Latest Studies

Global insurance M&A themes 2018. Moving from optimization to transformation
Ernst & Young Global Limited (EY);
March 01, 2018

While 2017 was not a great year for insurance M&As in terms of the number or value of deals, E&Y analysts foresee an increase in deals in 2018 as more insurers seek to transform, using business acquisitions or disposals as elements of that transformation. Insurers are engaging in “portfolio optimization” or taking care of legacy systems as they try to streamline and simplify their businesses, either priming for a sale or looking to expand through acquisition. With most companies looking to evolve their operations to compete in the digital ecosystem more effectively, E&Y predicts headline-making deals in the future. In 2017 there were 458 deals valued at $48 billion, 16 of the deals were valued at more than $1 billion. That year also saw an increase in private-equity-led deals, a trend that is expected to continue. Tax reform in the U.S. has been cited as a contributing factor in several transactions. The report also describes how insurers are grappling with the challenges of assessing insurtech investments and entering into new types of partnerships within the context of newly developing, digitally-connected business ecosystems. Full report

Automated vehicles and the insurance industry
Casualty Actuarial Society;
January 01, 2018

This report by the Casualty Actuarial Society's Automated Vehicles Task Force discusses how automated vehicles (AVs) will affect the insurance industry, and the role that actuaries will play in assessing risk and setting premiums. The report includes a section on adjusting the auto insurance pricing model for AVs, concluding that building such a model will be a long process and suggesting that the model's success will depend on a direct and collaborative relationship between manufacturers and casualty actuaries. A section devoted to liability posits that the ideal liability system will align responsibility and accountability, encourage manufacturers to invest in product improvement, compensate claimants fairly and efficiently, and minimize frictional costs. The report contains several scenarios of how full adoption of AVs might impact insurance rates. In one scenario where every private passenger auto is fully autonomous and owned by the manufacturer, the manufacturer would buy a private passenger automobile insurance policy to cover its liability losses, but would pay for any vehicle damage itself. Each vehicle has the same bodily injury and property damage limits of, approximately, $115K/$250K/$70K. If the vehicle gets into an accident, each claimant can only receive $115,000 with each accident’s payment capped at $250,000 for bodily injuries. Any property that is damaged in an accident would be covered, up to $70,000. Medical payment and Personal Injury Protection would provide additional coverage. In this scenario the current average vehicle premium rises from $781 to $1,065, but the amount of coverage expands dramatically, every vehicle has the same coverage and is charged the same premium and while insurers are no longer responsible for physical damage claims, the insurance market now covers liability on 15 percent more vehicles. The report also contains sections on risk minimization strategy and safety benchmarks. Full report

Big data and Insurance: implications for competition, innovation and privacy
Benno Keller
The Geneva Association;
March 14, 2018

This report from the Geneva Association discusses the trade-offs that the uses of big data analytics present to the insurance industry. As the digital transformation in the insurance industry continues, policy choices will have far-reaching impact on the future of the industry, its socio-economic relevance and the value it creates for customers. New sources of digital data, such as the Internet of Things, reveal information about behaviors and habits that allow insurers to assess individual risks much better than before, but the use of such data also raises concerns regarding privacy, discrimination and competition. While the use of big data to create ever more sophisticated risk-pricing can lead to personalized pricing for policyholders, this could mean that individuals with high risk can no longer afford insurance. Alternatively, better understanding of risk through enhanced use of data also facilitates the development of new types of coverage and enhances the insurability of existing and emerging risks. Insurers face competition throughout their value chain not only from insurtech firms, but also from large technology companies. If technology firms with platform business models leverage their unique access to customers to drive competitors away, the marketplace dynamic could become problematic for insurers. Full report

Impact of gender, organized athletics, and video gaming on driving skills in novice drivers
Nancy L. Wayne and Gregory A. Miller
January 24, 2018

This study from the University of California Los Angeles, analyzed the correlation between the skill of new drivers and their age, gender, sports participation and video game experience. The study found that new male teen drivers are better than new male drivers in their 20s; that male and female students who play sports are better new drivers than those who do not participate in organized sports; and that video game experience does not have any effect on driving skills. The authors said that, “based on the results of the current study, we hypothesize that the relatively high accident rate of younger drivers (especially male drivers) is most likely due to inattention to safety considerations rather than lack of technical driving ability.” The authors suggest that states consider ending mandatory driver’s education for only teens and expanding safety training to new drivers of all ages. Full text

Pedestrian traffic fatalities by state, 2017 preliminary data
Richard Retting
Governors Highway Safety Association;
February 01, 2018

Without making a direct correlation or claiming a definitive link, this Governors Highway Safety Association study suggests that the reasons for the recent increases in pedestrian fatalities might include the growing number of state and local governments that have decriminalized the recreational use of marijuana. The seven states (Alaska, Colorado, Maine, Massachusetts, Nevada, Oregon, Washington) and Washington, D.C., that legalized recreational use of marijuana between 2012 and 2016 reported a collective 16.4 percent increase in pedestrian fatalities for the first six months of 2017 versus the first six months of 2016, whereas all other states reported a collective 5.8 percent decrease in pedestrian fatalities. In recent years, the number of pedestrian fatalities in the United States has grown substantially faster than all other traffic deaths. The number of pedestrian fatalities increased 27 percent from 2007 to 2016, while at the same time, all other traffic deaths decreased by 14 percent. Pedestrians now account for a larger proportion of traffic fatalities than they have in the past 33 years. Cellphones also play a part in pedestrian fatalities. Cellphone-related Emergency Department visits are increasing in parallel with the prevalence of distraction from cellphone use in the United States. Full report

Preserving the Mobility and Safety of Older Americans
March 01, 2018

The number of Americans over the age of 65 has been climbing, and by 2060 the total population in that age category is projected to reach 24 percent. With this demographic shift, the number of older drivers involved in car crashes has been increasing as well. This report studied the fatality rates of older drivers by state. Wisconsin, Minnesota, Kansas, Nebraska and Rhode Island had the highest rates of fatalities involving at least one driver age 65 or older. The report assesses the licensing requirements for older drivers and makes recommendations for improving the safety and mobility of the older population. Recommendations include alternative transportation options, highway improvements such as larger and brighter signage, vehicle enhancements and driver education. Full report.

