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Property-and-Casualty Property and Casualty Insurance
TOPIC: Overview of Insurance Operations
1. The candidate will understand how insurance companies are organized, their goals, how success is measured, and their functions.
Learning Outcomes
The candidate will be able to:
a) Explain how insurers have organized to provide property-casualty insurance
b) Describe the major goals of an insurer
c) Describe the internal and external constraints that impede insurers from achieving their major goals
d) Describe the measurements used to evaluate how successful an insurer is at meeting its established goals
e) Describe the core and supporting functions performed by insurers
TOPIC: Insurance Regulation
2. The candidate will understand the reasons for and the types of regulation.
Learning Outcomes
The candidate will be able to:
a) Describe the effect each of the following acts and legal decisions have had on insurance regulation: Paul v. Virginia, Sherman Antitrust Act, South-Eastern Underwriters Association, McCarran-Ferguson Act, Insurance Services Office and the Attorneys General Lawsuit, and Gramm-Leach-Bliley Act
b) Explain how insurance regulation protects consumers, contributes to maintaining insurer solvency, and assists in preventing
destructive competition
c) Identify the regulatory activities of state insurance departments and the duties typically performed by state insurance commissioners
d) Describe the arguments for and against federal regulation of insurance
e) Describe the licensing requirements for insurers and insurance personnel
f) Describe the methods that regulators use to maintain the solvency of insurers and to manage insolvencies, and the reasons why insurers become insolvent
g) Describe the goals of insurance rate regulation, the major types of state rating laws, and the reasons supporting and opposing rate regulation
h) Explain how the contract language contained in insurance policies is regulated
i) Explain how the market conduct areas in insurance are regulated and how regulatory activities protect consumers
j) Explain how organizations that act as unofficial regulators affect insurance activities
TOPIC: Insurance Marketing and Distribution
3. The candidate will understand the insurance marketplace and marketing and distribution systems.
Learning Outcomes
The candidate will be able to:
a) Describe the following attributes of the competitive property-casualty insurance marketplace: distinguishing characteristics of insurance customers, insurer marketing differentiations, and unique factors in the insurance marketplace
b) Explain how typical insurer marketing activities are performed and why they are performed
c) Describe the main types of insurance distribution systems and channels, including the principal characteristics that distinguish one distribution system from another
d) Describe the functions performed by insurance producers
e) Describe the key factors an insurer should evaluate during the distribution-system and distribution-channel selection process
TOPIC: The Underwriting Function
4. The candidate will understand the purpose, role, and function of underwriting.
Learning Outcomes
The candidate will be able to:
a) Describe the purpose of underwriting
b) Describe the underwriting activities typically performed by line and staff underwriters
c) Describe the importance of compliance with underwriting authority in individual account selection
d) Describe the constraining factors considered in the establishment of underwriting policy
e) Describe the purposes that underwriting guidelines and underwriting audits serve
f) Describe the steps in the underwriting process
g) Explain how an insurers underwriting results are measured and how financial measures can be distorted
TOPIC: Underwriting Property and Liability Insurance
5. The candidate will understand the different policy considerations in underwriting property and liability insurance policies.
Learning Outcomes
The candidate will be able to:
a) Describe in detail each of the COPE factors used to evaluate property loss exposures
b) Explain how insurable interest, policy provisions for valuing losses, and insurance to value affect a loss payment amount under property insurance
c) Explain how underwriters use policy amount, amount subject, normal loss expectancy (NLE), probable maximum loss (PML),
and maximum foreseeable loss (MFL) to measure potential loss severity
d) Describe the underwriting considerations for business income and extra expense coverage
e) Describe the underwriting considerations and risk control techniques associated with employee dishonesty and crimes
committed by others
f) Describe the loss exposures and the underwriting considerations for commercial general liability insurance
g) Describe the underwriting considerations for personal and commercial auto insurance
h) Describe the key underwriting considerations relevant to the evaluation of submissions for workers compensation insurance
i) Describe the underwriting considerations for umbrella and excess liability insurance
TOPIC: Risk Control and Premium Auditing
6. The candidate will understand the purpose and function of risk control and premium auditing.
Learning Outcomes
The candidate will be able to:
a) Describe the goals of insurer risk control activities
b) Describe the risk control services provided by insurers
c) Explain how risk control cooperates with other insurer functions
d) Explain why premium audits are conducted
e) Describe the premium auditing process
f) Explain why premium audits must be accurate
g) Explain how premium auditing contributes to other insurer functions
TOPIC: The Claim Function
7. The candidate will understand the claim function and related elements.
Learning Outcomes
The candidate will be able to:
a) Identify goals of the claim function, the users of claim information, and the parties with whom claim personnel interact
b) Describe the claim department structure, types and functions of claim personnel, and claim personnel performance measures
c) Describe the key activities in the claim handling process: Acknowledging and assigning the claim, Identifying the policy and
setting reserves, Contracting the insured or the insureds representative, Investigating the claim, Documenting the claim,
Determining the cause of loss, liability, and the loss amount, and Concluding the claim
d) Explain how the law of bad faith relates to an insurers duty of good faith and fair dealing and how the legal environment
affects the law of bad faith
e) Describe the elements of good-faith claim handling
TOPIC: Adjusting Property and Liability Claims
8. The candidate will understand the claim handling process for property and liability claims.
Learning Outcomes
The candidate will be able to:
a) Explain how and why the activities in the framework for handling property claims are accomplished
b) Describe the challenges of handling various types of property claims: Residential dwelling, Residential personal property,
Commercial structure, Business income, Merchandise, Transportation and bailment, and Catastrophe
c) Explain how and why the activities in the framework for handling a liability claim are accomplished
d) Describe the challenges of handling various types of liability claims: Auto bodily injury liability, Auto property damage,
Premises liability, Operations liability, Products liability, Workers compensation, and Professional liability
e) Given a claim, determine coverage for a loss using the framework for coverage analysis and the activities in the claim handling process
TOPIC: Reinsurance
9. The candidate will understand the function and types of reinsurance and its application.
Learning Outcomes
The candidate will be able to:
a) Describe reinsurance and its principal functions
b) Describe the three sources of reinsurance
c) Describe treaty reinsurance and facultative reinsurance
d) Describe the types of pro rata reinsurance and excess of loss reinsurance and their uses
e) Describe finite risk reinsurance and other methods that rely on capital markets as alternatives to traditional and non-traditional reinsurance
f) Describe the factors that should be considered in the design of a reinsurance program
g) Given a case, identify the reinsurance needs of an insurer and recommend an appropriate reinsurance program to address those
needs
h) Explain how reinsurance is regulated
TOPIC: Personal Auto Policy
10. The candidate will understand the role of automobile insurance in society and the contents of the Personal Auto Policy.
Learning Outcomes
The candidate will be able to:
a) Evaluate various laws and systems regarding approaches to compensating automobile accident victims: Tort liability system,
Financial responsibility laws, Compulsory insurance laws, Uninsured motorists coverage, Underinsured motorists coverage,
and No-fault insurance
b) Describe no-fault automobile laws in terms of their types and required benefits
c) Explain how high-risk drivers may obtain auto insurance
d) Describe automobile insurance rate regulation in terms of rating factors, matching price to exposure, competition, and other
regulatory issues
e) Summarize the sections of the Personal Auto Policy
f) Identify the types of information typically contained on the declarations page of a personal auto policy
g) For each of Part A – Liability Coverage, Part B – Medical Payments Coverage, Part C – Uninsured Motorists Coverage, and
Part D – Coverage for Damage to Your Auto: Summarize the provisions; given a case describing a claim, determine if that part
of the coverage applies and, if so, the amount the insurer would pay for the claim
h) Describe underinsured motorist insurance in terms of its purpose and the ways in which it can vary by state
i) Describe the insureds duties following a covered auto accident or loss as shown in Part E
j) Summarize each of the general provisions in Part F
k) Describe the Personal Auto Policy endorsements that are used to handle common auto loss exposures
l) Given a case describing a claim, determine whether the Personal Auto Policy would cover the claim and, if so, the amount the
