Thousands more Californians will lose their home insurance this summer as two more insurers withdraw from the state.

In filings with the California Department of Insurance, Tokio Marine America Insurance Company and Trans Pacific Insurance Company said they would both withdraw from the homeowners and personal umbrella insurance markets in California. Both are subsidiaries of Tokio Marine Holdings Inc., a Japanese company.

The two companies together insured 12,556 homeowner policies in California with $11.3 million in premiums, according to their filings. Tokio Marine also insured 2,732 personal umbrella policies for liability worth $400,000.

Tokio Marine America and Trans Pacific join a roster of insurers big and small that have limited and stopped doing business in California, often citing the risk of wildfires in the state. Some, such as AllState and State Farm, have stopped writing new policies in the state though they continue to renew policies — though last month, State Farm also announced it would not renew 30,000 homeowner policies, a small fraction of its total business in California. Farmers Direct Insurance has chosen to leave the state.

In response, California Insurance Commissioner Ricardo Lara has proposed a slate of reforms known as the Sustainable Insurance Strategy, designed to attract insurers back to the state. They include ideas such as changing the process for requesting rate hikes to allowing insurers to use forward-looking risk models when raising their rates. All of the strategy’s reforms are set to take effect at the end of the year.

Tokio Marine did not immediately respond to a request for comment. Neither company disclosed in state filings the reasons behind the withdrawal or where their policies are located in the state.

The companies will begin sending non-renewal notices to customers starting July 1, according to state filings.

   

Home sales in March posted their biggest decline in more than a year, reversing course after a positive start this year as rising mortgage rates frightened off buyers.

Sales of previously owned homes decreased 4.3% from the prior month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. It was the biggest percentage decline on a monthly basis since November 2022, NAR said.

After sales tumbled to their lowest level in nearly 30 years in 2023, activity picked up to start this year. Home sales rose during the first two months as buyers took advantage of a decline in rates and active listings that ticked higher early in the year.

But mortgage rates rose again in February. That sent buyers to the sidelines and it now threatens to squash momentum during the crucial spring home-buying season, which is typically the busiest time of year in the housing market.

The average rate on a 30-year fixed mortgage has moved back toward 7%, according to Freddie Mac. While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. That could also keep mortgage rates from declining.

Home buyers are also confused about coming changes to rules about how real-estate agents get paid, and whether those changes could increase or decrease their costs. That is causing some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.

“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. “I think they’re just sitting it out.”

While higher mortgage rates make home purchases more expensive for many buyers, a persistently low supply of homes for sale is also pushing prices higher.

The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said.

“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”

On an annual basis, existing home sales fell 3.7% in March. These sales make up most of the housing market.

Economists surveyed by The Wall Street Journal estimated sales of previously owned homes fell a seasonally adjusted 4.8% in March from February.

Homes typically go under contract a month or two before the contracts close, so the March data largely reflect purchase decisions made in February and January.

For some who bought in March, they found less competition. David Bramlett and Alexandra Hodson started house hunting last fall but decided to wait. When they re-entered the market this year, interest rates had declined, Bramlett said. The couple bought a four-bedroom home with a yard in Cumming, Ga., in March for $480,000.

“There was no bidding war,” Bramlett said. “It was good to get in when we did, where we did, with a motivated seller.”

But affordability has worsened in recent weeks. The median monthly payment for a home purchase rose to $2,747 in the four weeks ended April 7, up 11% from a year earlier, according to real-estate brokerage Redfin.

“March and April slowed down tremendously,” said Clint Jordan, a real-estate agent in Colorado Springs, Colo. “Rates are a little bit higher, so a lot of our buyers are sitting back.”

The share of first-time buyers in the market was 32% in March, up from 28% a year earlier. About 28% of March existing-home sales were purchased in cash, up from 27% in the same month a year ago, NAR said.

The typical home sold in March was on the market for 33 days, up from 29 days a year earlier, NAR said.

