Super Bowls Ads, Kobe Bryant Lawsuit Make The Year’s Top P&C Stories

The pandemic and the pros and cons of digitalization dominated coverage of property and casualty carriers. It seemed for every negative aspect of the issues, there were bright sides.

Here are the top 10 P&C stories for 2021:

1. State Farm NFL Ads Crushing The Marketing Competition

State Farm was all over the 2021 NFL Playoffs, with popular quarterbacks Aaron Rodgers and Patrick Mahomes serving as two of the most popular pitchmen in the marketing world.

Mahomes played in his second straight Super Bowl, where he led the Kansas City Chiefs against the Tampa Bay Buccaneers. Rodgers remained one of the most popular personalities in the marketing world, raking in about $9 million annually from endorsements, according to Forbes.

The State Farm ads are funny and clever, often starring Rodgers alone, but sometimes in tandem with Mahomes. More importantly, the impact is readily apparent, the advertising metrics data firm EDO told CNBC for this story.

EDO used this example: “For State Farm, when Aaron Rodgers and Patrick Mahomes are featured in the ads during a game they’re playing in, there’s a huge boost in excess performance on a per person basis of people searching for State Farm. The ads perform two-three times better than other ads aired in those games.”

2. Insurer Says It Won’t Cover Flight Operator In Kobe Bryant Lawsuits

A California insurer said its coverage did not include the type of helicopter that crashed on Jan. 26, 2020, killing basketball legend Kobe Bryant and eight others.

OC Helicopters was covered by an aircraft insurance policy issued by Endurance Assurance Corp. at the time of the accident. The policy contained a single limit of $10 million for bodily injury and property damage, Endurance acknowledged in a lawsuit filed by Kobe’s widow Vanessa.

Endurance defended OC Helicopters. It said the Sikorsky S76B helicopter was not qualified for coverage under the policy due to a clause for aircraft it operated but did not own. Helicopters did not fall under that clause, Endurance said.

3. Cyber Risk Outlook 2021: How Evolving Trends Will Impact the Year Ahead

At the beginning of 2021, data security experts noted attacks by cyber criminals were up dramatically during the pandemic. And they predicted such crimes would escalate further.

They were right. The number of data breaches through September 30, 2021 exceeded the total number of events in full-year 2020 by 17 percent (1,291 breaches in 2021 compared to 1,108 breaches in 2020). For Q3 2021, the number of data compromise victims (160 million) is higher than Q1 and Q2 2021 combined (121 million).

The shift to remote work and large-scale dependency on personal devices on residential networks have expanded threat actors’ attack surface — the number of different points through which an unauthorized user can access or extract data from an environment.

At the same time, businesses have been digitizing operations at a record pace to adapt to remote working trends, increased virtual consumption and the need for contactless services.

The net effect has been a mass increase in potential targets for criminals to exploit and an unprecedented expansion of company networks beyond their external firewalls.

4. Colorado Law Bars Insurance Discrimination By Data

Colorado adopted new law prohibiting insurance companies from disproportionately harming people based on race, sex, sexual orientation or gender identity, although it did not directly bar the use of credit histories and other data in setting individual rates.

The law tackled the thorny issue of discrimination by proxy, when third-party data are used to set rates that disproportionately affects particular groups adversely.

Advocates called it a “victory for fairness.”

SB 169 prohibits insurance companies from discriminating against protected classes in the “marketing, underwriting, pricing, utilization management, reimbursement methodologies, and claims management in the transaction of insurance.” Carriers are required to change practices when unfair discrimination results from algorithms, models or the use of external data sources.

5. No-Code Technology: Breaking Down Silos In Insurance

The insurance industry is going digital. No big news there. But some warned against going too far in digitalizing the experience of purchasing policies.

Buying insurance is a burdensome process. Most consumers use both offline and online channels to research their options and gather the necessary information before they buy.

That’s why digitalizing processes should not be seen as a replacement for the existing agency model. On the contrary, said top executives at Innoveo, digital technology should help insurers automate standard processes and enable the agent to add an extra layer of personalized services.

Perhaps that’s why in spite of the increasing demand for digital-native products, the percentage of insurers that offer more complex insurance products for purchase online remains low, according to a McKinsey report for the European market.

6. COVID-19 And Business Interruption Insurance: Ambiguity Remains

At the one-year anniversary of the start of COVID-19 lockdowns, the insurance industry noted the lack of clarity for businesses trying to determine how their business interruption insurance coverage aid in complying with government shutdowns and other consequences of the pandemic.

Now at the two year anniversary, that lack of clarity persists as insurance carriers and courts still apply policy considerations in strikingly differing ways. The result is wildly varying outcomes for insureds.

7. Florida Bill Would Jack Up Auto Insurance Rates, Insurance Group Says

The Florida Legislature passed a bill to end a decades-old requirement that motorists carry $10,000 in personal-injury protection, replacing it with mandatory bodily injury coverage, a mandatory death benefit and an “opt-out” medical payments coverage modeled on PIP.

Proponents said the bill would ultimately lead to lower auto insurance rates but heavy lobbying by the insurance industry and opposition from the Personal Insurance Federation of Florida convinced Gov. Ron DeSantis to veto the bill.

8. Big Data Carries Big Potential For Insurance Discrimination, Regulators Say

Vincent Tsang, an actuary with the Illinois Department of Insurance, said more insurers are relying on big data to guide underwriting and set what is expected to be impartial, by-the-numbers pricing. But critics say it is anything but, he noted. The capabilities are only going to increase as insurers seek to speed up accelerated underwriting (AUW) capabilities.

Regulators like Tsang worry about adverse impacts on availability and affordability of insurance for protected classes, including race, color, creed, national origin, standard of domestic violence victims, past lawful travel or sexual orientation in any manner, as well as other protected classes.

There are numerous examples of how big data algorithms discriminate against communities of color. For example, a 2018 study by Consumer Reports and ProPublica found disparities in auto insurance prices between minority and white neighborhoods that could not be explained by risk alone.

9. Global Insurance Risks Start With The Good, Bad And Ugly Of Big Data

The opportunities to reshape the industry through digitalization are enormous, industry experts said during a June conference.

For example, Discovery Limited, a South African-founded financial services company, is achieving great success using technology to connect with clients on mental and physical health goals.

"They created a way to engage policyholders to become healthier. They are rewarding them for doing the right things," said Matteo Carbone, founder and director of the IoT Insurance Observatory.

The John Hancock Vitality Program, first launched in 2015, is a similar effort. Customers can earn savings of up to 15% on premiums and valuable rewards for the everyday things they do to stay healthy, like exercising, eating well and getting regular checkups.

But there is still hesitancy on the data methods insurers are using to do contact-free underwriting.

10. Chubb Offers To Buy Hartford For $23 Billion

The Hartford rejected three acquisition moves from insurer Chubb, with offers of $65, $67, and finally $70 per share, or around $24 billion.

The Hartford’s board of directors unanimously rejected each of Chubb’s proposals, determining that “entering into discussions regarding a strategic transaction would not be in the best interests of the company and its shareholders.”

The overtures pushed up the stock in Hartford to nearly the offer levels, however, where it has stayed since.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].