insurer would pay for the claim
TOPIC: Homeowners Coverage
11. The candidate will understand the contents of the ISO Homeowners Program and describe some specialty plans.
Learning Outcomes
The candidate will be able to:
a) Describe how individuals and families can use the ISO 2011 Homeowners insurance program to address their personal risk
management needs
b) Summarize the structure of the Homeowners Policy (HO-3), key changes in the ISO 2011 program revision, and factors
important to rating homeowners insurance
c) Determine whether the 2011 HO-3 policy provisions in Section I – Property Coverages provide coverage for a given loss or
loss exposure: Coverage A – Dwelling, Coverage B – Other Structures, Coverage C – Personal Property, Coverage D – Loss of
Use, and additional coverages
d) Summarize the 2011 HO-3 policy provisions concerning Perils Insured Against and Exclusions
e) Summarize each of the 2011 HO-3 policy provisions in Section I – Conditions
f) Given a scenario describing a homeowners property claim, determine whether the 2011 HO-3 Policy Section I – Property
Coverages would cover the claim and, if so, the amount the insurer would pay for the claim
g) Determine whether the 2011 HO-3 policy provisions in Section II – Liability Coverage provide coverage for a given loss or
loss exposure: Coverage E – Personal Liability, Coverage F – Medical Payments to Others, and additional coverages
h) Determine whether one or more exclusions preclude the coverage provided by Section II of the 2011 HO-3 policy provisions
in Section II – Exclusions
i) Summarize the 2011 HO-3 policy provisions concerning Conditions applicable to Section II and Conditions applicable to
Sections I and II
j) Given a case describing a homeowners liability claim, determine whether the 2011 HO-3 policy Section II – Liability
Coverage would cover the claim, and if so, the amount the insurer would pay for the claim
k) Compare the coverage provided by each of the following 2011 Homeowners policies to the coverage provided by the 2011
HO-3 policy: HO-2 Broad Form, HO-5 Comprehensive Form, HO-4 Contents Broad Form, HO-6 Unit-Owners Form, and
HO-8 Modified Coverage Form
l) Summarize the coverages provided by the various 2011 ISO Homeowners policy endorsements
m) Given a case describing a homeowners claim, determine whether a 2011 HO-3 Policy that may include one or more
endorsements would cover the claim, and, if so, the amount the insurer would pay for the claim
n) Describe the operation of the National Flood Insurance Program and the coverage it provides
o) Describe the operation of FAIR plans and beachfront and windstorm plans and the coverage they provide
TOPIC: Commercial Property Insurance
12. The candidate will understand the nature of Commercial Property Insurance.
Learning Outcomes
The candidate will be able to:
a) Describe commercial property insurance in terms of the major categories of loss exposures that can be covered and the
components of a commercial property coverage part
b) Determine whether a described item of property qualifies as Covered Property under one or more of these categories in the
Building and Personal Property Coverage Form: Building, Your Business Personal Property, and Personal Property of Others
c) Determine which of the additional coverages and coverage extensions of the Building and Personal Property Coverage Form
apply to a described loss
d) Determine whether the cause of a described loss is a covered cause of loss under the Causes of Loss – Basic Form or the
Causes of Loss – Broad Form
e) Determine whether the cause of a described loss is a covered cause of loss under the Causes of Loss – Special Form
f) Apply the Limits of Insurance and Deductible provisions of the Building and Personal Property Coverage Form to a described
loss
g) Explain how each of the Loss Conditions and Additional Conditions affects coverage under the Building and Personal Property
Coverage Form
h) Explain how each of the following optional coverages described in the BPP modifies the basic coverage of the BPP: Agreed
Value, Inflation Guard, Replacement Cost, and Extension of Replacement Cost to Personal Property of Others
i) Summarize each of the Commercial Property Conditions
j) Explain how each of the conditions contained in the Common Policy Conditions affects coverage under a commercial property
coverage part
k) Explain how each of these documents modifies the Building and Personal Property Coverage Form: Ordinance or Law
Coverage endorsement, Spoilage Coverage endorsement, Flood Coverage endorsement, Earthquake and Volcanic Eruption
Coverage endorsement, Peak Season Limit of Insurance endorsement, and Value Reporting Form
l) Identify the factors that affect commercial property insurance premiums
m) Given a case, determine whether, and for what amount, a described loss would be covered by a commercial property coverage
part that includes the Building and Personal Property Coverage Form and any of the three causes of loss forms
TOPIC: Commercial General Liability Insurance
13. The candidate will understand the nature of Commercial General Liability Insurance.
Learning Outcomes
The candidate will be able to:
a) Describe commercial general liability insurance in terms of the types of losses that can be covered by general liability
insurance and the components of a commercial general liability coverage part
b) Determine whether a described claim meets the conditions imposed by the Coverage A insuring agreement of the Commercial
General Liability Coverage Form (occurrence version)
c) Determine whether any of the exclusions applicable to Coverage A of the Commercial General Liability Coverage Form
eliminate coverage for a described claim
d) Determine whether a described claim meets the conditions imposed by the Coverage B insuring agreement of the Commercial
General Liability Coverage Form and whether any of the Coverage B exclusions eliminate coverage for the claim
e) Determine whether a described claim meets the conditions imposed by the Coverage C insuring agreement of the Commercial
General Liability Coverage Form and whether any of the Coverage C exclusions eliminate coverage for the claim
f) Summarize the supplementary payments of the Commercial General Liability Coverage Form
g) Determine whether a described person or organization is an insured under the Commercial General Liability Coverage Form
h) Explain how the following limits of insurance in the CGL Coverage Form are applied: Each occurrence limit, Personal and
advertising injury limit, Damage to premises rented to you limit, Medical expense limit, General aggregate limit, and Productscompleted operations aggregate limit
i) Apply the Commercial General Liability Conditions to claims or other interactions between the insurer and the insured
j) Explain how the premium for CGL coverage is determined
k) Given a case, determine whether, and for what amount, the Commercial General Liability Coverage Form (occurrence version)
covers a described claim
TOPIC: Commercial Auto Insurance
14. The candidate will understand the nature of Commercial Auto Insurance.
Learning Outcomes
The candidate will be able to:
a) Describe commercial auto insurance in terms of the loss exposures that can be covered and the components of a commercial
auto coverage part
b) Select the symbols needed to provide a described organization with appropriate commercial auto coverage(s) under the
Business Auto Coverage Form
c) Summarize the provisions contained in Section II – Covered Autos Liability Coverage of the Business Auto Coverage Form
d) Summarize the provisions contained in Section III – Physical Damage of the Business Auto Coverage Form
e) Describe the conditions contained in the business Auto Coverage form
f) Describe the following coverages that may added by endorsement to the Business Auto Coverage Form: medical payments,
personal injury protection and added personal injury protection, and uninsured and underinsured motorists
g) Explain how private passenger vehicles and trucks, tractors, and trailers are rated for commercial auto coverage
h) Given a case, determine whether, and for what amount, the Business Auto Coverage Form covers a described claim
TOPIC: Workers Compensation and Employers
Liability Insurance
15. The candidate will understand workers compensation and employers liability coverages.
Learning Outcomes
The candidate will be able to:
a) Describe workers compensation statutes in terms of: Basic purpose, Benefits provided, and Persons and employments covered
b) Describe workers compensation statutes in terms of: Extraterritorial provisions, Federal jurisdiction, and Methods for meeting employers obligations
c) Summarize these sections of the Workers Compensation and Employers Liability Insurance Policy: Information Page, General
Section, and Part One – Workers Compensation Insurance
d) Explain why employers liability insurance is needed and how the Workers Compensation and Employers Liability Insurance
Policy addresses this need
e) Describe the purpose and operation of Part Three – Other States Insurance in the Workers Compensation and Employers
Liability Insurance Policy
f) Describe the need for and the coverage provided by the Voluntary Compensation and Employers Liability Coverage
Endorsement and the Longshore and Harbor Workers Compensation Act Coverage Endorsement
g) Explain how premium bases, classifications, and premium adjustments affect the rating of workers compensation insurance
h) Given a case, determine whether the Workers Compensation and Employers Liability Insurance Policy covers a described
injury or illness and, if so, what types of benefits or what amount of damages is covered
TOPIC: Specialty Coverages
16. The candidate will understand various specialty coverages.
Learning Outcomes
The candidate will be able to:
a) Describe commercial excess liability insurance and commercial umbrella liability insurance in terms of: The three basic types
of commercial excess liability insurance and The provisions commonly found in commercial umbrella liability policies that
distinguish them from other types of commercial liability policies
b) Describe professional liability insurance and management liability insurance in terms of: How they differ from each other,
How they differ from commercial general liability policies, and The common types of professional and management liability
policies
c) Describe the purpose and characteristics of each of these types of environmental insurance policies: Site-specific
environmental impairment liability (EIL) policies, Underground storage tank compliance policies, Remediation stop-loss
policies, Contractors pollution liability policies, and Environmental professional errors and omissions liability policies
d) Describe aircraft insurance in terms of: The purpose-of-use categories that insurers use to classify aircraft and The coverages that can be included in an aircraft policy
e) Describe the types of losses that can be covered by each of the insuring agreements generally available in cyber risk insurance policies
f) Explain how an organization domiciled in the United States can insure foreign loss exposures that would not be covered under
standard property and liability insurance policies
g) Summarize the purpose and provisions of the terrorism endorsements developed by Insurance Services Office, Inc., and the
National Council on Compensation Insurance, Inc.