Nationally, there were 1.11 million homes for sale or under contract at the end of March, up 4.7% from February and up 14.4% from March 2023, NAR said. At the current sales pace, there was a 3.2-month supply of homes on the market at the end of March.

Despite the increase in inventory, the supply of homes for sale in March was still 37.9% below typical prepandemic levels, according to Realtor.com.

But some markets are more amply supplied. In San Antonio, inventory in March was 27% above prepandemic levels.

“It is a buyer’s market now,” said Maricela Mares Castillo, a real-estate agent in San Antonio. “They don’t have to settle as much as they may have last year.”

   

Florida’s homeowners market may look better than it has in the past, but Travelers Cos. is still steering clear, according to Travelers Personal Insurance President Michael Klein. It’s still a highly catastrophe-exposed geography and carriers are vulnerable to an assigned risk obligation if a significant catastrophe strikes, he explained during a first-quarter earnings conference call. “While we do see signs of improvement ... it’s going to take more. We haven’t seen enough change to cause us to change our perspective on wanting to reopen to business," said Klein. “It is still a place where we think the risk reward is not in balance." Chairman and Chief Executive Officer Alan Schnitzer said enacted tort reforms were an “excellent start” in Florida. “We would love other states to follow suit,” he said, but agreed other “structural” elements are an impediment. The company routinely evaluates conditions, both men said.

Travelers Cos. Inc.’s first-quarter net income increased 15% to $1.12 billion despite higher catastrophe losses, largely on elevated activity in Central and Eastern states, Schnitzer said.

Renewal premium change was 16.6% in personal automobile and 13.4% in homeowners and other business, he said. That was basically flat, compared with the fourth quarter for auto, but down from 21.2% in homeowners in the prior quarter. Because Travelers writes mostly 12-month auto policies, Klein pointed out a rate hike enacted in May 2023 is still taking effect on policies renewing this month. Personal auto renewal premiums change should moderate as the year progresses, he said. However, in homeowners the carrier plans to keep raising rates “in response to increased loss costs.” Renewals declined because Travelers took “dramatic increases in property Coverage A limits” in 2022 and 2023 and has caught up with higher values and construction costs. “What you’re looking at now is mostly our outlook for rate” increases for homeowners, said Klein. In terms of non-rate actions, he said the carrier, like others in the industry, is executing broad changes. First, it determines eligibility after evaluating exposure and roof age, he said, and may place underwriting restrictions based on roof conditions or tree overhang. "Our primary approach on risk sharing is really to focus on all other perils and wind-hail-tornado deductibles," said Klein. Travelers has implemented higher tornado and wind-hail deductibles in 21 states, "virtually every severe convective storm-exposed state across the country." "We've increased deductibles to help deal with the exposure, and then managing distribution" and appetite to address aggregated exposure locally and at the state level, Klein said.

Travelers completed its $435 million acquisition of cyber insurance managing general underwriter Corvus Insurance Holdings Inc. at the start of the year (BestWire, Jan 3, 2024).

Bond and Specialty President Jeff Klenk said the company feels "really good about bringing in and leveraging the capabilities of both organizations. We feel really good about the quality, the profitability of the Corvus book of business. It's consistent and we're taking some of those capabilities." Travelers has scanned its business using proprietary technology acquired with Corvus. "We're really comfortable with what we're seeing," said Klenk. Most operating entities of Travelers Cos. Inc. currently have a Best’s Financial Strength Rating of A++ (Superior).      

Climate change will reduce future global income by about 19% in the next 25 years compared to a fictional world that’s not warming, with the poorest areas and those least responsible for heating the atmosphere taking the biggest monetary hit, a new study said. Climate change’s economic bite in how much people make is already locked in at about $38 trillion a year by 2049, according to Wednesday’s study in the journal Nature by researchers at Germany’s Potsdam Institute for Climate Impact Research. By 2100 the financial cost could hit twice what previous studies estimate. “Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany and the U.S., with a projected median income reduction of 11% each and France with 13%,” said study co-author Leonie Wenz, a climate scientist and economist. These damages are compared to a baseline of no climate change and are then applied against overall expected global growth in gross domestic product, said study lead author Max Kotz, a climate scientist. So while it’s 19% globally less than it could have been with no climate change, in most places, income will still grow, just not as much because of warmer temperatures. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979.

