Report on I.I.I. ActivitiesI.I.I. Communications Committee Meeting

San Francisco, California

Monday, November 14, 2016

2

Presentation Outline

Update on I.I.I. Website – Andréa Basora

Industry Financials – Dr. Steven Weisbart

Update on CyberRisk Issue and Media Analysis–Mike Barry

Cost of Auto Insurance – Jeanne Salvatore

Moderator, Sean Kevelighan

Web & Social Analysis;Responsive Website Redesign

Andréa C. Basora, Executive Vice President

4

Search Engine RankOctober 2016

Source: Various search engines.

Google

Search term = insurance: 3

Search term = insurance information: 2

Bing

Search term = insurance: 3

Search term = insurance information: 2

Yahoo

Search term = insurance: 5

Search term = insurance information: 3

Search

Search term = insurance: 5

Search term = insurance information: 3

AOL

Search term = insurance: 3

Search term = insurance information: 2

Summary

5

304,981 300,852

264,280

327,622

368,979

403,808 408,345394,713

356,200

338,314

374,402

355,963

407,680

160,676 161,104

144,751

185,514

201,342

220,206 223,559 222,610

197,303188,465

210,501

199,728

227,205

154,431 154,786

138,698

179,481

193,999

212,220 215,812 214,549

190,070181,135

202,845

192,212

218,957

0

50,000

100,000

150,000

200,000

250,000

10,000

60,000

110,000

160,000

210,000

260,000

310,000

360,000

410,000

10/2015 11/2015 12/2015 1/2016 2/2016 3/2016 4/2016 5/2016 6/2016 7/2016 8/2016 9/2016 10/1/2016

Pageviews

Users

New Users

Source: Google Analytics.

Pageviews and Users

October 2015 vs October 2016

Pageview %change: +33.7

User % change: 41.4

New User %change: 41.8

A Google search on “insurance” brings iii.org up at #3

Summary

6

75

76

77

78

79

80

81

82

83

84

85

1

2

2

10/2015 11/2015 12/2015 1/2016 2/2016 3/2016 4/2016 5/2016 6/2016 7/2016 8/2016 9/2016 10/2016

Pages per visit

Bounce Rate (%)

Source: Google Analytics.

Pages/visit and Bounce Rate

October 2015 vs October 2016

Pages per visit %change: -6.1

Bounce rate % change: -2.5

Top Referral Sources

7

Rank Source Visits Notes URL

1taboola 56,985

2

nytimes.com 6,934

The nytimes.com article that drove the most traffic (6,212 visits) was a personal finance article, “How Should You Manage Your Money? And Keep It Short” by Ron Lieber.

nytimes.com/2016/01/09/your-money/how-should-you-manage-your-money-and-keep-it-short.html

3m.facebook.com 6,629

4

learn.flvs.net 5,297

5facebook.com 4,441

6

t.co 4,067

Twitter uses the t.co domain as part of a service to protect users from harmful activity and as a signal for surfacing relevant Tweets.

7

reviews.com 2,758

The reviews.com article that drove the most traffic (285 visits) was “The Best Homeowners Insurance”.

reviews.com/homeowners-insurance

8

l.facebook.com 2,422

The l.facebook.com is a form of traffic that has been redirected through Facebook through what is known as a link shim. This traffic code provides the user with anonymity.

9duckduckgo.com 2,198

10

propertycasualty360.com 2,059

The propertycasualy360.com article that drove the most traffic (640 visits) was “23 trends, challenges and opportunities in personal lines insurance”.

propertycasualty360.com/2016/02/17/23-trends-challenges-and-opportunities-in-personal

I.I.I. Website – 2016

Source: Google Analytics.

8

2,5932,662 2,716

2,8092,907

3,0323,137

3,2653,360

3,4963,615

3,713 3,791

29,58829,811

30,752

31,203

31,829

32,424

32,925

33,399

33,904

34,222

34,668

35,05435,491

29,000

30,000

31,000

32,000

33,000

34,000

35,000

36,000

0

1,000

2,000

3,000

4,000

10/2015 11/2015 12/2015 1/2016 2/2016 3/2016 4/2016 5/2016 6/2016 7/2016 8/2016 9/2016 10/2016

Facebook Likes

Twitter Followers

Source: Google Analytics.

Total FollowersTwitter & Facebook

Top Five Posts (Engagement)

9

Rank Title Reach Engaged Talking Reactions Comments SharesEngagement Rate

1

III's Janet Ruiz (@InsuringCAL) discusses driverless- and

accident-avoiding tech with #KXTV Sacramento:

http://bit.ly/1nj9BT1 (I.I.I. Youtube Media video interview of

Janet Ruiz)

1,085 155 123 113 30 11 14%

2

Do you have a family evacuation plan? Prepare effectively by using our five-step guide. http://bit.ly/2cRqO3J #NatlPrep(I.I.I. article) 167 20 19 16 8 4 12%

3

#HurricaneSeason is underway. Use our free #app to create, manage, & share your family emergency preparedness plan! http://apple.co/1WYMhIH (Link to I.I.I. Know Your Plan app) 116 13 11 9 1 3 11%

4#Wildfire happens anywhere conditions are dry and the weather is hot--#NJ, for instance... http://bit.ly/292bfmk (Link to Jersey Shore Hurricane News article on wildfire concerns)

68 7 7 8 -- 1 10%

5Learn to be #FloodSmart. Here are answers to 4 big questions about flood #insurance. http://yhoo.it/2bak6aE(Yahoo article)

412 38 22 20 -- 13 9%

Facebook – January 1 October 2016

Source: Meltwater Engage; Engagement Rate is defined by Users who Liked, Commented, Shared, or Clicked on the Post divided by People who saw the post (Post Reach).

Notes: Social content relating to technology and disasters, particularly preparation, resonate strongly with followers.

Highlights

10

Twitter: January 1 – October 2016

Source: Twitter Analytics.

Responsive Website RedesignProject Goals

12

Project Goals

Create a design that engages users with a modern responsive layout that allows easy and intuitive access to the large volume of information on the site—across all screen sizes.

Deliver a best in class design that c a perfect showcase for the information and represents the Triple-i brand with a balance between “friendliness” and “professionalism”.

Redesign the core functional components of the site to be engaging for the user and encourages a continued journey on the site.

Make social integration of content and sharing action primary to the user experience.

Improve SEO characteristics to ensure content continues to appear at the top of any related Google search.

Sitemap, Wireframes & Member Landing Page

14

Sitemap – Top Level

15

16

Member Landing Page

Usability Testing

18

Usability Testing – Key Findings

Users often come to the site with a specific intent. To expedite their search, the new design should allow them to gain quick access to relevant information

The new site organization reads well as a place to gain information about a broad spectrum of insurance, including facts to consider when choosing a plan and how to approach different aspects of insurance.

Consumer participants expressed a desire to have a “what next?” action step built into the content.

Users would be more likely to share content publicly on LinkedIn—rather than Facebook or Twitter.

Overall users understood the mission of the I.I.I. and that the purpose of the site is to educate

Next Steps and Questions

20

Next Steps and Questions

Complete Design Templates

Create Style Guide & Content Strategy Recommendations

Nylon Technology will then take over to do the site development.

Questions?

Cyberrisk:Threat And Opportunity PowerPointCreated Specifically for I.I.I. Members

Insurance Information Institute 110 William Street New York, NY 10038 212.346.5500 info@iii.org www.iii.org

22

Major Difficulties In Writing Cyber Coverage

Complexity of risk

Lack of historical data

Risk accumulation

Threats are becoming more sophisticated.

Executives, boards, cyber experts, insurers and others struggle to keep up.

New coverages lack historical data, making pricing difficult.

Several insurers are developing common data requirements.

Cyberattacks could be massive. A 'cyber hurricane' could cause thousands of claims.

Some insurers worry that cyber is too big for private sector to handle alone.

23

2015 Data Breaches By Business Category, By Number of Breaches

Who Gets Attacked The Most?

Total may not equal 100% due to rounding.

Source: Identity Theft Resource Center.

Business

312

Businesses are breached most frequently, but more medical records are exposed.

Medical And Healthcare Records Were More Than Half Of All Records Stolen

40%

35%

9%

8%7%

Medical/

Healthcare

277

Banking/

Credit/Financial

71

Govt./Military

63

Educational

58

68%

19%

9%3%

Medical/

Healthcare

121.6 MM

Govt./

Military

34.2 MM

Banking/Credit/Financial

5.1 MMBusiness

16.2 MM

Educational

759,600

0.4%

24

Cyber Incidents Are The No. 3 Global Business Risk

*From social media

Source: Allianz Risk Barometer on Business Risks 2016.

11%

11%

16%

18%

22%

24%

24%

28%

34%

38%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Theft, fraud, corruption

Political, social upheaval, war

Fire, explosion

Loss of reputation or brand value*

Macroeconomic developments

Changes in legislation and regulation

Natural catastrophes

Cyber incidents

Market developments

Business interruption, supply chain risk

Cyber incidents moved to No. 3 in the Allianz Risk Barometer Survey, up from No. 5 a year earlier.

25

Breach Costs Are Rising

*The 2016 study examines the costs incurred by 383 companies across 16 industries representing 12 countries, including 64 U.S. case studies. Total breach costs include: lost business resulting from diminished trust or confidence of customers; costs related to detection, escalation, and notification of the breach; and ex-post response activities, such as credit report monitoring.

Source: Ponemon Institute.

$7.0

$6.5

$5.9

$5.4

$5.5

$0 $1 $2 $3 $4 $5 $6 $7 $8

2016

2015

2014

2013

2011

Millions (US$)

The average breach in the U.S. cost $7.0 million in 2016.*

26

Who Is Buying Cyber Coverage?

Source: Benchmarking Trends: As Cyber Concerns Broaden, Insurance Purchases Rise, Marsh Risk Management Research Briefing, March 2015.

Growth is fastest among manufacturers and communications companies.

Stand-alone Policies Grew By More Than 25 Percent Among Marsh Clients

27%

41%

37%

28%

6%

15%

63%

28%

30%

13%

0% 10% 20% 30% 40% 50% 60% 70%

All Industries

Communications, Media and Tech

Education

Financial Institutions

Health Care

Hospitality and Gaming

Manufacturing

Power and Utilities

Retail/Wholesale

Services

I.I.I. Media Index

January – October, 2016

28

I.I.I. Media Index, P/C, First Ten Months 2015 vs. First Ten Months* 20161

Percent Increase/Decrease from Previous Year

*Through October 15. 1Based on a search of Meltwater News

-52%

-17%

-7%

-2%

1%

11%

20%

32%

33%

36%

42%

52%

60%

77%

79%

80%

83%

87%

87%

89%

92%

96%

96%

143%

176%

195%

231%

-100% 100% 300%

RiotsClimate Change

TerrorismInsurance Fraud

Systemic RiskTornadoes

AutoMarket Conditions

Workers CompEarthquakes

Flood InsuranceHomeowners

Credit ScoringGun Liability

Auto Affordability & CFASharing Economy

TortAviation

Winter Storms & InsuranceCyber Insurance

SolvencyPrice Optimization

Pay-As-You Go/TelematicsDriverless Cars

Drones and InsuranceHurricanes

Wildfires

29

Top Issues, P/C, First Ten Months 2015 vs. First Ten Months* 20161

*Through October 15. 1Based on a search of Meltwater News

Top Issues 2015 2016 % Increase/Decrease

1 Auto 30,145 36,078 20%

2 Solvency 16,770 32,137 92%

3 Homeowners 14,958 22,697 52%

4 Hurricanes 7,699 22,676 195%

5 Cyber Insurance 10,374 19,648 89%

6 Driverless Cars 8,061 19,618 143%

7 Wildfires 4,270 14,126 231%

8 Market Conditions 10,715 14,108 32%

9 Pay-As-You Go/Telematics 5,945 11,662 96%

10 Tort 6,193 11,306 83%

11 Terrorism 10,912 10,193 -7%

12 Insurance Fraud 10,049 9,873 -2%

13 Earthquakes 6,873 9,372 36%

14 Flood Insurance 4,729 6,717 42%

15 Workers Comp 3,510 4,665 33%

16 Tornadoes 4,174 4,617 11%

17 Climate Change 5,002 4,151 -17%

18 Sharing Economy 1,709 3,069 80%

19 Drones and Insurance 790 2,180 176%

20 Price Optimization 698 1,367 96%

21 Winter Storms & Insurance 693 1,299 87%

22 Auto Affordability & CFA 714 1,277 79%

23 Aviation 504 944 87%

24 Gun Liability 264 467 77%

25 Riots 966 460 -52%

26 Systemic Risk 428 433 1%

27 Credit Scoring 243 388 60%

TOTAL 166,598 263,348 58%

30

Top Issues, L/H, First Ten Months 2015 vs. First Ten Months* 20161

*Through October 15. 1Based on a search of Meltwater News

Top Issues 2015 2016% Increase/Decrease

1 Annuities 106,771 180,967 69%

2 Health Insurance 145,542 154,760 6%

3 Life Insurance 56,984 113,144 99%

4 Solvency 16,770 32,137 92%

5 Retirement 10,064 21,916 118%

6 Long Term Care Insurance 1,230 1,247 1%

7 Unclaimed Benefits 193 662 243%

Total 337,554 504,833 50%

31

Social Media Engagement in 2016

October 2016: 35.5K June 2016: 33.5K December 2015: 30.6K

Top Trends in Conversation

Growth of Twitter Followers

Hurricane Hermine & Matthew

Unclaimed Life Policies

California Wildfires

October 21 Cyberattack

32

Discussion on Media Index and 2017 Policy Issues

How will a GOP White House, Congress impact P/C insurers?

Could the U.S. Department of Labor drop the fiduciary rule?

How will FEMA NFIP reauthorization debate unfold?

Other?

Cost of Auto Insurance:Strategic Plan on Personal Auto Insurance Costs The Problem

Key Messages

Goals

Key Tactics

Discussion

Personal Automobile InsuranceMore Accidents, Larger Claims Drive Costs Higher

Insurance Information Institute 110 William Street New York, NY 10038 212.346.5500 info@iii.org www.iii.org

35

The Big Problem: Insurance Costs Are Rising

Source: Fast Track Monitoring System.

From early 2014 to early 2016, the cost of accidents has risen dramatically. By contrast, consumer prices overall

rose 1.7 percent during 2014 and 2015.

Auto Insurance Increase in Loss Costs, 2014:Q1–2016:Q1

Bodily Injury

9.6%

Property

Damage

14.7%

Personal Injury

Protection

18.4%

Collision

11.1%

Comprehensive

11.0%

36

More Accidents

Source: Fast Track Monitoring System, Insurance Information Institute.

-1.8%

-3.6%

2.5%

-2.4%

-1.4%

-0.5%

0.9%

-1.8%

2.4%

4.4%

0.8%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

An

nu

al

Ch

an

ge

The accident rate – the number of claims per hundred vehicles – is rising.

Collision Claims: Frequency Trending Higher in 2015

37

Why More Accidents? More Driving

Source: Federal Highway Administration, Rolling Four-Qtr Avg. Frequency from Fast Track Monitoring System,Insurance Institute for Highway Safety, Insurance Information Institute.

People are driving more. The more miles people drive, the more likely they are to get in an accident.

More Miles Driven, More Collisions, 2006–2015

5.3

5.4

5.5

5.6

5.7

5.8

5.9

6.0

2,850

2,900

2,950

3,000

3,050

3,100

3,150

06:Q4 07:Q4 08:Q4 09:Q4 10:Q4 11:Q4 12:Q4 13:Q4 14:Q4 15:Q4

Miles Driven Collision Claim Frequency

Billions of Miles Driven in Prior Year

Overall Collision Claims per 100 Insured Vehicle Years

38

Why More Accidents? More Jobs

Source: Seasonally adjusted employed from Bureau of Labor Statistics, rolling four-quarter average frequency from Fast Track Monitoring System, Insurance Information Institute.

People are driving more because the economy is improving.

More People Working and Driving => More Collisions, 2006–2016

5.3

5.4

5.5

5.6

5.7

5.8

5.9

6.0

120

125

130

135

140

145

06:Q1 07:Q1 08:Q1 09:Q1 10:Q1 11:Q1 12:Q1 13:Q1 14:Q1 15:Q1 16:Q1

Number Employed Collision Claim Frequency

Number Employed, Millions

Overall Collision Claims per 100 Insured Vehicle Years

39

Accidents Are Getting More Expensive

Source: Fast Track Monitoring System, Insurance Information Institute.

The average claim size has risen steadily since 2010.

3.9%

3.1%

0.1%0.5%

-2.3%

-0.1%

2.8%

1.3%

4.1%

1.3%

5.7%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

An

nu

al

Ch

an

ge

Collision Claims: Severity Trending Higher in 2009–2015

40

Why Are Accidents More Expensive? Repair Costs

Indexed so 2004 = 100.

Source: Insurance Information Institute, Bureau of Labor Statistics.

The cost of repairing autos is rising faster than overall inflation.

100

105

110

115

120

125

130

135

140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Body work Overall inflation

Cost of Body Work Is Rising Faster Than Costs Overall

41

Severity: Driving Fatalities Are Rising

Annual Change in Motor Vehicle Deaths

Source: National Safety Council, Insurance Information Institute.

-7.0%

-5.9%

2.2%1.5%

2.0%

0.7%

-0.4%

0.1%

-2.5%

2.2%

1.0%

3.6%

-1.4%

0.4%0.9%

-0.1%

-3.0%

-9.5%-9.0%

-2.4%

-0.1%

3.1%

-2.9%

0.1%

8.0%9.0%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Driving has been getting safer for decades, but recent trend is discouraging—38,300 deaths in 2015.

Seatbelt Use Rose to 62% of Drivers, From 49% in ‘90

Big Drop-off Due to the Great Recession

On Track for 18% Increase in Two

Years

42

Cost of Auto Insurance – Strategic Plan

1. Communicate to both policymakers and drivers why auto insurance costs are increasing.

2. Explain that auto rates are determined by a number of factors.

3. Provide I.I.I. member company communicators/government affairs staff, advocacy trades and state trades with the economic reasons that auto insurance costs are on the rise.