h) Summarize the ensure provided by the particular types of surety bonds within the following bond classifications: Contract
bonds, License and permit bonds, Public official bonds, Court bonds, and Miscellaneous bonds
Property and Casualty Insurance P-and-C Insurance benefits
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Property and Casualty Insurance
https://killexams.com/pass4sure/exam-detail/Property-and-Casualty Question: 15
What coverage pays for damage to your auto when it collides with something or overturns?
A. Comprehensive
B. Collision
C. Liability
D. Uninsured motorist Answer: B Question: 16
What type of insurance coverage is used for strict liability?
A. Railroad protection
B. Owner/contractor protection
C. Builder's risk
D. No benefit to bailee Answer: A Question: 17
Which of the following is excluded as money in a crime policy?
A. Checks
B. Coins
C. Traveler's check
D. Registered check Answer: A Question: 18
What type of bond is written to protect an employer from theft by employee?
A. Surety bond
B. Fiduciary bond
C. Judicial bond
D. Fidelity bond Answer: D Question: 19
What type of coverage protects a business for care, custody and control of a non owned vehicle?
A. No benefits to bailee
B. Commercial auto coverage
C. Drive other car coverage
D. Garage keeper Answer: D Question: 20
What is coverage that protects property movement on land?
A. Trucker insurance
B. Cargo insurance
C. Ocean marine insurance
D. Inland marine insurance Answer: D
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The Property and Casualty (P&C) insurance industry’s prospects appear promising, thanks to robust demand and rapid digitalization. Moreover, insurance companies benefit from higher interest rates. Thus, quality insurance stocks W.R. Berkley (WRB), CNA Financial (CNA), and Donegal Group (DGICA) could be ideal buys now. Continue reading….
The P&C insurance industry is projected to grow significantly owing to robust demand, driven by rising urbanization and rising awareness about insurance benefits combined with increasing digitalization. Further, a high-interest rate environment positively impacts the profitability of P&C insurers as they realize greater profits due to an increased yield from their underlying bond investments.
Amid this backdrop, it could be wise to invest in fundamentally sound insurance stocks W.R. Berkley Corporation (WRB), CNA Financial Corporation (CNA), and Donegal Group Inc. (DGICA) for potential gains.
Despite several macro headwinds, the Property and Casualty (P&C) insurance industry is expected to witness significant growth and expansion, driven by sustained demand for its offerings. According to a report by Global Market Insights, the P&C insurance market is expected to reach $3.02 trillion by 2032, growing at a CAGR of 5.5% from 2023 to 2030.
As the Gross Domestic Product (GDP) rises, businesses and individuals have more to protect, increasing demand for P&C insurance products, including property, liability, and business interruption coverage. The Commerce Department reported that GDP grew at a 4.9% annualized pace, above the 4.7% estimate and up from an unrevised 2.1% pace in the second quarter.
In addition, growing urbanization would boost the P&C insurance market’s growth as an increasing concentration of properties and businesses in urban areas drives demand for insurance coverage on properties, homes, commercial enterprises, and automobiles. Also, another primary growth driver is the rising awareness about insurance benefits.
Digital technology is further transforming every aspect of the P&C insurance industry. Insurance companies increasingly leverage technology to enhance customer experiences, streamline operations, and make data-driven decisions.
Some technology trends gaining traction in the industry include Artificial Intelligence (AI), machine learning, the Internet of Things (IoT), Telematics and Usage-Based Insurance (UBI), data analytics and predictive modeling, blockchain technology, digital claims processing, cybersecurity and data protection, robotic process automation (RPA) and mobile applications.
Moreover, a high-interest rate environment positively impacts the insurance industry. Insurers generate revenue by charging premiums in exchange for coverage, with the collected premiums invested in interest-generating assets, which create higher yields when interest rates rise.
The Federal Reserve raised its key rate 11 consecutive times since March 2022 to fight multi-decade high inflation. The central bank’s benchmark interest rate is now in the 5.25%-5.50% range, the highest level in 22 years. At the end of its two-day monetary policy meeting in November, the Fed left interest rates unchanged.
Fed Chairman Powell Jerome recently suggested that keeping the central bank’s benchmark rate for a prolonged period could slow the economy and control inflation. The likelihood of the Fed keeping interest rates higher for longer should bode well for the insurance company.
Investors’ interest in insurance stocks is evident from SPDR S&P Insurance ETF’s (KIE) 8.7% returns over the past six months.
Considering these encouraging trends, let’s analyze the fundamental aspects of the three best Insurance - Property & Casualty stocks, beginning with the third choice.
CNA offers commercial property and casualty insurance products internationally. The company operates through Specialty; Commercial; International; Life & Group; and Corporate & Other segments. It serves several professional firms, including architects, real estate agents, and accounting and law firms.
On October 30, CNA declared a quarterly dividend of $0.42 per share, payable on November 30, 2023. Its annual dividend of $1.68 per share translates to a 4.31% yield at the current price level. Over the past five years, the company’s dividend payouts have grown at a 5.3% CAGR. Its four-year average dividend yield is 8.19%.
Moreover, CNA has raised its dividends for seven consecutive years.
For the third quarter ended September 30, 2023, CNA’s Property & Casualty Operations segment net earned premiums increased 9.1% year-over-year to $2.30 billion. Its net investment income grew 31% from the year-ago value to $553 million. The company’s core income came in at $289 million, or $1.06 per share, up 572.1% and 562.5% from the prior year’s quarter, respectively.
Analysts expect CNA’s revenue and EPS for the fiscal year (ending December 31, 2023) to increase 10.6% and 16.3% year-over-year to $13.36 billion and $4.47, respectively. Also, the company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
For the fiscal year 2024, the company’s revenue and EPS are expected to grow 6.2% and 12.3% from the prior year to $14.19 billion and $5.02, respectively.
CNA’s stock has plunged 1.6% over the past month to close the last trading session at $38.96.
CNA’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Stability and Momentum. Within the Insurance - Property & Casualty industry, CNA is ranked #12 out of 56 stocks.
In addition to the POWR Ratings stated above, one can access CNA’s Growth, Value, Sentiment, and Quality ratings here.
WRB is a global insurance holding company that operates as a commercial lines writer. It operates in two segments: Insurance and Reinsurance & Monoline Excess. It offers workers’ compensation insurance products, accident and health insurance and reinsurance products, insurance for commercial risks, casualty and specialty environmental products, and more.
On October 4, WRB paid a special cash dividend on its common stock of 50 cents ($0.50) per share to stockholders of record at the close of business on September 25. Together with the $0.50 special dividend that was paid on January 24, this will bring special cash dividends paid during 2023 to $1 per share.
Additionally, the company paid a regular quarterly cash dividend of 11 cents ($0.11) per share to its stockholders. WRB pays a dividend of $0.44 annually, which translates to a yield of 0.65% on the prevailing share price. Its dividend payouts have grown at a CAGR of 10.3% over the past five years. Its four-year average dividend yield is 1.91%.
In addition, the company has raised its dividends for 17 straight years.
In the third quarter that ended September 30, 2023, WRB’s net premiums written increased 10.5% year-over-year to $2.85 billion. Its total revenues grew 11.2% from the year-ago value to $3.03 billion. Net income to common stockholders rose 45.7% from the prior year’s quarter to $333.59 million. Also, the company’s net income per share was $1.23, up 49.4% year-over-year.