The Supreme Court on Wednesday made it easier for workers who are transferred from one job to another against their will to pursue job discrimination claims under federal civil rights law, even when they are not demoted or docked pay. Workers only have to show that the transfer resulted in some, but not necessarily significant, harm to prove their claims, Justice Elena Kagan wrote for the court. The justices unanimously revived a sex discrimination lawsuit filed by a St. Louis police sergeant after she was forcibly transferred, but retained her rank and pay. Sgt. Jaytonya Muldrow had worked for nine years in a plainclothes position in the department’s intelligence division before a new commander reassigned her to a uniformed position in which she supervised patrol officers. The new commander wanted a male officer in the intelligence job and sometimes called Muldrow “Mrs.” instead of “sergeant,” Kagan wrote. Muldrow sued under Title VII of the Civil Rights Act of 1964, which prohibits workplace discrimination on the basis of race, sex, religion and national origin. Lower courts had dismissed Muldrow’s claim, concluding that she had not suffered a significant job disadvantage. “Today, we disapprove that approach,” Kagan wrote. “Although an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test.” Kagan noted that many cases will come out differently under the lower bar the Supreme Court adopted Wednesday. She pointed to cases in which people lost discrimination suits, including those of an engineer whose new job site was a 14-by-22-foot wind tunnel, a shipping worker reassigned to exclusively nighttime work and a school principal who was forced into a new administrative role that was not based in a school. Although the outcome was unanimous, Justices Samuel Alito, Brett Kavanaugh and Clarence Thomas each wrote separate opinions noting some level of disagreement with the majority’s rationale in ruling for Muldrow. Madeline Meth, a lawyer for Muldrow, said her client will be thrilled with the outcome. Meth, who teaches at Boston University’s law school, said the decision is a big win for workers because the court made “clear that employers can’t decide the who, what, when, where and why of a job based on race and gender.” The decision revives Muldrow’s lawsuit, which now returns to lower courts. Muldrow contends that, because of sex discrimination, she was moved to a less prestigious job, which was primarily administrative and often required weekend work, and she lost her take-home city car. “If those allegations are proved,” Kagan wrote, “she was left worse off several times over.”

The federal Internal Revenue Service listed microcaptive insurance programs on its 2024 "Dirty Dozen" list of 12 tax scams, saying the programs can prove to be bogus tax avoidance strategies. The IRS has prevailed in multiple recent tax court cases involving the arrangements and last year moved to place more regulatory oversight on them. The agency in the past has argued they don't provide insurance and allow entities to make improperly tax deductions. "Abusive microcaptives involve schemes that lack many of the attributes of legitimate insurance," the IRS said. "These structures often include implausible risks, failure to match genuine business needs, and in many cases, unnecessary duplication of the taxpayer’s commercial coverages." Premiums paid under the microcaptive arrangements are often excessive and reflecting pricing that isn't "arm’s length," the IRS said. The agency reaffirmed abusive microcaptive transactions are a high-priority enforcement area for the IRS, and it has won all Tax Court and appellate court cases involving them that have been decided on their merits since 2017. “Taxpayers should be wary of anything that seeks to completely eliminate a legitimate tax responsibility,” said IRS Commissioner Danny Werfel in a statement. “Promoters continue to peddle elaborate schemes to reduce taxes and make a handsome profit. Taxpayers contemplating these arrangements should always seek advice from a trusted tax professional, not an aggressive promoter focused on pushing questionable transactions to make a buck.” The IRS has released the Dirty Dozen list annually since 2022, highlighting scams that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more, the agency said. Along with microcaptives, the final installment on the list included syndicate conservation easements, which allow property owners to report a deduction in exchange for limiting land use. Last month, the IRS won another round of legal wrangling over a dispute with a microcaptive owner's tax payments for a number of years. Sunil Patel's businesses supplemented their commercial insurance coverage by purchasing assorted policies from two microcaptive insurance companies that Patel controlled, Magellan Insurance Co., domiciled in St. Kitts, and Plymouth Insurance Co., domiciled in Tennessee. According to the decision, the premiums paid to the microcaptives were substantially more than the premiums paid to  Patel's commercial insurers, creating substantial tax benefits for the couple.