Motorcycle helmets and cervical spine injuries: A 5-year experience at a Level 1 Trauma Center
Paul S. Page, MD et al.
Journal of Neurosurgery: Spine;
March 06, 2018

This study found that the use of motorcycle helmets reduces the likelihood of cervical spine injury (CSI). A total of 1,061 patient charts were examined containing data on 738 unhelmeted and 323 helmeted motorcycle riders. Cervical spine injury occurred in 114 unhelmeted riders (15.4 percent) compared with only 24 helmeted riders (7.4 percent). In the unhelmeted group, 10.8 percent of patients were found to have a cervical spine fracture compared with only 4.6 percent of patients in the helmeted group.The 5-year study refutes claims that helmets do not protect the cervical spine and may even increase the risk of injury. Full report

The impact of opioid prescriptions on duration of temporary disability
Dr. Bogdan Savych, Dr. David Neumark, and Dr. Randy Lea
Workers Compensation Research Institute (WCRI);
March 08, 2018

Longer-term prescribing of opioids causes substantially longer duration of temporary disability among workers with work-related low back injuries, according to this study from the Workers Compensation Research Institute (WCRI). Temporary disability is time that workers spend away from work recovering from their work-related injuries. “While medical practice guidelines often advise against routine use of opioids for the treatment of nonsurgical low back injuries, opioid prescribing in these cases is common,” said John Ruser, WCRI’s president and CEO. “Based on the results of this study, there is a clear implication that policies addressing inappropriate longer-term opioid prescribing will result in faster return to work.” The study uses data from 28 states, for injuries between 2008 and 2013 where workers had more than seven days of lost work time. For more information about this study or to purchase a copy, visit

2018 LexisNexis IoT and state of the insurance industry study
LexisNexis Risk Solutions;
March 20, 2018

This study surveyed 500 U.S. insurance professionals from auto, home, life and commercial lines of business to gauge how Internet of Things (IoT) data fits into their current and future business strategies, and the extent to which this data is being collected and used today. The research uncovered that while 70 percent of respondents agree that gathering IoT data is important to their organization's current insurance strategy, only 21 percent have an IoT strategy, and just 7 percent have the human and technology resources required to use it in decision making. Of those that said they currently collect data from telematics, wearables, connected home and properties, just 5 percent use it in their day-to-day analytics. Research shows that insurance customers are expecting benefits from IoT adoption, a 2017 survey by Aite Group found that 77 percent of connected homeowners would be open to seeing their insurer manage their connected home in some way. Bill Madison, CEO of Insurance for LexisNexis Risks Solutions said, “The good news is that the IoT playing field is currently relatively even. Partnering with an experienced organization to cleanse, normalize and analyze IoT data can help carriers gain a first-mover advantage in enhancing their existing portfolio and developing new products.” Full report

Rapid growth of the US wildland-urban interface raises wildfire risk
Volker C. Radeloff et al.
Proceedings of the National Academy of Sciences of the United States of America;
March 12, 2018

This study examined the number of houses that have been built since 1990 in or near natural vegetation, in an area known as the wildland-urban interface (WUI). Approximately one in three houses and one in 10 hectares are now in the WUI, making it the fastest-growing land use type in the conterminous United States. The WUI in the United States grew rapidly from 1990 to 2010 in both the number of new houses (from 30.8 to 43.4 million; 41 percent growth) and land area (from 581,000 to 770,000 km; 33 percent growth). The vast majority of new WUI areas were the result of new housing (97 percent), not related to an increase in wildland vegetation. Within the perimeter of recent wildfires (1990–2015), there were 286,000 houses in 2010, compared with 177,000 in 1990. WUI growth often results in more wildfire ignitions, putting more lives and houses at risk. Wildfire problems will not abate if recent housing growth trends continue. Although Western fires often the most destructive the study found that a lot of the growth of the WUI has been in the densely populated Eastern U.S., as well as the Southern Plains states of Texas and Oklahoma. The study is available for purchase from the PNAS.

Extreme weather events in Europe
European Academies’ Science Advisory Council (EASAC);
March 21, 2018

This report by a group of 27 national science academies in the European Union, Norway and Switzerland examined extreme weather events in Europe and concluded that extreme weather events have become more frequent in the last 36 years. Hydrological events such as floods and landslides around the world have become four times more common since 1980 and have increased by 100 percent since 2004. The study also found that other climatological events such as extreme temperatures, droughts and forest fires have increased by more than 100 percent since 1980, and that such meteorological events as storms have increased by 100 percent during the same period. The study found that losses from thunderstorms in North America doubled from less than $10 billion in 1980 to almost $20 billion in 2015, and that adaptation and mitigation must remain the fundamental responses to climate change. Full Text