Street expects WRB’s revenue to increase 9.6% year-over-year to $10.47 billion for the fiscal year ending December 2023. The company’s EPS is expected to grow 9.8% year-over-year to $4.81 in the current year. Moreover, WRB topped the consensus EPS estimates in three of the trailing four quarters.
Over the past month, the stock has gained 7% and 16.4% over the past six months to close the last trading session at $68.15.
WRB’s POWR Ratings reflect solid prospects. The stock has an overall B rating, which translates to a Buy in our POWR rating system.
WRB has an A grade for Momentum and a B for Stability. Within the Insurance - Property & Casualty industry, WRB is ranked #11 among 56 stocks.
Click here to see the other ratings of WRB for Sentiment, Value, Growth, and Quality.
DGICA is an insurance holding company that provides personal and commercial lines of property and casualty insurance to businesses and individuals across 23 Mid-Atlantic, Midwestern, New England, Southern and Southwestern states. It operates through three segments: Investment Function; Personal Lines of Insurance; and Commercial Lines of Insurance.
On October 19, DGICA’s Board of Directors declared a regular quarterly cash dividend of $0.17 per share of the company’s Class A common stock and $0.1525 per share of the company’s Class B common stock. The dividends are payable on November 15 to stockholders of record as of the close of business on November 1.
DGICA pays an annual dividend of $0.68 per share, which translates to a yield of 0.65% on the current share price. Its dividend payouts have grown at a CAGR of 4.3% over the past three years. Its four-year average dividend yield is 4.30%. Also, the company has increased its dividends for 17 consecutive years.
DGICA’s net premiums earned increased 8.9% year-over-year to $224.39 million for the third quarter that ended September 30, 2023. Its net investment income rose 23% year-over-year to $10.54 million. Its total revenues were $233.93 million, up 9.9% from the prior year’s quarter.
In addition, the company’s non-GAAP operating income was $176 thousand, compared to an operating loss of $8.51 million a year ago.
Analysts expect DGICA’s EPS to increase 88.9% year-over-year to $0.17 for the fourth quarter ending December 2024. Its EPS and revenue for the fiscal year 2024 are estimated to grow 228.6% and 4.9% year-over-year to $1.15 and $966.54 million, respectively. Also, the company has surpassed the consensus revenue estimates in three of the trailing four quarters.
Shares of DGICA have gained 2.2% over the past six months to close the last trading session at $14.42.
DGICA’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Momentum and Stability. It also has a B grade for Growth. DGICA is ranked #10 in the same industry.
Beyond what is stated above, we’ve also rated for Value, Quality, and Sentiment. Get all DGICA ratings here.
What To Do Next?
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WRB shares were unchanged in premarket trading Monday. Year-to-date, WRB has declined -4.22%, versus a 16.49% rise in the benchmark S&P 500 index during the same period.
Mangeet’s hurry interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
Moody’s has downgraded the Nationwide Mutual Insurance Company (NMIC) and its property & casualty affiliates, Nationwide P&C, insurance financial strength rating to A2 from A1, and downgraded NMIC’s surplus notes rating to Baa1 (hyb) from A3 (hyb).
The rating agency has also affirmed the insurance financial strength ratings of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company at A1 and the senior unsecured debt rating of Nationwide Financial Services (NFS) at Baa1.
The rating outlook for Nationwide P&C and NFS is stable, Moody’s added.
According to the announcement, Nationwide P&C’s rating downgrade reflects its weak profitability over the past several years. This was mainly due to standard personal and standard commercial lines experiencing high loss cost inflation along with sizable catastrophe losses, Moody’s noted.
“In response to this issue, Nationwide P&C is raising rates, tightening underwriting standards, and investing in automation and digitization to become more efficient,” analysts explained.
Adding: “ Over time, the group is shifting some of its underwriting focus from standard P&C lines toward excess and surplus and other specialty lines, while also shifting some of its distribution from independent agents toward wholesale and brokerage channels. It could take a couple years for Nationwide P&C to work through this transition and achieve its target underwriting results.”
Nationwide P&C’s ratings benefit from a solid market presence among the 10 largest US P&C insurers; its diversified product offerings and geographic reach across the US; and its mutual ownership, Moody’s highlighted.
The relatively steady earnings of NFS is an added benefit to Nationwide P&C, as well as the large capital base of Nationwide Enterprise, which encompasses both Nationwide P&C and NFS, Moody’s added.
Yet, Nationwide P&C’s weak/volatile earnings record, exposure to catastrophe losses in property lines, and exposure to adverse reserve development in casualty lines, including a runoff asbestos and environmental book, could offset these strengths, analysts warned.
Regarding NFS, the rating affirmation of its insurance financial strength reflects its strong position in US life insurance, annuities and retirement plans along with its diversified distribution channels and brand recognition, according to Moody’s
Its robust capitalization, including a relatively high regulatory risk-based capital (RBC) ratio, coupled with Nationwide Enterprise’s strategic focus on NFS support continued growth across its target products, analysts added.
Yet, these strengths are offset by the challenges of managing contract guarantees in variable annuity (VA) liabilities, which expose NFS’ capital and earnings to equity market and interest rate risks.
At the same time, NFS also offers lower-margin asset accumulation products such as pension plans and mutual funds, which add further earnings sensitivity to equity markets and interest rates.
Other challenges, Moody’s highlighted, include NFS’ relatively high exposure to commercial mortgage loans (18% of cash and invested assets at year-end 2022) and the possibility that NFS would allocate some of its capital to support Nationwide P&C’s credit profile.
Sun, 12 Nov 2023 23:30:00 -0600Kassandra Jimenez-Sanchezentext/htmlhttps://www.reinsurancene.ws/moodys-downgrades-nationwide-pc-financial-strength/Has the insurance M&A bubble burst?
A accurate report from OPTIS Partners’ M&A database revealed a notable drop in announced insurance agency mergers and acquisitions during the first three quarters of 2023. The figures show a decline to 534 transactions, down from 729 in 2022, marking a significant decrease.
The report covers sales of US and Canadian agencies dealing with property and casualty (P&C) insurance, as well as those managing both P&C and employee benefits or solely employee benefits. The data from 2022 onwards also encompasses life/financial services, consulting, and other businesses associated with insurance distribution.
OPTIS partner Steve Germundson said that various factors contributed to the slowdown in deal activity. Rising capital costs, increased leverage, and a reduced number of business owners prepared to sell were primary reasons for the decline, Germundson said.
Notable shifts in buyers’ behaviour were observed, where previous active participants like Acrisure and PCF Insurance notably reduced their deal activity by 81% compared to 2022. However, new leaders emerged, with Broadstreet Partners and Hub International leading the transactions, completing 43 and 37 deals, respectively.
Other significant buyers included Inszone Insurance Services and Leavitt Group, each closing 27 deals, followed by World Insurance Associates with 24, and Arthur J. Gallagher with 25 transactions.
The data also highlighted variations in activity among the most active buyers, as four of the top 10 buyers completed fewer deals in the first three quarters of 2023 compared to 2022.
The breakdown of buyers into specific groups revealed that private equity-backed/hybrid brokers remained dominant, accounting for 67% of all transactions, while privately held brokers moved up slightly to 24%. Additionally, publicly held brokers saw a minor increase in acquisitions, now comprising 6% of the total deals.
P&C-only agencies were the leading sellers, representing 62% of the total transactions, followed by agencies focusing solely on employee benefits and those handling both P&C and employee benefits. The report also outlined sales by MGAs, TPAs, and sellers of life/financial services agencies, consulting, and other businesses associated with insurance distribution.
While it seems that activity has indeed slowed, OPTIS partner Dan Menzer said that there are still a lot of deals being done. A number of buyers not strapped with debt are also still upping their deal flow, a trend which could push M&A to return to pre-bubble pace.
“We continue to see valuations holding, especially for attractive sellers. The economic change of rising interest rates and a reduction in the supply of sellers has fundamentally changed the value proposition that the insurance distribution business represents. It has not reduced the demand from a still robust group of buyers. We expect the valuation environment to hold rather steady, though we could see that soften slightly for less attractive firms over the coming quarters,” OPTIS managing partner Tim Cunningham said.
In a accurate IB interview, Marsh McLennan Agency (MMA) CEO David Elsick revealed that the company’s M&A pipeline “has never been better,” and that there are still high-quality firms to be in contact with.
