Morning Briefing: SMEs to embrace insurance telematics, says report

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SMEs to embrace insurance telematics, says report
Plummeting connection costs and a surge in the use of predictive analysis are set to drive the deployment of telematics across the global insurance industry.

That’s the verdict of a new report by Dublin, Ireland-based Research and Markets that reveals consumers’ enthusiasm for in-car connectivity plus the growth of smartphone penetration are helping boost the market.

Telematics is the use of wireless devices and ‘black box’ technologies to transmit data in real time back to an organization. Insurers typically use such technology to monitor the behaviour of clients to financially reward – or penalise – policyholders. Lifestyle habits (regular exercise) and driving patterns (not speeding, braking techniques) are common activities telematics examine – both at the personal and corporate policy levels.

In terms of end users, SMEs are expected to show the highest growth rate due to keen adoption of cloud-based insurance telematics technologies. Geographically, North American insurance companies are fast deploying telematics, while Latin America and Asia-Pacific are also witnessing record growth in the use of such devices.

Entitled ‘Insurance Telematics Market by Deployment Type, End User,  and by Region - Global Forecast and Analysis to 2020’ warned that privacy concerns over the misuse of personal data of individuals are crimping market growth. 
 
Cheaper gas burns Allstate profit
Fourth quarter 2015 income at the largest publicly-traded US car and home insurer sank 41 percent due to a deluge of auto claims.

Allstate Corp. said net income fell to $489 million, or $1.18 a share, from $824 million, or $1.86, a year earlier. The Northbrook, Illinois-based firm added that operating profit, minus some investment results, was $1.60 a share, beating the $1.35 average estimate of 24 analysts surveyed by Bloomberg.

The insurer has had to contend with a bitter irony of falling fuel prices: cheaper gas encouraged more people to drive last year, which led to an increase in accidents and subsequent claims. As a result, CEO Tom Wilson has been raising prices for auto coverage while cutting expenses related to professional services and advertising for its Esurance brand.
 
Allstate stock slipped less than 1 percent to $59.64 as of 4pm yesterday (Wednesday) in New York.   
 
MetLife Q4 dives 45%
MetLife Inc., the Colossus of US life insurance, has blamed weaker investment returns from private equity and hedge funds for a Q4 slump in profit.

Net income at the New York-based insurer fell 45 percent to $834 million from $1.52 billion a year earlier. Excluding some investment results, operating profit was $1.23 a share, missing the $1.36 estimate from 17 analysts surveyed by Bloomberg.

Low interest rates and market volatility are detrimentally affecting bonds and variable holdings, respectively. CEO Steve Kandarian also laid the blame on the strong greenback. 

To reverse the stock slump and appease regulators, MetLife is considering a spinoff, sale or public offering of a U.S. retail operation with $240 billion in assets. The company’s share price has fallen 13 percent so far this year after an 11 percent drop in 2015.
  
Simplicity for small firms’ credit protection
Small businesses in the US can protect themselves from the risk of not being paid, thanks to a new product launched by Allianz-backed Euler Hermes.

The Paris-headquartered trade credit insurer is rolling out Simplicity for micro and small business owners to cover their accounts receivable risk.

Aimed at businesses with $1 million to $5 million in annual sales, Simplicity is designed to protect domestic and export buyers in 32 countries.

James Daly, president and CEO of Euler Hermes Americas, said that as many as 82 percent of business failures are due to poor cash management, according to a report. The U.S. Small Business Administration found that America's 28 million small businesses account for 54 percent of the country's sales and 55 percent of all jobs.   They complain that managing cash flow, targeting business opportunities and the economy are among their chief concerns.

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