4. Empower drivers with ways they can reduce auto insurance costs and provide information on how they can shop for auto insurance and get the best auto insurance policy for their needs at the most competitive cost.

Goals

43

I.I.I. Strategic Plan on Auto Insurance

Auto insurance costs are rising.

More people are working, which means more people are driving for both work and pleasure. This means more collisions.

The severity of those collisions is increasing with more fatalities and serious injuries. Speed limits are increasing in many states. Quite simply, speed kills.

The costs associated with these accidents is also increasing with more people buying expensive cars that are more expensive to both replace and repair.

Medical costs and litigation costs are also on the rise.

Key Messages

44

I.I.I. Strategy on Auto Insurance

When talking about the issue we are careful to not use the word “rates” as we do not what to be accused of predicting where “rates” are headed.

Instead, we will be very disciplined in using the word, “costs.” So, we plan to say, the cost of auto insurance are on the rise.

The advocacy trades agree with this way of framing the issue and since the advocacy trades and government relations staff at I.I.I. member companies are on the front lines of this issue, all messaging is carefully vetted by those most involved.

Assist individual I.I.I. member companies in their communications strategies as needed.

Key Tactics

45

I.I.I. Produced a White Paper on Personal Auto InsuranceDistributed Broadly Within the Industry and to Key Media Outlets

Larger Claims Drive Costs Higher

News Release Widely Picked up

46

Key Tactic –Infographic and Consumer ArticlesWhat Determines the Cost of Auto Insurance

Useful TacticsWhen Confronting CFA and

Others

47

Strategic Plan on Auto Insurance

Florida

Georgia

Maryland*

Michigan

Nevada*

South Carolina

Washington, D.C.*

*These states identified by PCI on 11/11/ 2016 as of concern.

Work with the Advocacy Trades In Key States

I.I.I. will make its chief actuary, economist, president and other subject matter experts available to speak to policymakers, editorial boards and other opinion makers in key states.

48

I.I.I. Strategic Plan on Personal Auto Insurance Costs

Create a consumer-facing campaign on how to shop and save money on auto insurance for both traditional and social media. This will include reaching out to national consumer media such as the morning talk shows, as well as bloggers and print reporters.

The goal is to empower consumers so that they know they have options if they find out the cost of their insurance is going up and to make the point that auto insurance is a highly competitive marketplace where drivers have many choices.

Part of this campaign will include a Satellite Media Tour to reach targeted media in key states along with the broadest number of social and traditional news outlets

Provide Consumers with Actionable Steps

49

I.I.I. Strategic Plan on Personal Auto Insurance Costs

Monitor social media to learn more about the tone of the conversation and concerns about rising auto costs. Use this information to refine messaging on the issue.

Promote I.I.I. consumer article, “Why did my auto insurance cost go up when I did not file a claim.”

Promote I.I.I. consumer resources (articles, videos, infographics) on how to shop for and save money on auto insurance to consumer organizations.

Provide Actionable Steps

50

Tactics Completed

Published white paper, “Rising Auto Claims Costs Put Upward Pressure On Price Of Insurance

Broadly distributed the paper within the industry, including the state insurance trade associations and through social channels.

Briefed national news outlets such as the Wall Street Journal, CNBC-TV, Atlanta Journal Constitution and others about the key reasons costs are increasing. A number of news outlets also filed stories including Business Insurance, CNBC.com, and MarketWatch.

Created PowerPoint slides based on the white paper for use by I.I.I. member companies.

51

Tactics Completed

Created an infographic (to accompany a consumer article) explaining how rates are calculated. It was used to defend the industry when traditional underwriting criteria came under attack from the Consumer Federation of America (CFA) and others.

I.I.I. spokespeople have given presentations: “Auto Insurance Trends”, to the Insurance Council of New Jersey (October 14); and Personal and Commercial Auto Insurance Trends to policymakers in Georgia.

I.I.I. subject matter experts appeared on NBC’s Today Show (June 20) and NBC’s Nightly News (July 1) to discuss auto insurance cost drivers.

Discussion

Input on Next Steps

Financial Snapshot: The Property/Casualty Insurance IndustryNovember 14, 2016

Steven Weisbart, Ph.D., CLU, Senior Vice President and Chief Economist

Insurance Information Institute 110 William Street New York, NY 10038 Office: 212.346.5540 Cell: 917.494.5945 stevenw@iii.org www.iii.org