US non-life segment to grow in next four years
The US’s non-life insurance segment is set to witness healthy, albeit moderately slower growth in the next four years, supported by the adoption of new technology and an increasing demand for cyber liability insurance, according to a new report by Timetric, a provider of online data, analysis and advisory services on key financial and industry sectors.
The non-life segment’s gross written premium grew from $824.4 billion to $996.3 billion during 2010-2014, according to the report, at a CAGR of 4.8 percent. Timetric forecasts the segment’s gross written premium to post a compound annual growth rate (CAGR) of 4.3 percent up to 2019, to reach $1.2 billion –growth that will be driven in part by innovations in the use of technology within the insurance sector and a rising awareness of cyber-crime, which has led to more purchases of cyber risk insurance.
Insurers in the US are taking advantage of technological applications to insurance that can be used to monitor how safely motorists drive, according to the report. Timetric said that these applications can help insurer to overcome issues of adverse selection and rely less on blunt criteria (such as age and gender) when assessing the risk of drivers, enabling them to price policies more accurately. Furthermore, they also give motorists an incentive to drive in a much safer manner and thus reduce the number of claims pay outs the insurer must meet, according to Timetric.
This increased use of telematics is part of the reason for the forecast slowdown in growth of paid claims by motor insurers from 4.6 percent per year during 2010-2014 to 3.8 percent per year over the next five years, said the report.
The rising frequency and severity of cyber-attacks on companies is increasing awareness among executives of the importance of the benefits of purchasing adequate cover; both for the damage caused by breaches of data and for the interruption to business that can be caused by cyber-crime, according to the data.
Timetric said that the US experienced the highest average data breach cost in 2015 at $6.53 million. Furthermore, many cyber liability policies come with advice and guidance for companies on how to reduce their vulnerabilities, adding preventative benefits to the traditional remedial advantages of insurance.
Timetric expects the growth in cyber liability insurance to contribute towards the liability segment’s 5.2 percent annual rate of growth up until 2019.
