Who are better drivers—autonomous vehicles or human beings?

With the rapidly increasing number of autonomous-enabled vehicles on public roads, it is important to consider that autonomous driving is not as scary as what human beings think. Autonomous cars use a sophisticated suite of sensors and software to interpret massive streams of data from outside or inside the car.

Autonomous cars improve safety because they:

  • Don’t drive drunk or text while driving
  • Communicate with other cars, better navigating traffic
  • Carry more passengers, reducing the number of vehicles
  • Provide safe transportation for the blind, elderly, and children

Distracted driving has replaced drunk driving as the leading cause of car crashes on our roads today. Autonomous cars solve these issues and also expand transportation options and relieve congestion.

When assessing whether machines are better than human beings at some tasks, we are cautious, especially when making this determination requires relinquishing control of driving. We naturally bring our prior experiences, preconceived notions, and biases to the table.

In this paper, Milliman’s Sheri Scott takes to her Tesla and provides a statistical framework to study whether—and by how much—an autonomous car drives better than a human being.

How can U.S. insurers help the country build a successful climate resilience strategy?

While many consumers may recognize the risk of extreme weather-related events, they don’t yet fully understand what they can do to protect their property from a flood, wildfire, or other catastrophic event. One effect of the growing awareness and discussion regarding climate change is that extreme weather events tend to drive consumers to inform themselves about insurance options. Milliman analysis of Google Trends dating back to 2004 identified an increase in search interest for catastrophe insurance related search terms, with surges of online searches occurring around the time of severe weather events.

According to a December 2018 report by Yale and George Mason Universities, a record number of Americans believe that global warming is real and are increasingly worried about its effect on their lives. In this paper, Milliman’s Nancy Watkins and Elias Braunstein explain in more detail the impact of extreme weather on consumers and how insurers can take advantage of increasing climate change awareness to engage more with the public about climate resilience.

To learn more about climate resilience strategies, click here.

What do property insurers entering the private flood market need to know?

The U.S. private flood insurance industry is an emerging market with the potential for risks and rewards, none as important as helping Americans become more resilient against devastating floods. Several converging developments have transformed the formerly niche offering into a potential sustainable, largescale business. These developments include rapid advances in technology, an abundance of risk capital, a break in the longstanding legislative status quo, and the human and economic impact of recent disasters on consumer awareness of the increasing flood hazard.

Establishing a greater private flood insurance market should benefit insurance consumers, helping to close the protection gap and improve the resilience of households and economies against future flood-related catastrophes. But as with most great undertakings, hard work and foresight are necessary for success. In this paper, Milliman consultant John Rollins explores some questions and challenges for aspiring U.S. private flood insurers.

Solvency II analysis of non-life insurers

(Re)insurance undertakings across the European Union published their second set of Solvency II public reports, the Solvency and Financial Condition Reports (SFCRs) in 2018. In this report, Milliman’s Derek Newton, Marc Smillie, and Flavien Thery analyse and compare the quantitative information contained in the Quantitative Reporting Templates (QRTs) and the text within SFCRs across a number of European non-life insurers.

The analysis of the non-life market covers 870 companies from 15 countries listed, which together comprise more than £326 billion of gross written premium and nearly £475 billion of gross non-life technical provisions. The report focuses on solo entities rather than groups and includes comparison of the 2017 year-end SFCRs with the 2016 year-end SFCRs.

Equity release mortgages considerations for UK life insurers

Equity release mortgages (ERMs) have been sold for many years in the United Kingdom and in their early days were subject to controversy around customer fairness. However, ERMs are now a growing component of UK life insurers’ balance sheets, and are mired in a new controversy, this time around their prudential and capital treatment when used to match annuity liabilities.

Milliman consultants have drafted a briefing note that brings together the recent developments affecting the valuation and capital treatment of ERMs in the UK, particularly those brought about by the evolving prudential regulatory regime being put in place by the Prudential Regulation Authority (PRA) and the debates around the most appropriate technique for valuing the no-negative-equity-guarantee.

This paper by Milliman’s Robert Bugg and Paul Fulcher is relevant to life insurers with annuity liabilities who invest in, or are considering investing in, ERMs.