Travelers has published its first quarter 2024 financial results, reporting 16% growth in net income despite an elevated level of catastrophe losses compared to the prior year quarter. The insurer saw its net income rise to $1.123 billion in Q1 2024, a figure that compares to the $975 million reported in Q1 2023. Core income also increased, to $1.096 billion from $970 million in the same quarter last year. According to the insurer, the increase in core income was mainly due to higher net investment income and a higher underlying underwriting gain, which was partially offset by higher catastrophe losses. The underlying underwriting gain was higher than in the prior year quarter, notwithstanding that the prior year quarter included a $211 million one-time tax benefit. Net realized investment gains in the current quarter were $35 million pre-tax ($27 million after-tax), compared to $6 million pre-tax ($5 million after-tax) in Q1 2023. Q1 2024 included an elevated level of catastrophe losses of $712 million pre-tax, compared to $535 million pre-tax in the prior year quarter. These quarters cat losses primarily resulted from severe wind and hail storms in the central and eastern regions of the United States, Travelers noted. It is worth noting that, while this quarter’s cat losses are elevated, given the $3.5 billion attachment point of its main per-occurrence cat XoL treaty, these events are not the type of losses that would trigger Travelers’ reinsurance. But it does highlight how higher reinsurance attachment points, and a move away from frequency events by reinsurers, is resulting in the primary market retaining more of these types of losses. Despite the rise in cat losses, the insurer’s combined ratio improved 1.5 points, to 93.9%, due to an improvement in the underlying combined ratio (2.9 points), partially offset by higher catastrophe losses (1.1 points) and lower net favorable prior year reserve development (0.3 points). Underlying combined ratio also saw an improvement, going from 90.6% in Q1 2023 to 87.7% in Q1 2024. Travelers also reported net written premiums of $10.18 million in this year’s first quarter, an 8% increase compared to the $9.39 million reported in the same period last year. The firm’s Business Insurance segment saw an increase in income of $8 million, to $764 million after-tax. This was mainly due to higher net investment income, partially offset by a lower underlying underwriting gain. Its combined ratio improved to 93.3% due to a lower underlying combined ratio (0.4 points) and lower catastrophe losses (0.3 points), partially offset by no net prior year reserve development compared with net favorable prior year reserve development in the prior year quarter (0.4 points). The segment’s underlying combined ratio improved 0.4 points to a very strong 89.2%. Net written premiums increased to $5.596 billion, reflecting strong renewal premium change (10.6%) and retention (86%), as well as higher levels of new business, the insurer noted. Segment income for Bond & Specialty Insurance was $195 million after-tax, a decrease of $12 million, primarily due to lower net favorable prior year reserve development, partially offset by higher net investment income. Combined ratio improved to 84.5% and underlying combined ratio to 86.5%. The segment’s net written premiums of $943 million increased 6%, reflecting strong production in both surety and management liability. Travelers Personal Insurance segment also saw an increase in income, to $220 million after-tax. This was due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The combined ratio improved to 96.9%, as well as the underlying combined ratio of 86.1%. Net written premiums of $3.643 billion increased 9%, reflecting strong renewal premium change in both Domestic Automobile (16.6%) and Homeowners and Other (13.4%). Alan Schnitzer, Chairman and Chief Executive Officer, commented: “The year is off to a terrific start with strong profitability and production in all three segments, as well as higher investment income. In short, we’re firing on all cylinders. We also continue to invest in important strategic initiatives. “We have demonstrated success in executing our innovation strategy, which has contributed to superior returns with industry-low volatility, growth in our premium base and higher adjusted book value per share. With this momentum and the best talent in the industry, we remain well positioned for success this year and beyond.

