Superyachts, super spending and a super stock-market milestone

Warren Buffett's Berkshire Hathaway, driven by strong results in the juggernaut's insurance division, this week became the first non-tech company to reach a $1-trillion valuation. 晨星 ' Greggory Warren, CFA isn't exactly sure what's behind the stellar outperformance. “I, unfortunately, don’t have an answer as to why it is up as much as it is, other than that perhaps some market participants weren’t buying into the tech-driven rally and wanted the downside protection of a Berkshire if things went south," he said.

Yep, it's safe to say, insurance has never been more relevant. In fact, global insurance spending is on track to hit almost $10 trillion by 2028, according to Stocklytics. Despite a slower growth rate since 2021, the market has still managed to surge 25% over the past four years, with total premiums now exceeding $9 trillion. Key drivers include economic expansion, insurtech, and evolving risks. Non-life insurance is expected to lead growth, jumping 10.5% to almost $6 trillion, while life insurance is seen growing by 6.8%. The U.S. will continue to dominate, generating nearly half of the world's premiums.

We saw another milestone this week – maybe more of a grim reminder. Thursday marked the 19th anniversary of Hurricane Katrina, the most expensive insurance disaster on record. The devastation reshaped our understanding of risk, resilience and the importance of preparedness. As we push deeper into what's shaping up to be an active hurricane season, the shadow of Katrina also serves as a stark reminder of our industry's critical role in helping people rebuild their lives after the unimaginable. Local ABC affiliate WGNO ABC26 looks back on the day that "forever changed" New Orleans and the Gulf Coast.

On the topic of climate change and those increasingly severe storms, insurers are bracing for a hefty $150 million payout after the Bayesian superyacht sank off Sicily earlier this month, claiming the lives of tech entrepreneur Mike Lynch and six others. This disaster highlights the growing risks in the luxury yacht market, where nasty weather and rising insurance premiums continue to make waves. With the yacht valued around $40 million and additional protection and indemnity coverage, this tragic incident is a wake-up call for insurers already grappling with climate-driven challenges. As rates skyrocket, NSI Insurance Group 's Oscar Seikaly told Reuters that boat shoppers are having second thoughts.

Rising insurance premiums are also having a bigger-picture impact: More and more Americans are shopping for new coverage. Take auto insurance, for example. Policy shopping rates, as LexisNexis Risk Solutions reports, jumped up 16% in the second quarter and more than 30% in July vs. a year earlier. It's true for home insurance, too. In California, more than 50% of homeowners said they or the area they live in has seen insurance prices surge, according to a survey conducted by Redfin. In Florida, the rate was even higher, at 70%, while 12% of respondents reported being dropped by their insurance company.

All the headlines getting you down? Maybe it's time for a little self-reflection, courtesy of The Rough Notes Company, Inc. Hurricane season got off to an historic bang, underwriting losses have been piling up across the U.S. P&C industry, auto insurance rates are through the roof, etc. Yeah, there's a lot to grapple with as we head toward 2024's back stretch. "At this point, you may feel a bit defeated or deflated," contributor Michael Wayne wrote. "If not, and all is right in your world, I congratulate you." For those struggling to make sense of it all, he offered five steps toward righting your personal ship.

Have a great three-day weekend, folks!