What are your thoughts on this story? Please feel free to share your comments below.
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Thu, 02 Nov 2023 01:22:00 -0500entext/htmlhttps://www.insurancebusinessmag.com/ca/news/breaking-news/has-the-insurance-manda-bubble-burst-465346.aspxLarge decrease seen in insurance agency mergers and acquisitions
The once-ballooning insurance agency mergers and acquisitions market in the United States and Canada has deflated, showing a 27% drop in deal activity through the third quarter of 2023.
According to the latest report from OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry, the decrease in M&A deals marks the largest decline ever for this period.
Multiple factors are cited for this sudden deceleration: rising capital costs, increased leverage, and a reduced pool of business owners willing to sell.
A shift in acquisition leaders
The landscape of top buyers has also seen a shift. Acrisure and PCF Insurance, for example, both former leaders in deal counts, dramatically reduced their deal activity by 81% compared to 2022. Stepping into the void are new leaders, with Broadstreet Partners and Hub International taking the lead with 43 and 37 transactions, respectively, year-to-date. Other major players include Inszone Insurance Services, Leavitt Group, World Insurance Associates, and Arthur J. Gallagher.
Four of the top 10 buyers completed fewer deals in the first three quarters of 2023 compared to the same period in 2022. Acrisure led the decline with a 66% reduction, followed by Hub International (down 31%), Patriot Growth Insurance Services (down 10%), and Keystone Agency Partners (5% lower).
Conversely, companies like Broadstreet Partners, Leavitt Group, Arthur J. Gallagher, and Risk Strategies Company have demonstrated substantial year-over-year growth, with percentages ranging from 35% to 87%.
Report 'consistent' with what's being seen
Insurance executives say they are neither surprised by the study’s finding nor does it signal any long-term weakness in the markets.
“The report on deal activity is consistent with what we are seeing in the market,” said Mark Breading, senior partner with ReSource Pro, a New York-based insurance consultancy. “While there are certain firms that have slowed, there are others that continue with significant agency acquisition activity. While ‘only’ 172 deals took place in the third quarter, it is still quite remarkable given the current environment surrounding interest rates and capital markets.”
Breading said many firms that had been aggressive acquisitors over the past several years have taken the current opportunity to pause and focus on ‘optimization.’
“Many are now thinking more about enhancing enterprise capabilities and how to optimize people, processes, technology, and data for the benefit of their agencies,” he said.
The OPTIS Partners report categorizes buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others. The private equity-backed/hybrid group remains dominant, accounting for 67% of all transactions in 2023, a slight decrease from 71% in the same period in 2022. Privately held brokers increased their share slightly from 22% to 24%, while publicly traded brokers saw a modest increase from 5% to 6% of the total deals.
P&C-only agencies dominate sellers
P&C-only agencies continue to dominate the sellers' market, representing 62% of the total 534 transactions. Agencies focused solely on employee benefits and those selling both P&C and employee benefits each contributed 12% to the total sales. Meanwhile, managing general agency (MGA) sellers accounted for 5% of the transactions, with the remaining 8% split among third-party administrators (TPAs) and sellers of life/financial services agencies, consulting, and other businesses associated with insurance distribution.
Franklin Manchester, an insurance strategic advisor at SAS, in Raleigh, N.C., says changes in interest rates, data quality, and sustainability, most impacted the insurance M&A market.
“Debt can no longer be financed at a rate commensurate with agency valuations,” he said. “At double the former rate, the valuation would have to come down significantly. This reduces the available targets but doesn’t eliminate them entirely.”
Growth, Manchester said, now needs to come organically, and not falsely inflated due to purchasing, so resources will be directed toward traditional means.
“This means staff at insurers will become valuable to brokers who need their skills and expertise…and one or more of the largest brokers will merge,” he said.
Yet, despite the substantial decline in the number of transactions, optimism remains within the industry. Dan Menzer, a partner at OPTIS, notes that numerous deals are still being closed, and many buyers, unburdened by debt, are increasing their deal flow. Tim Cunningham, managing partner, emphasizes that valuations are holding, especially for attractive sellers, and the demand from a robust group of buyers remains steady. The report suggests a return to a pre-bubble pace, anticipating the valuation environment to remain relatively stable, albeit with a potential softening for less attractive firms in the coming quarters.
“The economic change of rising interest rates and a reduction in the supply of sellers has fundamentally changed the value proposition that the insurance distribution business represents,” the report says. “It has not reduced the demand from a still robust group of buyers. We expect the valuation environment to hold rather steady, though we could see that soften slightly for less attractive firms over the coming quarters.”
For a detailed analysis and insights into the changing landscape of insurance agency M&A, the full report can be accessed here.
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].
Tue, 14 Nov 2023 05:44:00 -0600Doug Baileyen-UStext/htmlhttps://insurancenewsnet.com/innarticle/large-decrease-seen-in-insurance-agency-mergers-and-acquisitionsDuck Creek Pioneers the Next Era of Cloud-Based Technology for P&C Insurers Through Microsoft Azure OpenAI Service
BOSTON, Nov. 16, 2023 (GLOBE NEWSWIRE) -- Duck Creek Technologies, the intelligent solutions provider defining the future of property and casualty (P&C) and general insurance, announces a breakthrough initiative in collaboration with Microsoft. This collaboration is poised to empower insurers to reimagine their businesses by facilitating smoother implementation processes and faster speed to market through the aid of generative artificial intelligence (AI)—a transformative technology that enables the creation of innovative applications and low-code solutions.
Duck Creek's comprehensive platform is built on Microsoft Azure, the preferred technology for harnessing the power of Azure OpenAI Service, as large language models (LLMs) continue to redefine and shape the technology landscape. This represents a significant leap forward in the insurance sector, fostering innovation and efficiency that promises to influence how insurers conduct their business and engage with customers. By merging Duck Creek's expertise in insurance solutions with the cutting-edge capabilities of Microsoft, this collaboration aims to create a brighter and more agile future for the entire insurance industry.
“Generative AI is a truly transformative technology, and our valued customers will benefit immensely from its powerful capabilities as we continue to drive the modernization of the insurance industry. Our objective is to empower insurers to innovate products faster and assist employees with AI tools,” said Mike Jackowski, Chief Executive Officer, Duck Creek Technologies. “This marks the next chapter in the evolution of our longstanding partnership, where we are pioneering in the space by uniting the exceptional talent of Microsoft and Duck Creek to develop cutting-edge technology solutions for the P&C and general insurance industries. In doing so, we are committed to spearheading the insurance industry's embrace of generative AI and solving the innovation challenges insurers face—all while upholding the highest standards of regulatory compliance and ethical responsibility."
Duck Creek is harnessing this emerging technology to curate innovative solutions for insurers, helping them embrace the future of technology with:
Copilot solutions powered by near-real-time data, which empowers insurers to make informed decisions and respond to changing market conditions swiftly and effectively.
Enhanced productivity tools that Improve efficiency and productivity throughout the insurance ecosystem, designed to benefit consumers, agents, underwriters, and claim adjusters.
The next era of low-code configurator tools that simplify the development and adoption of insurance products, enabling insurers to expedite their time-to-market for both new and ongoing configurations.
“Duck Creek will continue advancing how it brings responsible AI to the insurance industry and enables a rapid business transformation toward humanized experiences,” said Jess Keeney, Chief Product & Technology Officer, Duck Creek Technologies. “We are consistently assessing how our solutions can more seamlessly integrate into our customers' operational landscapes, and we are dedicated to delivering meaningful outcomes and addressing significant business challenges. Both Duck Creek and Microsoft share a common dedication to enhancing the customer journey across the entire insurance lifecycle. This marks a significant evolution in how underwriters leverage consumer data and conduct risk analysis, the efficiency of claims handling, fraud detection, and the industry's ability to meet customer needs and adapt to feedback promptly.”
“Innovative insurers want to move quickly to use the power of generative AI to drive demonstrable business value,” said Bill Borden, CVP for Worldwide Financial Services at Microsoft. “We’re excited to deepen our collaboration with Duck Creek to deliver new generative AI-powered capabilities to help our joint insurance customers drive marked improvements in employee productivity, reinvent customer engagement, and bend the curve on innovation – both securely and responsibly.”
