Top 10 National Insurance Journal Stories of 2021
News about two proposed but unrealized insurance acquisitions were the top national stories published by Insurance Journal in 2021, a year in which news on COVID-19 and ransomware also continued to dominate. Reports on the twists and turns of broker Aon’s bid to purchase rival Wills Towers Watson grabbed the most interest.
That ill-fated deal was followed by Chubb’s spurned bid to acquire The Hartford. Readers closely followed that business drama as well. A completed acquisition by Farmers also garnered attention.
Stories on teens losing interest in driving and companies hit by ransomware hackers, along with reports on employment matters related to COVID-19 and the Jan. 6 attack on the nation’s Capitol interested a lot of readers. What Allstate’s CEO had to say about agents cracked the top 10 also.
Here are the Top 10 National Insurance Journal news stories of 2021
It was March, 2020 when Aon proposed buying Willis Towers Watson in a $30 billion deal to create the world’s biggest insurance brokerage. They began selling the merger as about “getting better, not bigger” and as a benefit to innovation in the industry. Before the end of the year, the European Union had opened an antitrust review of the deal. Also the two brokers announced their post-merger leadership team. In early 2021, Australian regulators raised concerns. The firms still hoped for a first half closing. By spring, it became clear that the brokers would need to sell off some assets to accommodate the EU watchdogs. They agreed to do so, including pursuing one deal involving competitor Arthur J. Gallagher as the buyer. But then in early summer, the U.S. Justice Department announced it would sue to block the transaction as anti-competitive. By this time other countries, including Canada, South Africa and Singapore were also examining the antitrust implications of the merger. By late July, Aon and Wills accepted that the U.S. officials were not satisfied with the concessions offered and were unlikely to approve the merger. On July 26, Aon and Willis announced they had “reached an impasse” with the U.S. and agreed to terminate their $30 billion agreement and end litigation with the U.S. Aon would pay a $1.4 billion termination fee to Willis. The two brokers prepared to move forward independently. U.S. Attorney General Merrick Garland welcomed the decision by the insurance brokers to terminate the deal. “This is a victory for competition and for American businesses, and ultimately, for their customers, employees and retirees across the country,” stated Garland.
2. The Hartford Rejects Chubb’s $23 Billion Buyout Offer
The story broke on March 16: On March 11, Chubb CEO Evan Greenberg had proposed an acquisition of Hartford Financial Services for about $23.2 billion in what would have been one of the industry’s biggest deals in years. On March 23, The Hartford board of directors unanimously rejected Chubb’s unsolicited proposal, deciding that entering into discussions “would not be in the best interests of the company and its shareholders.” In the time that passed between the report of the original offer and the final rejection, analysts weighed in on Chubb’s bid for “significant scale” and Hartford’s “crown jewel” of small commercial business as well as how it made sense as a personal lines “chess move.” Insurance Journal later reported that Chubb actually made three offers, Allianz mulled making its own offer, and CEO Greenberg expressed his disappointment the deal never happened.
3. Workers Refusing Covid Vaccine Could Lose Their Jobs
This report was relatively early in the ongoing debate around vaccine mandates for employees that has grown and is still playing out in offices, factories, hospitals, airports, the military and the courts. Employee vaccine mandates by governments, companies and organizations have helped increase vaccination rates but they have been opposed by some unions, rights groups and states, as well as by citizens claiming religious exemptions. The Biden Administration is pushing for an employee vaccine mandate or testing requirement in firms with 100 or more employees. The Supreme Court will take up the legality of the Biden mandate in early January. A separate mandate potentially affecting more than 17 million workers in about 76,000 health care facilities that receive federal Medicare or Medicaid funding is also before the Supreme Court. If such a mandate is approved by the high court, the Occupational Health and Safety Administration could begin issuing citations of companies not in compliance soon thereafter.