MGM Resorts International sued the Federal Trade Commission to stop an investigation into how it dealt with a cybersecurity attack last year. The company said the investigation deprives it of its fundamental due process rights and that FTC Chair Lina Khan should recuse herself from the case, according to the lawsuit filed in Washington federal court Monday. Bloomberg earlier reported that Khan was visiting MGM Grand on the Las Vegas strip in September when the company was hit by a cyberattack that temporarily shut down its computer systems. A front desk clerk asked Khan and her staff to write down their credit card information on a piece of paper as they were checking into the hotel, according to Bloomberg. Khan responded by asking the employee how MGM was managing data security in this situation. Shortly after, the FTC started an investigation and in January demanded that the company respond to how it handled the situation, according to the lawsuit. The agency asked the company to hand over more than “100 categories of information.” The company also claimed that the FTC relied on “inapplicable” regulations that apply only to financial services companies to demand information from the casino operator. FTC representatives didn’t respond to a request for comment. The agency will likely challenge the MGM lawsuit, according to a person briefed on the situation. The person said there is a long history of efforts to get Khan disqualified from past cases, but added that people normally try to get her removed for having a point of view, rather than just being present. The FTC earlier denied the company’s request that Khan recuse herself from involvement in the investigation given her personal experience with the cyberattack. “As the most high-profile person involved in the events at issue — and the only such person widely identified by name in press reports — Chair Khan is both a potential civil plaintiff and a potential witness,” attorneys for the company wrote in the lawsuit.        