About Duck Creek Technologies
Duck Creek Technologies is the intelligent solutions provider defining the future of the property and casualty (P&C) and general insurance industry. We are the platform upon which modern insurance systems are built, enabling the industry to capitalize on the power of the cloud to run agile, intelligent, and evergreen operations. Authenticity, purpose, and transparency are core to Duck Creek, and we believe insurance should be there for individuals and businesses when, where, and how they need it most. Our market-leading solutions are available on a standalone basis or as a full suite, and all are available via Duck Creek OnDemand. Visit www.duckcreek.com to learn more. Follow Duck Creek on our social channels for the latest information – LinkedIn and Twitter.
Media Contacts: Carley Bunch carley.bunch@duckcreek.com
Thu, 16 Nov 2023 00:08:00 -0600entext/htmlhttps://markets.businessinsider.com/news/stocks/duck-creek-pioneers-the-next-era-of-cloud-based-technology-for-p-c-insurers-through-microsoft-azure-openai-service-1032827538Over-regulation, populism: P&C execs sound the alarm
Canada’s P&C insurance industry is tired of shouldering the weight of “over-regulation” and populist politics.
To counter these influences, the industry needs to spin its own narrative, P&C insurance company executives told attendees at the Insurance Broker Association of Ontario’s annual conference in Toronto.
The industry’s messaging to the public should champion the benefits of a competitive industry offering consumers choice. And it would debunk the threat of collusion if the P&C industry shares ways to eliminate inefficiencies to benefit consumers.
Speakers on the CEO panel at IBAOcon’23 were asked if they felt any additional pressure these days from regulators and politicians, or whether it was the same regulatory pressure, just different politicians.
Image courtesy of iStock.com/Afry Harvy
Regulating competition
Louis Gagnon, president and CEO of Intact Insurance, suggested the behaviour and rhetoric of regulators and politicians around insurance had the unfortunate effect of making the P&C insurance industry out to be monolithic. In fact, he said, the P&C industry was much more diverse than other industries, providing real choice for consumers.
“In Ontario, there are 21 very active writers of auto insurance. There are three grocery stores, five banks, three life insurance, one Google. So, you want to talk about competition? We are fighting against each other every day for every piece of business that is presented to us.
“And sometimes I feel like we are looked at as one: The Industry. The insurance industry. What the heck is that? Seriously, we have in Canada direct writers, foreign companies, mutual companies, private, public, non-for-profits, cooperatives, that are all competing against each other. Think about that. Think about the landscape of the P&C insurance business. And we are regulated to the…teeth. We are checked [and] looked at, and so, it bugs me.
“It’s like we are constantly being the people pointed out as the culprit in many cases by politicians. I’m tired of that.”
Heather Masterson, president and CEO of Travelers Canada, added when regulators and politicians interfere in the marketplace, the consumer is never best served over the long run.
“You’re talking about a competitive marketplace, with diversity of appetite, diversity of product, perceived capabilities and expertise, and we need to be recognized for that,” she said. “That heathy, diverse marketplace is only going to favour the consumer.”
Masterson said P&C professionals are very good at sharing this narrative with each other. But the message needs to be directed outwards, so that regulators, politicians, and consumers better understand how the industry’s core values are aligned with helping consumers.
“We’re not telling our story externally,” she said. “We’re letting other people tell our story, whether it’s politicians, regulators, lawyers, or consumers.
“We need to start telling our story. Yes, we are diverse and highly competitive; that’s all good. But there is a lot of common ground, common goals, common values that we all share,” she said. “We have amazing contributions that we’re providing to the economy, to communities, to people, to families.
“We really do need to harness that energy, get that message out there together, and we all need to amplify it.”
Collusion confusion
One of the dangers for the industry in banding together to promote its common values is that regulators might view that as a form of “collusion,” observed Paul MacDonald, executive vice president of personal insurance and digital channels at Definity.
Canada’s Competition Act states it against the law for competitors to collude to “fix, maintain, control, prevent, lessen, or eliminate the production or supply of the product,” among other things. The act was modified in June 2023 to ban anti-competitive practices such as price-fixing, market allocation, restricting supply, bid-rigging, wage-fixing, and no-poaching agreements.
The law extends to caution trade associations about the sharing of their members’ sensitive business information.
But when the P&C industry comes together to reduce market inefficiencies, which leads to better product pricing for consumers, that’s not collusion, said MacDonald.
“The one thing that drives me absolutely crazy…is to Louis’s point about the other industries—they’re all oligopolies. Banking is a good [example]. And yet they always meet all the time and talk about what they can do for the betterment of the industry and consumers,” he said.
“And yet at every single [IBC] Insurance Bureau of Canada meeting I attend, the first thing you do is compliance protocol. ‘You’re not allowed to talk about this, that or that,’ as if you are going to collude when you’ve got hundreds of P&C companies.
“How many BMS vendors are there? How many rate-quoting members are there? How many different technologies are there? It is all inefficient. And that inefficiency means more work for you, more work for us, more cost in the system, and more premium for the consumer. And yet we’re hamstrung because we’re perceived as [though] there may be a threat of us working together. It’s a bit ridiculous.”
Image courtesy of iStock.com/RapidEye
Countering populism
MacDonald also discussed the impact of political populism, defined in the Oxford Dictionary as a “political approach striving to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.”
Politicians’ context-free rhetoric isn’t easily disproved by the P&C industry’s facts and data. For that reason, political populism isn’t an arena in which the P&C insurance industry fares well, said MacDonald.
“At the National Insurance Conference of Canada, we had a panel on this,” he said. “One of the presenters was an adviser to politicians [and said], ‘The reality is, you can’t argue with populism. We’re an industry of data and facts. It doesn’t matter. That’s not what’s going to rule the day in the immediate term.’
“So that’s the struggle we’re going to have to come to terms with. And you know, I might lie in bed in the fetal position in the dark, rocking myself back and forth, thinking, ‘How do I make sense of this all?’
“But I think we’re just going to have to weather the storm on that particular issue, and just do what we do, provide the services we do, keep investing in our people in our capabilities, and be better in the future. That’s really the only way we can do it. One step at a time.”
Feature image courtesy of iStock.com/alashi
Thu, 19 Oct 2023 12:00:00 -0500en-UStext/htmlhttps://www.canadianunderwriter.ca/associations/over-regulation-populism-pc-execs-sound-the-alarm-1004239247/What is short-term disability insurance and how does it work?
Key points
Short-term disability insurance can temporarily replace 40% to 70% of your income.
You may be eligible for short-term disability benefits if you can’t work and are losing wages because of a non-work-related illness, injury or pregnancy.
Short-term disability insurance typically covers you for three to six months.
More than 1 in 4 people will experience a serious medical condition or injury before reaching retirement age, according to the Social Security Administration. If it happens to you and you’re unable to work, short-term disability insurance can replace a portion of your salary for a period of time, to help you pay for monthly expenses like groceries, utilities and your mortgage or rent.
Read on to learn how to calculate your short-term disability insurance needs and the average cost of coverage.
USA TODAY Blueprint may earn a commission from this advertiser.
What is short-term disability insurance?
Short-term disability insurance, also known as temporary disability insurance, can provide monthly payments if you are too sick or injured to work. You can expect to receive about 40%to70% of your monthly income until you are able to return to work or until the end of your benefit period — whichever comes first. Benefits typically last three to six months.
Unlike health insurance, disability payments are paid directly to you and you can use them however you like.
Most employers offer short-term disability coverage but the length of coverage and type of disabilities covered will depend on the definition of disability outlined in your employer’s plan.
How short-term disability insurance works
The specifics of disability insurance coverage will vary based on the insurance provider and your state requirements (only California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island currently require employers to offer short-term disability and/or family medical leave).
You can typically choose from the following disability insurance plan options:
Traditional coverage — the employer pays the monthly premium.
Contributory coverage — both the employer and employee contribute.
Core buy-up coverage — the employee can buy additional coverage.
Voluntary coverage — the employee is fully responsible for the disability benefits.
If you become disabled while your plan is active, you will need to see a doctor to get the necessary paperwork regarding your condition, file a claim and wait for approval. You should be as detailed as possible when documenting your condition to avoid any hiccups when filing your claim.
“Claimants often don’t document their conditions well enough,” said Jason A. Newfield, founding partner of Frankel and Newfield, P.C. “I recommend keeping a log or diary so that you can track how you’re feeling from Day 1, since you might not get to the doctor right away and you don’t want to leave any important symptoms or ailments out of your file.”
Claims are typically approved in one to two weeks, which means you will only have to wait up to 14 days from the day you file a claim to begin receiving payments. You’ll receive the payments up until you can work again or until the end of your benefit period, whichever comes first.
What is covered with short-term disability insurance
When you file a short-term disability claim, the nature of your injury or illness will determine whether or not you are qualified to receive benefits.
According to The Council for Disability Awareness, the most common short-term disability claims, in descending order, include:
Pregnancy.
Musculoskeletal disorders affecting the back, spine, knees, hips and shoulders.
Muscle and ligament strains, fractures and sprains.
Digestive issues, like gastritis and hernias.
Mental health conditions, including depression and anxiety.
Tip: If you are filing a pregnancy-related claim, benefits can typically be collected two to four weeks prior to delivery and up to six weeks after the baby is born, or eight weeks if the baby is delivered via c-section.
Definitions of disability
To see if your injury or illness qualifies for temporary disability coverage, look at your employer’s plan information and its definition of disability. The most common definitions are own-occupation disability and any-occupation disability.
Own-occupation disability
With this type of coverage, you qualify for benefits if you are unable to perform the duties of the job you were working at the time of your injury, even if you are able to work elsewhere.
There are two subcategories of own-occupation disability:
Transitional own-occupation, which pays you an amount based on the total disability benefit minus your post-disability income.
Modified own-occupation, which pays you if you’re not able to work in your field of expertise and you’re not employed anywhere else.
Any-occupation disability
With any-occupation disability insurance, you only qualify for benefits if you are completely unable to work any job, both in your area of expertise and outside of it.
What isn’t covered by short-term disability insurance
Short-term disability policies differ on what is and isn’t covered, but the following disabilities are typically considered “exclusions,” meaning they don’t fall under the approved coverage requirements:
Crime-related injuries if the disabled person is convicted.
Disability occurs during incarceration.
Injury occurs when taking an active part in a riot.
Pre-existing conditions (a disability that takes place in the first year after your effective date).
Self-inflicted injuries (not accidental).
War or act of war.
Workplace injuries (though some exceptions could be made if they are not covered by workers’ compensation).
Where to get short-term disability insurance
To find the best short-term disability insurance for you:
See if your employer offers a discounted plan. You should first find out if your employer offers coverage. If it offers a group plan but you’re concerned that it’s not enough coverage, you can look into buying insurance privately.
Buy your own policy through an agent or broker. You can purchase a short-term disability policy by calling an insurance company or by working with a broker. Keep in mind that buying short-term disability insurance on your own may be more expensive than your employer’s group plan.
No matter how you go about buying a short-term disability insurance policy, you should find out how the insurer defines a disability since that can have major implications on your coverage. You also need to take a close look at your policy’s:
Benefit period.
Coverage amount — a policy that replaces 60% to 70% of your income is ideal.
Waiting period — how long you’ll have to wait before your benefits kick in.
There are some specifics like partial benefits, transitional benefits and ongoing coverage that may worth discussing with an agent.
Are you eligible for short-term disability insurance?
To qualify for short-term disability insurance benefits, you need to be actively enrolled in either a group plan or an individually purchased plan. If your coverage is active at the time of your disability, you should notify your doctor so they can gather the appropriate forms to document the necessary details of your illness or injury.
If your disability is not a work-related injury (which would make you a better candidate for worker’s compensation) and it falls under your insurer’s list of covered conditions, you can file a claim. If your claim is approved, payment will begin at the end of waiting period, an amount of time specified in your policy
Short-term disability insurance cost
If a group plan is not available to your through your employer, a private disability insurance policy costs an average of 1% to 3% of your annual salary.
Your genuine short-term disability premiums will come down to a few personal factors:
Your age. As with life insurance, the younger you are when you buy, the less you will likely pay. Insurers look at your background to assess the risk of insuring you and the older you are the more likely you are to have various illnesses or disabilities.
Gender. Females file more disability claims than men (for pregnancy and mental health illnesses) so males may pay less.
Health. A history of ailments and illnesses can mean higher premiums.
Occupation. If you have a high-risk job like construction or forestry insurers consider you to be at higher risk of becoming disabled.
Along with the underwriting involved in buying disability insurance, the specifics of your short-term disability insurance policy will also determine the final cost.
Some important factors include:
Benefit amount. The higher the benefit amount, the higher your premiums.
Benefit period. The longer the coverage lasts, the more you will pay.
Elimination or waiting period. The longer you have to wait for benefits, the less you will pay.
Additional riders. If you add more coverage to your policy than the standard coverage you will likely pay more.
Do you need short-term disability insurance?
According to the 2023 Insurance Barometer Study by LIMRA and Life Happens, more than half of consumers (54%) worry about supporting themselves if they get sick or injured and can no longer work. More than a third (38%) are very or extremely concerned about being able to support themselves if they become unable to work because of an illness or injury.
While at first glance, an injury or illness might just seem like a temporary setback, if it means you are out of work for weeks or months at a time, that can have a serious financial impact. Having short-term disability coverage can keep you from dipping into your savings or retirement accounts while you are recovering.
If your employer doesn’t provide short-term disability insurance, or you have coverage through work but it’s not enough, consider purchasing additional coverage — enough to get you through up to six months of a short-term disability leave from work.
Short-term vs. long-term disability insurance
Both short-term and long-term disability insurance provide some degree of income replacement when you are out of work due to injury or illness. But the waiting period, benefit period and amount of coverage will differ depending on which type of disability insurance you have.
While short-term and long-term disability insurance have some clear differences, the two can work in tandem. People often start with short-term disability insurance and then transition to long-term disability insurance once the benefits from the short-term disability policy run out.
Frequently asked questions (FAQs)
To calculate your short-term disability rate:
Divide your annual salary by 52 (the number of weeks in a year).
Multiply that number by your benefit percentage (.60 for 60% coverage, for instance).
Take that number (or your maximum weekly benefit, if it is lower), round it to the nearest dollar and divide by 10.
Reference your insurer’s age and rate table to find your rate based on your age.
Take the number you divided by 10 and multiply it by the rate in your age range to get your monthly premium.
If you work for a living and your family depends on your income, having short-term disability insurance may be worth the cost of premiums to you. If you are injured or become seriously ill and are temporarily unable to work, this coverage could mean the difference between being able to pay your bills and struggling financially.
Also known as a waiting period, the elimination period is the amount of time you have to wait before you start getting short-term disability benefits. Short-term disability typically has a two-week waiting period, but your elimination period could be anywhere from one week to one month.
If you are seriously injured or ill and cannot work, ask your doctor to gather the required documentation and forms so you can file a short-term disability claim.
Reina is a freelance writer and editor with over a decade of experience in SEO content, marketing copy, and editorial strategy. Before becoming a USA TODAY Blueprint insurance contributor, her work was featured on Forbes Advisor. She was also the managing editor and life insurance expert at Policygenius, overseeing life and disability insurance content. Before Policygenius, Reina was the senior editor at DoctorOz.com, where she created and edited health and wellness content.
Kara McGinley is deputy editor of insurance at USA TODAY Blueprint and a licensed home insurance expert. Previously, she was a senior editor at Policygenius, where she specialized in homeowners and renters insurance. Her work and insights have been featured in MSN, Lifehacker, Kiplinger, PropertyCasualty360 and more.
Wed, 08 Nov 2023 21:58:00 -0600en-UStext/htmlhttps://www.usatoday.com/money/blueprint/health-insurance/short-term-disability-insurance/KMG and Insurity Partner to Provide a Value-Driven Approach to Insurance Core Solution Deployment
The partnership between Insurity and KMG furthers the mission of providing reliable, cost-effective services in the P&C insurance domain
Insurity, the leading provider of cloud-based software for insurance carriers, brokers, and MGAs, today announced that Key Management Group. Inc (KMG) is its existing system integrator (SI) partner. As an Insurity SI partner, KMG will help address the critical challenges faced by insurers when implementing and integrating core solutions by offering collaborative, capabilities-driven deployment options. This partnership between Insurity and KMG ensures that customers receive the best implementation and integration experience when they opt for Insurity's core solutions.
