Weekly News Roundup, February 28

In this week’s news will talk about how Allianz unveils huge financial results, State Farm threatens to drop more policies if California’s Lara rejects rate hike, and much more…

New York lawmakers are considering legislation that would limit how insurers assess risk by preventing companies from using a driver’s credit history as the primary factor in issuing or renewing auto insurance policies.

Assembly Bill 6053, introduced in the state Senate, would also prohibit insurers from requesting a policyholder’s credit information for renewal purposes.

According to AM Best report, the proposal is part of a broader debate over credit-based insurance pricing, which insurers argue helps predict the likelihood and severity of claims.

Allianz SE has reported a record operating profit of €16.0 billion for 2024, marking an 8.7% increase from the previous year, with strong performance across all business segments. The German financial services giant also announced a new share buyback program worth up to €2 billion.

Allianz’s total business volume rose 11.2% in 2024 to €179.8 billion, driven primarily by its life/health and property-casualty segments. Shareholders’ core net income increased 10.1% to €10.0 billion, while net income attributable to shareholders climbed 16.3% to €9.9 billion.

The company’s Solvency II capitalization ratio remained robust at 209% by the end of 2024. Allianz’s board of management proposed a dividend per share of €15.40, an 11.6% increase from 2023.

In the fourth quarter of 2024, Allianz posted a 10.9% rise in operating profit to €4.2 billion, with total business volume growing 16% to €45.9 billion. The property-casualty segment was a key driver of this growth.

The rise of telematics-based car insurance policies is reshaping the industry, driven by customer demand for digital management, cost savings, and transparency. A recent GlobalData poll conducted on Verdict Media sites in Q4 2024 and Q1 2025 found that 36.4% of respondents were convinced to adopt a telematics policy due to the ability to manage their policy online or through an app, closely followed by 36.2% who cited cheaper premiums as the primary motivator.

Additional key factors influencing consumer adoption included the ability to track journeys online (35.2%), transparency in policies (34.7%), assistance in tracking stolen vehicles (33.8%), and more efficient driving habits leading to fuel savings (32.1%). Notably, 31.1% of policyholders were drawn to telematics for its potential to improve driving behavior.

The global reinsurance market has experienced notable changes in recent years, with many reinsurers reducing their property exposures, contributing to hard market conditions.

In contrast, casualty reinsurance capacity has remained stable and, in some areas, expanded, particularly in workers’ compensation. Casualty reinsurance has played a central role in risk transfer for primary insurers, providing financial support amid large claims.

However, shifting dynamics, particularly in the US, have reshaped the sector. A key factor has been adverse reserve development, largely driven by social inflation, which has altered the underwriting environment.

Regulators have given the go-ahead for Mercury General to see premium hikes averaging 12% from March, and for Liberty Mutual subsidiary Safeco to raise by 7.2%. The issue, however, is far from clear for State Farm, California’s largest home insurance provider.

The insurer has warned regulators that it may cancel a significant number of policies if its request for an emergency rate hike is denied. The company met with Insurance Commissioner Ricardo Lara this week to push for an immediate increase in homeowner premiums by 22%, as well as hikes for rental and condo policies, citing massive wildfire-related losses.

State Farm executives made it clear that if the California Department of Insurance does not approve the increases, the insurer may move forward with dropping even more policies, reducing coverage across the state.

During a private meeting with regulators, Mark Schwamberger, CFO of State Farm General, emphasized the severity of the situation, stating, “The ability, prospectively, to continue to stay behind our policies as we enter fire season, it’s in jeopardy, sir, and it’s a very serious situation.” He warned that without approval, the company could pursue “significant non-renewals” to limit exposure to wildfire risk.