The vast majority of small insurers operating in Florida are considered so financially weak that they wouldn’t typically meet federal guidelines allowing them to back mortgaged homes. That’s a central finding of a study that also suggests that Florida consumers are being led to believe their insurers are much healthier than they really are. The study, by researchers at Harvard University, Columbia University and the Federal Reserve Board, has not yet been peer-reviewed. But it was posted on a website for scholarly papers in December and has caught the attention of national and state insurance officials and observers. There are few independent studies of Florida’s insurance crisis, and the report offers insight into one of the state’s vulnerabilities: its reliance on about 50 small insurers, covering about 70% of policyholders, that are usually rated by a single company. That ratings company, Ohio-based Demotech Inc., was the target of a round of public retribution in 2022, after Gov. Ron DeSantis’ administration accused it of threatening to downgrade 17 companies that year. The downgrades posed a threat to the state’s housing market as DeSantis was seeking reelection and gearing up for a presidential run. The mortgage giants Fannie Mae and Freddie Mac require insurance from highly rated companies, such as those that receive an “A” from Demotech. If 17 insurers suddenly didn’t qualify, a million Floridians could have been left scrambling to seek insurance policies. Demotech was accused of being a “rogue ratings agency” by Florida’s chief financial officer, and U.S. Sen. Marco Rubio wrote that its ratings were “dubiously based.” Neither produced evidence Demotech did anything improper. Ultimately, four insurance companies went insolvent, and Demotech continues to be the industry’s primary ratings agency. In their study, researchers compared Demotech’s ratings to that of AM Best, a more tenured company that rates some insurers in Florida. To Fannie Mae and Freddie Mac, Demotech’s “A” is equivalent to AM Best’s “B” or “B+”. Researchers found they were not equivalent. Their results showed that two-thirds of Demotech’s A-rated insurers would not meet Freddie Mac’s eligibility to insure mortgaged homes, and 21% would not meet Fannie Mae’s requirement, if they were rated by AM Best. Overall, it indicates there are “inconsistencies” among ratings agencies that “could encourage ratings shopping” by lower-quality insurers, they write. “The ratings are not as meaningful as you would hope them to be,” said Ishita Sen, a professor of finance at Harvard Business School and one of the authors of the report. When asked for comment, Fannie Mae and Freddie Mac did not directly address the report’s findings. Both said in statements that they regularly review insurance rating requirements. “We do not influence or opine on the rating methodologies developed and executed by these rating agencies,” a statement from Freddie Mac said. The authors presented the paper to a research group there during an academic seminar last week. Joe Petrelli, the founder and CEO of Demotech, said the report was yet another unfounded attack on his company. He said he had other studies showing that Demotech’s ratings were accurate and reliable. “It’s part of the hit job that began in July of 2022,” Petrelli said. Higher default rates The authors said they focused on Florida because its insurance market is a bellwether for the nation. Unlike most states, Florida’s market is dominated by small startup insurers that sprang up as national carriers withdrew from the storm-prone peninsula. Many of the new companies had relatively little money or experience; some were led by former politicians. No ratings agency was willing to evaluate them. Nearly all mortgage lenders require homeowners to have insurance through a carrier approved by Fannie Mae and Freddie Mac, which accepts only companies with high enough ratings. Other states are seeing a similar dynamic as disasters strike around the country. Last year, State Farm and Allstate announced they were pulling back from California over increasing wildfire risk. They still write in Florida but under subsidiaries that mostly cover the safer parts of the state. The study’s authors note that the small insurers are far less diversified than their large counterparts. They’re also far more prone to go out of business and more likely to receive consumer complaints. About 19% of companies Demotech rated “A” and above went insolvent between 2009 and 2022. Between 2006 and 2016, the state was not hit by any named hurricanes. Mortgage lenders seem to be aware that the smaller insurers are riskier, according to the study. Florida lawmakers have helped startup insurers by paying them to take policies out of state-run Citizens Property Insurance. When that happens, lenders are more likely to offload those mortgages to Fannie Mae and Freddie Mac, placing the risk with federal taxpayers, according to the study. The two corporations were created by the federal government to buy mortgages from lenders, pool them and sell them as mortgage-backed securities, freeing up lenders to sell more mortgages. The two corporations guarantee the securities — Fannie Mae typically from larger banks and Freddie Mac from smaller banks. “Our results suggest that the banks are aware that there is, sort of, good insurers and bad insurers, and are trying to limit their exposure to the high-risk insurers,” said co-author Parinitha Sastry, a professor of finance at Columbia Business School. Ana-Maria Tenekedjieva, a senior economist at the Federal Reserve Board, is the third co-author of the report. Fragile insurers could also be causing Floridians to default on their mortgages after hurricanes strike. The authors found higher rates of mortgage delinquencies after storms in counties that were dominated by those insurers. Despite the risks with Florida-based insurers, Florida regulators have been “lax,” they write. Under state law, small insurers’ finances must be reviewed once every five years, the same rate as larger national insurers. (One insurer that went insolvent in 2018 had not been reviewed in seven years, the Times/Herald found.) “You want the low-quality ones to be examined a lot more,” Sastry said.

Study recommended changes

State lawmakers and regulators have been aware of the risks. After 2022, when the governor and regulators publicly lashed out at Demotech, lawmakers commissioned a $750,000 study to explore alternatives to the company. The study’s authors recommended requiring that insurers be rated by two companies instead of one, and that the state create a program to encourage those insurers to improve their ratings over time. Lawmakers did not publicly discuss the report or take up its recommendations. Florida’s insurance market is stabilizing, and regulators recently approved eight companies to write policies, six of which are rated by Demotech. Some Florida-based insurers are also seeking ratings from another new agency, Kroll Bond Rating Agency, which was approved by Freddie Mac last year. This session, state Rep. Spencer Roach, R-North Fort Myers, introduced a bill that would have required the state to seek independent ratings for insurers. It never received a hearing. He said the new study’s findings are “obvious.” “Nevertheless I am surprised to see it in print,” he said in a text message.    

