCI anticipates a combined ratio between 83% and 90% by the year’s end, with expectations for stable premium volume and underwriting gains.

For more on workers' comp and Paragon's unparalleled presence in the market, we'll leave you with all the whimsy and wonderment we've got going on the trucking front: