Overall, there was a consensus around the challenges we face, and the use of new and emerging technologies being deployed. According to respondents, the Florida Homeowners Insurance Market, Reinsurance/Capital, and Climate Risk/Natural Catastrophe Exposure were top concerns. Data Integrity/Accuracy and Accuracy of Risk Models were the top two data & technology priorities for respondents.

Leading Concerns About the Florida Insurance Market

It appears not much has changed over the past year with regard to the issues facing the Florida market. In our 2023 survey, respondents’ top concerns were the Florida Homeowners Insurance Market, followed by Reinsurance/ Capital, Assignment of Benefits Litigation, Insurance Regulation, Climate Risk/Natural Catastrophes, and then the Economy/Inflation.

More than 80% of respondents were at least Moderately Concerned about the Florida Homeowners Market. Slightly fewer view Reinsurance/Capital as a major concern.

Assignment of Benefits Litigation dropped from third in 2023 to seventh place among the top concerns in 2024. Moving higher among concerns are Climate Risk/Natural Catastrophe Exposures, with more than 70% now saying they are Extremely or Moderately Concerned.

Insurance Regulation and Federal/State Legislation garnered similar levels of concern with more than 30% of respondents Extremely Concerned. The Economy/Inflation remained a concern to respondents in 2023, with just 20% being Extremely Concerned.

Priority Placed on Data and Technology Issues

The top Data and Technology issues remained the same year-over-year compared to 2023. Interestingly, nearly all respondents said Data Integrity/Accuracy was at least Somewhat a Priority, while 85% said the same about Accuracy of Risk Models.

More than a third of respondents put Ownership/Control of Proprietary Data as their Top Priority, while only one in five said the same for Security/Privacy.

Regulatory Reporting became a larger priority in 2024, with 69% saying it was at least Somewhat a Priority and one in five reporting it as a Top Priority.

Half of respondents now say Artificial Intelligence/Machine Learning is at least Somewhat a Priority, making it a higher priority than in previous years.

Storage/Legacy Issues is becoming a lesser issue, with more than 68% rating it a Low Priority, or Not a Priority at all. Similarly, Info-Sharing and Blockchain Initiatives are getting little attention, with neither being a Top Priority for any respondents, and the majority making them a Low Priority, or Not a Priority.

For more information on the results of AAIS Market Surveys or any of the advisory products and services offered by AAIS, please contact an AAIS Engagement Manager.

The post AAIS Market Research Looks at Trends, Concerns, and Data/Technology Issues Affecting the Florida Market first appeared on AAIS.

“I’ve been getting out of the house more than ever with this new e-bike, have you considered getting one?”  

“Now that my solar array is complete, and I’ve connected the new 3000-watt home battery backup, I’m ready to go off-grid.”

The adage “home is where the heart is” speaks to our homes’ role in our lives. They are not simply our biggest investment, they are not simply an assembly of materials arranged in a shelter; a home is where our lives happen, where the people we care for coalesce. Increasingly, our homes are also where we store, charge, and use the multitude of battery-powered devices that we rely on for our work, our chores, and our leisure. A decade ago, the battery industry estimated that a typical household of two would have 20-40 (traditional removable) battery-powered devices. With the vast expansion and enhancements in battery technology, this number has grown exponentially. Nearly every household device now has a mass-market battery-powered version, and the remaining devices can typically be powered through large solar arrays and residential-scale energy storage systems.

With the rapid proliferation of battery-powered devices in homes (and businesses), we are hearing more frequently about the fire risks associated with these devices. Fires in modern battery-powered devices tend to be quite spectacular and cause considerable damage. The primary reason for this extreme fire behavior is Thermal Runaway – “a phenomenon in which the lithium-ion cell enters an uncontrollable, self-heating state. Thermal runaway can result in extremely high temperatures, violent cell venting, smoke, and fire.” (Source: UL Electrochemical Safety Research Institute). When confined inside a house, the thermal runaway from a small device can quickly transition to a fully involved structure fire. For NBC’s Today Show, UL conducted a full-scale demonstration of an e-scooter fire due to overcharging in a living room, dramatically demonstrating how quickly it can destroy a house.

Insurers have been working to understand this growing exposure. What the industry is learning is this exposure is not a narrow issue confined to one type of device or failure mechanism. The problem is multifaceted and complex, and this type of exposure is present in most homes (and businesses). But there are some common considerations and factors that increase the risk:

• Physical Damage or Destruction of the Battery – Many battery-powered devices are intended for hard work and rough play and consequently may crash, be stepped on, dropped from a height, pierced, submerged in water, or otherwise abused. Doing so can damage the battery components and disable safety features leading to overheating, short-circuits, and worse yet, thermal runaway.
• Resold or Refurbished Battery Components – The concern here is about used battery packs being resold from consumer to consumer when the provenance of the battery (and any potential damage, misuse, submersions, etc.) is unknown. This is even more problematic when advanced DIYers or unlicensed persons may have attempted to refurbish or modify battery components themselves. While there is a mature industry that tests, refurbishes, and resells used consumer electronic devices, the battery components themselves are best purchased new from a reputable source.
• Long-term and Unmonitored Recharging – Perhaps the most significant feature of any battery system is the ability to stop charging when it reaches its capacity. This technology has become so successful that we often put our devices on the charger and leave them there, figuring the device(s) are smart enough to shut themselves off when it is complete. This habit can result in fires when devices or battery packs are left on the charger for hours or days after they have fully recharged.
• Recharging Devices in Means of Egress – Very often the question about battery safety is more of a question of location—where is the battery being recharged? Many of the fatal fires associated with batteries have occurred when occupants—particularly in multi-story apartment buildings—have left micro-mobility devices (e-bikes, hoverboards, etc.) charging in hallways, stairwells, and doorways. If the device catches on fire it can block the primary means of escape for the residents, trapping them in the building or in their apartment.
• Batteries Inappropriately Disposed of in the Waste Stream – While typically less of a concern for traditional P&C carriers, another major fire source are batteries carelessly disposed of in residential trash waste streams. When compacted in refuse trucks or dumped into waste transfer stations, the residual “stranded energy” still contained within the batteries can start fires.

Communities across the country are working to reduce the prevalence of fires from battery-powered devices. New York City, which has seen a significant number of battery fires, instituted a series of regulations to reduce fires by prohibiting the sale of batteries that are not UL-approved and severely restricting locations where batteries can be refurbished or stored in large quantities (such as bike courier hubs), among other things. Other communities are following suit in passing regulations, increasing public awareness of battery fire safety, and developing effective strategies for suppressing and containing battery-caused fires.

But the challenge remains that many unapproved and unregulated devices are readily available for sale through online marketplaces, making it easy to sidestep local enforcement efforts. More places are providing safe battery disposal sites including big box stores and waste and recycling vendors (for the purpose of reducing the fire risk to their vehicles and facilities as much as for environmental stewardship), though many of these disposal sites explicitly prohibit disposing of batteries that have expanded, deformed, or are otherwise at risk of imminent catastrophic failure.

As the battery technology industry becomes more mature and more heavily regulated, we can expect to see more intrinsic safety measures built in and better ways to prevent the catastrophic failure of batteries. However, as the industry matures, it is also expanding exponentially with countless new technologies being introduced and novel energy storage devices being prototyped every month. So, the exposure is only anticipated to grow accordingly. Insurers need to have a seat at the table when the dinner conversation turns to fire risks from batteries. Because a modern home really is where the battery is.

The post Home Is Where the Battery Is first appeared on AAIS.