Tag Archives: property and casualty

InsurTech considerations for the P&C industry

InsurTech seeks to improve upon traditional insurance processes by making use of technology like artificial intelligence (AI), mobile applications, and cloud computing. In this article, Milliman’s Tom Ryan takes a look at the InsurTech environment within the property and casualty (P&C) industry. The following excerpt highlights the dynamics stirring up interest in the industry.

The current interest in InsurTech is driven by a perfect alignment of four key elements, the “big Ts”—technology, talent, treasure, and a tempting target.

• Technology: Many of the ideas behind InsurTech startups are not new. It’s just that they were not feasible previously because of shortcomings in technology—even for the technology available as recently as four to five years ago. The improvements in faster, cheaper, smarter computing power, greater storage capability, and large blocks of external but “usable” big data have allowed many seasoned ideas to come to fruition.

• Talent: Many of the entrepreneurs behind today’s InsurTech initiatives migrated to insurance from other industries where they successfully implemented technological innovation. As these other industries get more crowded and mature, innovators are bringing their playbooks to more wide open spaces—the insurance industry. Visit the websites or read the backstories of many InsurTech startups and you will likely find references to prior successes in FinTech or at least a Stanford or MIT pedigree.

• Treasure: At the end of 2016, policyholder surplus in the U.S. property and casualty (P&C) industry stood near record highs of $700 billion. According to the Insurance Information Institute, the industry now has $1 of surplus for every 77 cents of net written premium, close to the strongest claim-paying status in its history. While this is good news from an insurer solvency perspective, the abundance of surplus relative to premium is driving a sustained soft market with low return on equity. Many insurers are responding to these conditions by merging with or acquiring competitors, buying stock back, or raising distributed dividends. It has proved difficult to put any excess capital to work directly in company operations. This had led several insurers to invest in internal technology and digital innovation initiatives as well as starting their own corporate venture capital funds to invest in InsurTech startups. More and more of the investors in InsurTech ventures are the investment arms of legacy insurers and reinsurers. Because of the lack of attractive standard alternatives, these investments may be the best options.

• Tempting target: The insurance industry is huge, with over a trillion dollars of net premiums written annually—over $500 billion in the P&C industry alone. Couple the size of the industry with a reputation for risk aversion and conservatism, and you have a tempting target for innovators, disruptors, and entrepreneurs.

Infographic: Insurance for craft brewers

April 7th marked National Beer Day, in honor of President Franklin Roosevelt signing a law on that date in 1933 to once again legalize the brewing and selling of beer. It was one of FDR’s first steps toward ending prohibition.

Today, craft beer is a growing market, with the number of small and independent operating breweries in the United States totaling 5,301—a 16.6% increase over the year before. But as with any small, closely held business, this expanding industry faces some unique liabilities. The infographic below is based on an article by Milliman consultant Michael Henk, which examines some of the liabilities that both craft brewers and insurers should consider in order to minimize the financial impact of the risks they face.

Top 15 U.S. articles and reports for 2016


In 2016, Milliman consultants wrote articles and worked on studies covering a range of practices and areas. Healthcare was a hot topic again this year, and topics included value-based payments, risk adjustment, and the Medicaid managed care rule. Other articles—about student loan debt and daily fantasy sports—were also popular. Here’s a preview of the top 15 U.S. articles and reports for the year.

15. Financial analysis of ACA health plan issuers, By Daniel J. Perlman and David M. Liner

14. Are you ready for the new world of value-based reimbursement?, By Marla Pantano

13. Encounter data standards: Implications for state Medicaid agencies and managed care entities from final Medicaid managed care rule, By Jeremy Cunningham, Maureen Tressel Lewis, and Paul R. Houchens

12. The elusive nature of private exchanges, By Mike Gaal

11. Money market update for 2016: The rule that you should be aware of, By Jeffrey T. Marzinsky

For a summary and link to all of the articles, click here.

Top 15 global articles and reports for 2016


Milliman’s most viewed articles worldwide in 2016 covered topics including pensions, student loans, value-based payments—and Pokemon Go. There were also pieces on Solvency II, encounter data standards, and managed care regulations. Here is a preview of the top 15 global articles and reports for the year.

15. Financial analysis of ACA health plan issuers, By Daniel J. Perlman and David M. Liner

14. Telemedicine and the long-tail problem in healthcare, By Jeremy Kush and Susan Philip

13. Public Pension Funding Study, By Rebecca A. Sielman

12. Life insurance risks: Observations on Solvency II and the modeling of capital needs, By Stephen H. Conwill

11. Encounter data standards: Implications for state Medicaid agencies and managed care entities from final Medicaid managed care rule, By Jeremy Cunningham, Maureen Tressel Lewis, and Paul R. Houchens

For a summary and link to all of the articles, click here.

Brewing insurance solution for craft brewers

Craft beer companies need unique insurance solutions to address the distinct risks inherent in their industry. Companies can minimize the financial effects that these risks can create by purchasing specialized craft brewery coverage. In the article “Crafting insurance for the new brewery industry,” Milliman’s Michael Henk explores some of the larger risks a craft brewer faces along with the type of coverages the brewery should consider obtaining.

Here’s an excerpt:

Boiler/machinery liability
Boilers and machinery expose breweries to multiple liabilities. First of all, with production being reliant on machinery, any major breakdown could be devastating for business. When a brewery does not produce a lot of beer to begin with, even a temporary halt in production could have large consequences.

Along with a halt in production, brewers have the extra added risk of injuries if something more serious happens. An exploding boiler doesn’t just affect the production and finances of the brewery, but may also result in damages and injuries for workers, contractors, and tour-goers.

There are many steps that craft brewers can take to mitigate the potential economic impact of this risk. For the production side of the liability, brewers can obtain boiler and machinery coverage that will cover them for replacement or repair costs. Property insurance can also cover some of the loss of income from a breakdown in production.

Tour liability
One of the more interesting phenomena with respect to craft brewing is the great popularity of brewery tours, where breweries open their doors to the public (sometimes while the brewery is still in full operational mode). This serves craft breweries well as a marketing tool because it gets people in the door learning about and sampling the product. Popular tours sell out with regularity and have even become “must-see” tourist attractions in many cities. Macro-breweries have gotten in on the tour game as well. However, tours at larger breweries tend to avoid the production floor and tend not to include areas of the brewery that are currently operating.

With these production floor tours of active breweries comes unique liability. Paying customers are invited to walk around the brewery among the fermentation tanks and machinery (accompanied by a tour guide, of course). A brewer needs to make sure that conditions are safe for customers and take preventive measures.

In one specific case, a fermentation tank explosion during a tour led to customer injuries at a craft brewery in Texas.7 Not only was there an obvious halt in production in this case, but also two years after the incident, customers who were on the tour went to court for damages, citing pain and suffering as a result of the incident.

Brewers need to be covered for less “explosive” events as well. Slips and falls are a lot more likely, especially when the brewery tours contains stairwells and wet floors. Brewers must obtain general liability insurance with sufficient limits to cover the bodily injury caused to tour-goers or the potential property damage caused by them.

Bankers Insurance Group becomes latest property and casualty insurer to adopt Milliman competitive intelligence tool

Milliman today announced that Bankers Insurance Group has adopted Pixel™, a competitive intelligence tool for property and casualty insurance companies. Since launching in May, Pixel has provided a unique advantage for companies participating in the highly competitive and evolving Florida insurance market, and Pixel will soon be available in other states.

Pixel is a web-based, interactive platform designed to give marketing executives, product managers, and actuaries a comprehensive and customized view of the market. Companies can view their own data in Pixel, or they can license Milliman’s market baskets, which include competitor premiums for hundreds of thousands of policy profiles calibrated to represent various state markets.

“Our product managers are already reaping the benefits of this tool. It provides valuable insight to the market that allows us to target areas to grow our business where our rates are positioned well in the market while maintaining profitability” said Judy Copechal, President of Insurance at Bankers Insurance Group.

“Pixel is helping companies get ahead in the challenging Florida market,” said Milliman Principal Nancy Watkins. “These insurers face intense competition for market share and many stresses to their bottom lines. In this kind of environment having the best information makes all the difference, which explains the growing popularity of Pixel. In December alone, three insurers licensed Pixel.”

Pixel applies advanced data visualization and machine learning techniques behind the scenes in an easy-to-use tool that analyzes premiums for a given company relative to the competition. Users can filter markets by geography and type of risk, and drill down into the variables that most affect their competitive positions. Results are output in user-friendly data sets, charts, and maps that can easily integrate with other software. This information is useful not only in setting premiums, but also in arming agents with valuable insight and in supporting the regulatory process.

To read more about Pixel, click here.