HDI Global said it is expanding its operation to include clients in the mid-market segment that have turnover of between €20 million ($21.3 million) and €500 million. The industrial insurer is committed to the middle market in both liability and property complementing other lines, it said in a statement. Following a long-term partnership approach to large industrial clients worldwide, HDI Global said it is expanding its services to include mid-market clients. The insurer said it now offers domestic and international solutions for mid-market clients and a commitment to mid-market brokers. HDI Global’s mid-market initiative focuses on markets, including Belgium, Netherlands, France, Italy, Spain, Denmark and the United Kingdom as well as Canada, Mexico and Australia, a spokesperson said in an email to BestWire. "In all those markets we are already active in the middle market segment, but now our efforts are significantly strengthened on both strategic and operational levels," the spokesperson said. He said business in Denmark and Mexico is less-developed. "The mid-market approach focuses mostly on liability and property complementing other lines of business," he said. The mid-market segment has a range of industries including services within real estate, hospitality, offices, machinery manufacturers, breweries, scientific and technical services, retail, merchandise and consumer goods, HDI Global said. With the strategic focus and internal processes in place, "our partners within the mid-market segment can focus on their core business and entrepreneurial opportunities instead of the risks that come along the way," David Hullin, member of the HDI Global executive board responsible for Europe (without Germany), Americas, Association of Southeast Asian Nations, South Africa and Middle East, said in a statement. Hullin noted HDI Global’s position as a partner in transformation for clients in the mid-market segment worldwide. The insurer's focus on mid-market partnerships "comes as a natural in times of accelerated transformation for many companies,” Mukadder Erdönmez, member of the HDI Global executive board responsible for third-party liability, cyber insurance and motor, said in a statement. Erdönmez said HDI Global has already been offering services to mid-market clients, "but with recent developments, the focus has strengthened. The key regions of focus include Europe, Australia, Canada and Mexico, ensuring that clients across these areas can benefit from HDI Global's expertise and own global network in more than 175 countries." HDI Global Specialty earlier acquired a majority stake in managing general agency Falcon Risk Holdings LLC from investor Griffin Highline, seeking growth in the U.S. market. Parent HDI Global SE plans to move quickly to first offer surety and fidelity in the United States. Underwriting entities of HDI V.a.G. have current Best's Financial Strength Ratings of A+ (Superior), A- (Excellent) and B++ (Good).    

Ivans® today announced the results for Q1 2024 Ivans Index™, the insurance industry’s premium renewal rate index. The first quarter results of 2024 showed premium renewal rate change for all major commercial lines of business except Workers’ Compensation are up year over year. Q1 2024 experienced an increase in average premium renewal rate change across all major commercial lines compared to Q4 2023. Premium renewal rate change by line of business for Q1 2024 highlights include:

• Commercial Auto: Q1 2024 average premium renewal rate averaged 9.09%, an increase compared to Q4 2023’s average premium renewal rate of 8.79%. The quarter began with the lowest rate change in January, averaging 7.04%, and experienced its highest rate in February, averaging 10.30%.
• BOP: BOP premium renewal rate increased in Q1 2024 with an average of 9.30% versus 9.12% in Q4 2023. The quarter reached its highest premium renewal rate change in February, averaging 9.72% and ended with its lowest rate of 8.84% in March.
• General Liability: First quarter 2024 premium renewal rate experienced a slight increase compared to Q4 2023, averaging 5.89% versus 5.83%. The quarter began with the lowest rate change in January, averaging 5.38%, and reached its highest rate in February, averaging 6.21%.
• Commercial Property: Average premium renewal rate change for Commercial Property experienced an increase during Q1 2024 at 10.52% versus 10.34% in Q4 2023. The quarter began with the lowest rate change in January, averaging 10.30%, and reached its highest rate in February, averaging 10.77%.
• Umbrella: Average premium renewal rate change for Umbrella experienced an increase during Q1 2024 at 6.81% versus 6.39% in Q4 2023. The quarter began with the lowest rate change in January, averaging 6.35%, and ended with its highest rate in March, averaging 7.10%.
• Workers’ Compensation: Workers’ Compensation premium renewal rate change averaged -0.88% in Q1 2024, down from Q4 2023 at -0.64%. The quarter reached its highest premium renewal rate change in February, averaging -0.40% and ended with its lowest rate of -1.57% in March.