KMG, a global IT services and business process services company, has more than 30 years' experience serving the P&C industry and stands as a seasoned IT services and transformation provider. Specializing in the P&C insurance sector, KMG offers expertise in core transformation, software development, digital transformation, cloud migration, data analytics, and data migration. KMG's achievements include expanding personal lines offerings into Canada for one of the world's largest carriers, developing a cloud-native CRM with marketing automation to drive increased sales conversations and enhanced customer experience, and automating loss runs migration from paper to digital in just four months, resulting in 80% cost savings.
KMG has consistently delivered substantial cost savings and operational efficiencies for its customers. Key benefits of this partnership include bolstered market presence, shared technical expertise, and a commitment to providing customers with a refined, value-driven approach to insurance core solution deployment.
"We at KMG have always been driven by a commitment to excellence in our IT professional services. Partnering with Insurity, a recognized leader in core solutions, is a testament to the shared vision of delivering unparalleled value to our clients," said Ravendra Singh, EVP & Insurance Practice Head at KMG. "We're excited to bring our expertise to the table, ensuring that every Insurity solution is implemented seamlessly and effectively. This collaboration isn't just about business growth; it's about shaping the future of insurance together."
"For Insurity, this partnership is more than an expansion of our services—it is an elevation," said Jennifer Saylors, VP, SI Success at Insurity. "Working with KMG ensures that Insurity's solutions are backed by a team that brings unparalleled experience, promising a seamless transition for insurers, operational excellence, and a consistently positive user experience."
Insurity is a leading provider of cloud-based software for insurance carriers, brokers, and MGAs. Insurity is trusted by 22 of the top 25 P&C carriers and 7 of the top 10 MGAs in the US and has over 400 cloud-based deployments. Through its best-in-class digital platform, unrivaled industry experience, and the industry's most robust analytics offerings, Insurity is uniquely positioned to deliver exceptional value, empowering customers to focus on their core businesses, optimize their operations, and provide superior policyholder experiences. Insurity is a portfolio company of GI Partners and TA Associates. For more information, visit www.insurity.com.
About KMG
Key Management Group Inc. is a global IT services and business process services company providing technology services and solutions to the Insurance industry. KMG has a strong focus in the P&C insurance industry and is well positioned for its consistent track record in IT and business service delivery. We work with several leading Insurance customers of all sizes (midsize to large) across carriers, MGAs, brokers, and agencies. We engage with clients on their strategic technology and operations initiatives. Our services range from traditional IT services to helping companies with their digital transformation journey. We are constantly helping organizations implement new business ideas by using the power of technology, cloud, data and analytics.
Mon, 13 Nov 2023 23:44:00 -0600entext/htmlhttps://www.benzinga.com/pressreleases/23/11/b35777990/kmg-and-insurity-partner-to-provide-a-value-driven-approach-to-insurance-core-solution-deploymentVerisk Analytics: Pricing Upside and Resilient Demand Amid P&C Insurance Industry Profitability Woes
We maintain our $220 fair value estimate for wide-moat Verisk Analytics VRSK following healthy third-quarter 2023 results that track our full-year top-line growth and profitability expectations. The U.S. P&C insurance industry is facing profitability pressure amid inflation headwinds and higher insurance losses, however, demand for most of Verisk’s solutions remains robust. We believe this reflects the mission-critical and defensive nature of Verisk’s data and analytics capabilities that are integral for optimal underwriting and claim assessment outcomes. As insurers look to Improve internal efficiencies and offset hefty insurance losses, we view Verisk as well placed to benefit from accelerated digitization tailwinds. At current prices, Verisk shares trade in line with our unchanged fair value estimate.
Verisk’s top-line growth of 11% during the third quarter, or 10% excluding inorganic growth, reflects benefits from like-for-like pricing tied to above-average net written premium growth, lower client attrition and industry consolidation, and transactional revenue strength stemming from higher auto insurance shopping activity. The firm’s investments in product innovation are bearing fruit via improved retention of property estimating contractor clients, uplift from conversion of anti-fraud tools to subscription bundles, and strong demand for life insurance policy administration software. These demand drivers during the quarter more than offset weakness in marketing solutions as insurance providers pulled back on advertising spending and go-to-market efforts amid poor profitability.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
Wed, 01 Nov 2023 12:00:00 -0500Emma Williamsentext/htmlhttps://www.morningstar.com/stocks/verisk-analytics-pricing-upside-resilient-demand-amid-pc-insurance-industry-profitability-woesSompo Horizon Is Proud to Introduce Caregiving Solutions as an Employee Benefit to DEPT®
Sompo Horizon, a new employee benefits provider and subsidiary of Sompo Holdings, is pleased to announce global digital agency DEPT® will begin offering caregiving benefits through the CareGo platform to its employees in the U.S.
CareGo is an innovative solution that fosters a supportive workplace culture by equipping working caregivers with the necessary tools and guidance to care for their loved ones while prioritizing their own well-being. Through this program, companies can enhance the well-being of their employees, reinforcing their commitment to providing exceptional benefits and services in the workplace.
Key Features of CareGo Include:
One-on-One Care Advisors: Licensed and certified advisors offer personalized plans, support, and guidance to caregivers.
A Trusted Network of Partners: CareGo users have access to high-quality products and services that assist with home upkeep, in-home care, meal preparation, fraud detection, transportation, bill pay services, will and estate planning services and more.
Caregiver Check-Ins: These one-on-one sessions involve a dedicated Care Advisor offering invaluable support and guidance during occasionally complex and stressful situations.
Digital Repository: This tool helps the caregiver maintain important information about their care recipient(s), such as medications, dietary restrictions, contact lists, and centralized communications for the care team and caregiver.
Commenting on the partnership, Chuck Fillizola, Chief Operating Officer of Sompo Horizon, expressed his enthusiasm, stating, "We are thrilled to onboard DEPT® and begin offering concierge caregiving services to their employees in the U.S. Like many organizations, it is important for the agency to support employees who are caring for their own families, working full-time, and caring for an aging family member with the tools they need to prevent burnout."
"We listen to our people and are always working hard to Improve our processes, benefits and employee experience," said Laura Rodnitzky, VP, Global People Operations & Americas P&C Lead at DEPT®. "We try to ensure our employees have access to a variety of programs and support to help manage their physical and mental well-being, and that includes support for working caregivers."
The introduction of CareGo as an employee benefit is scheduled to rollout on January 1st, 2024, and DEPT® employees can look forward to a seamless integration and user-friendly experience.
About Sompo Horizon
Sompo Group is a Japanese conglomerate with businesses in financial services, insurance, and healthcare sectors. We have gained extensive experience in developing solutions for seniors and our mission is to promote security, health, and well-being globally. Sompo Horizon, a newly established subsidiary of Sompo Holdings, was launched to develop innovative products and services to address caregiving challenges and transform the way people care for themselves and each other. Our first solution is CareGo, a comprehensive digital platform, concierge support service, and partner network that empowers caregivers to make the best decisions for their loved ones while saving time, money, and alleviating stress.
About Sompo Holdings
Sompo Holdings is creating social value for security, health and wellbeing of customers, operating domestic (Japanese) P&C insurance business, overseas (re)insurance business, domestic life insurance business, nursing care & seniors business, and digital business with about 73,000 employees in 28 countries. Since its foundation as Japan's first fire insurance company for more than 130 years, we have been providing solutions to various challenges in society.
Listed on the Tokyo Stock Exchange (Prime Market), SOMPO's consolidated ordinary income totaled over JPY 4,600 billion (USD 34.5 billion*) in the fiscal year ended March 31, 2023. We have been achieving steady growth based on each business while accelerating new investments in growth areas. For more information, visit https://www.sompo-hd.com/en/.
*Conversion rate: USD/JPY 133.53 as of March 31, 2023
About DEPT®
DEPT® is a pioneering technology and marketing services company that creates integrated end-to-end digital experiences for brands such as Google, KFC, Philips, Audi, Twitch, Patagonia, eBay, and more. Its team of 4,000+ digital certified across 30+ locations on 5 continents delivers pioneering work on a global scale with a boutique culture. DEPT® is committed to making a positive impact on the planet and since 2021 has been Climate Neutral and B Corp Certified. www.deptagency.com
The rating agency has also affirmed the insurance financial strength ratings of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company at A1 and the senior unsecured debt rating of Nationwide Financial Services (NFS) at Baa1.
