Chubb’s Play for The Hartford
The most closely watched event in the personal lines industry last month was Chubb’s nearly $23 billion bid to acquire The Hartford, which the Connecticut-based carrier rejected. But that doesn’t mean that The Hartford isn’t attracting other bidders. Germany-based Allianz is considering a potential bid for The Hartford as it considers expanding its P&C footprint in the U.S., Bloomberg has reported. And there might be even other interested parties, plus Chubb may come back with a sweetened offer. That’s at least the contention of some Wall Street analysts.
A Chubb-Hartford combination could shakeup the top rankings of the overall P&C market, but not affect the personal lines space that much.
A combination of the two would create a nearly $37 billion P&C premium powerhouse that would jump ahead of carriers like Liberty Mutual, Allstate, Travelers, and USAA to become the No. 4 carrier in the overall P&C industry, based on 2020 NAIC data. The merged insurer would only be eclipsed by State Farm, Geico parent Berkshire Hathaway, and Progressive.
Any potential deal, which is far from certain, would have less impact on the personal lines portion of the P&C industry. Chubb is the No. 12 personal lines insurer, generating nearly $4.9 billion in premiums from that space, based on 2020 NAIC data. The Hartford ranks No. 19 and earned about $2.8 billion in personal lines premiums last year. A merger of the two insurers could catapult the combined entity to become the 11th biggest personal lines carrier, eclipsing Erie Insurance.
‘Days of Credit Scoring are Numbered’
Washington State Insurance Commissioner Mike Kreidler didn’t mince his words when he told P&C Specialist in an exclusive interview that he is settling down for a long fight with the P&C industry over his recently-announced emergency credit scoring ban. Though Kreidler has previously tried to pass anti-credit scoring legislation, this was his first time enacting an emergency ruling.
“The days of credit scoring are numbered whether we wind up being successful or not, as a number of other states have already banned it or are in the process of doing so,” said Kreidler. “Society is changing and we’re starting to realize that credit scoring needs to go away… inevitably [the practice] will be discredited.”
The practice of using credit scores in rate-setting has long been criticized as having a disparate, unfair impact on people of color.
Three top industry trade associations — the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, and the Northwest Insurance Council — have fired back at Kreidler regarding the emergency ruling.
Rich Steffen’s Trial by Fire at AmFam
Rich Steffen was less then two weeks into his new job as head of personal lines at American Family Insurance when the coronavirus was declared a pandemic and the word as we knew it came to an end. In an interview with P&C Specialist Steffen spoke at length about leading the business through such an unprecedented challenge.
For Steffen the most important and pressing goal was to create an environment of psychological safety for both employees and customers. One way to create this atmosphere was to ensure that management was on top of the message that had to be delivered. “These conversations that I had with the leaders, and then the individuals, some of it was business-related, but mostly it was culture related. That has been a key, as a leader, to create a culture of belonging in these times of social isolation," Steffen says.
California Puts Pressure on Auto Insurers
Auto carriers in California overcharged their customers during the COVID-19 pandemic despite a drastic drop in car accidents, the state’s top insurance regulator said.
Insurance commissioner Ricardo Lara had ordered carriers operating in California to report to him by April 30 how they will return “overcollected” premiums back to their customers. Lara’s statement came the very same day State Farm announced plans to provide a dividend of $400 million to its auto customers in the Golden State due to lower claims.
Lara’s demand hasn’t gone down well with the P&C industry and the American Property Casualty Insurance Association (APCIA) is rebutting the charges.
In its defense of insurers, APCIA cited a recent National Highway Traffic Safety Administration study that shows that auto fatalities increased significantly in the first nine months of 2020, even as overall miles driven decreased due to coronavirus-related shutdowns.
Phasing out Spire
Nationwide is looking to phasing out Spire, the millennial-friendly platform it unveiled in 2019 to take on InsurTech startups like Root Insurance. The move comes when the Columbus, Ohio-based insurer is taking steps to modernize its operations by investing and establishing partnerships with startups and launching new programs.
At the same time, the company has been consolidating its innovation and digital operations across all segments. In September, the insurer shut down its Millennial-focused personal finance app Nimbl. The service was launched out of the company’s innovation unit.
Faris Khan
Managing Editor
P&C Specialist
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