“This quarter’s Ivans Index results show that the premium renewal rates continue to increase across all major commercial lines, signaling continued hard market conditions,” said Kathy Hrach, senior vice president of Product Management, Ivans. “The continued rate increases of the hard market is being closely tracked across the industry as renewals and remarketing become more and more important, and Ivans Index will continue to be a source of data on rate trends.” Released monthly, Ivans Index is a data-driven report of current conditions and trends for premium rate renewal change of the most placed commercial lines of business in the insurance industry. Analyzing more than 120 million data transactions, the Ivans Index premium renewal rate change measures the premium difference year over year for a single consistent policy. Inclusive of more than 38,000 agencies and 600 insurers and MGAs, the Ivans Index is reflective of the premium rate change trends being experienced by all agencies and insurers across the U.S. insurance market. Ivans Index is available to agencies and insurers as part of Market Insights at markets.ivansinsurance.com.  

The U.S. cyber insurance line generated strong direct underwriting profits for the second straight year in 2023, but written premium volume has stalled amid renewed pricing pressure, Fitch Ratings says. A first look at data compiled from cyber insurance supplemental filings in statutory financial statements indicates that for standalone cyber coverage the direct incurred loss and defense and cost containment (DCC) expenses ratio held relatively steady at 44% in 2023 versus 43% in 2022. Despite two poor/performing years in 2020 and 2021, this ratio has averaged a highly profitable 48% over the nine years that cyber supplemental data is available. Favorable cyber underwriting results are partly due to prior large increases in premium rates. Insurers are also being more careful in cyber risk selection and the underwriting process. They are requiring that customers maintain proper cyber hygiene and risk management practices before agreeing to insure them. Additionally, insurers are tightening policy language to more strictly define terms, with more frequent insertion of sub-limits and exclusions. U.S. statutory direct written premiums for cyber coverage in standalone and package policies declined for the first time on record in 2023 by a modest 2%. This represents a sharp drop off from market growth of approximately 200% from YE20 to YE22. The reversal occurred even with continued growth in demand for coverage and carriers keen on expanding their cyber underwriting portfolios despite weaker pricing trends. Stand-alone cyber coverage, which represents 69% of all industry written premiums, declined by 3% in 2023 to $4.9 billion. Current segment underwriting profitability at current levels is unsustainable as cyber insurance pricing is likely to remain flat or down going forward. The Council of Insurance Agents & Brokers’ Commercial Property/Casualty Market Survey reveals that pricing has substantially moderated following rapid rate increases throughout 2021 and 2022. Average cyber renewal premium rate increases were up less than 1% per the 4Q23 survey compared with 15% and 34% in 4Q22 and 4Q21, respectively. Global insurance broker Marsh reported that U.S. cyber renewal rates were down for the last three successive quarters, including a 4% decline in 4Q23, as new capacity continues to enter the market despite concerns regarding ransomware and cyber catastrophe exposure, particularly via the managing general agent channel. Statutory cyber financial data does not provide a full picture of segment profitability as direct results do not include all underwriting and adjusting expenses. Effects on premiums and losses from ceded reinsurance also are not considered, and cyber is typically a product for which primary carriers buy considerable reinsurance protection. Carriers will face ongoing challenges to maintain underwriting discipline as market competition intensifies and adapt to an evolving claims environment that is heavily influenced by technological change. Cyber loss risk is also heightened by expansion of regulatory and compliance requirements, including recent SEC cyber risk management disclosures for public companies, that increase potential for litigation risks and substantial fines and penalties for not properly disclosing data breaches. Catastrophe exposure from cyber risks is another significant source of uncertainty in terms of the nature, likelihood and cost of the most severe cyber event. Considerable resources are expended by carriers and risk modeling firms to measure risk aggregations and probable maximum losses from larger cyber events. However, these tools remain less advanced than natural catastrophe risk models that have been refined over the last 30 years.