4. Today’s Teens Are in No Rush to Start Driving
The trend that began with millennials has been amplified by Generation Z, with teens putting off getting a driver’s license. Some prefer more environmentally friendly transportation, some found driving too stressful and some just don’t care about cars. J.D. Power researchers found that millennials now account for a higher percentage of new car buyers than any other age group, but Gen Z is fine with waiting for wheels. Previous research has noted that it is a lot harder for teens to get a license than it used to be since states have imposed new restrictions and cut back on driver’s education. It also seems in line with a 2020 observation that how young Americans have been going through other rites of adulthood — finishing school, getting a job, moving out on one’s own, getting married, having kids — at later and later ages, too. Whatever the reasons, it may be safer to wait. Despite less driving during the pandemic, traffic fatalities were way up. But the good news is that crash avoidance features and teen-specific vehicle technologies have the potential to prevent or mitigate up to three-quarters of fatal crashes involving teen drivers, the Insurance Institute for Highway Safety reported.
5. Goosehead Insurance Fires Employee Who Was at Jan. 6 Capitol Hill Riot
An executive at a Texas-based national insurance agency was fired on Jan. 7 for allegedly participating in the violent attack on the U.S. Capitol on Jan. 6. Insurance Journal obtained a copy of an internal company email from the CEO confirming the firing was due to the former executive’s involvement in the Capitol Hill riot. This was one of the first such reports of people losing their jobs over the events of Jan. 6 that brought attention to the rights of employers and employees in such situations.
6. Insurance Broker Gallagher Sued Over Ransomware Attack
Ransomware was all over the news this past year, including the insurance news. The fact that this major broker was hit by hackers and then sued over the incident caught the attention of a lot of readers. The plaintiffs alleged that Gallagher failed to follow federal and state government and industry standards to protect their personal information from hackers and failed to adequately notify or help individuals whose information was stolen. Many readers were perhaps grateful it was not their company that was victimized. The proportion of businesses targeted by cyber criminals in the past year increased from 38% to 43%, with over a quarter of those targeted (28%) experiencing five attacks or more, according to the Hiscox Cyber Readiness Report 2021.
7. Farmers Completes Acquisition of MetLife Auto & Home Business for $3.9 Billion
With so much in the news about mergers that never reached fruition, this news concerned one that actually closed. The business acquired included 2.4 million MetLife Auto & Home policies, $3.6 billion of net written premiums (2019) and 3,500 employees. The deal provides the Zurich subsidiary Farmers brand an opportunity to gain more of a national presence and strengthen its position a major personal lines carriers in the U.S. Jeff Dailey, chief executive officer for Farmers Group, called the deal a “milestone” in his company’s nearly 100-year history. MetLife President and CEO Michel Khalaf said the sale would allow the life insurer to focus on its “core strengths.”
8. Allstate CEO Strategy: More Independent Agents But No More ‘Human Modems’
As it builds on its purchase of National General, Allstate Chief Executive Tom Wilson said his company wants more agents who will be there to talk to customers in depth, not punch data into a computer to get a quote. “There’s no future in that – no need for a human modem anymore,” Wilson said. The insurer expanded its network of agents even as it also continues to grow sales over the Internet and telephone. Allstate’s strategy includes exiting the life insurance and annuity businesses to concentrate on property/casualty. It is also banking on remote work. With many employees choosing to work remotely, the insurance giant is selling its offices in Northbrook, Illinois in a deal worth $232 million. The complex in a Chicago suburb has several buildings that total 1.9 million square feet on a 186-acre lot. Allstate has nearly 42,000 employees across the country.
9. MarshMcLennan Fills Its Talent Pool in the Wake of Aon-Willis Merger
While Aon and Marsh were busy working on their merger deal, MarshMcLennan, parent of the largest insurance broker Marsh, was capitalizing on the disruption to add to the pool of talent that it already had. MMC CEO Dan Glaser said his firm added 500 new employees in the fourth quarter of last year, many of whom were from Aon and Willis. Other companies including Lockton, Howden, Alliant, TigerRisk and Miller also reported hiring Aon executives. In an August call with analysts, Glaser said Marsh has been able to capitalize “on the opportunity they see with their two biggest competitors having some element of distraction and uncertainty.” Indeed, he said, MMC’s level of new hires from Aon and Willis after their merger was announced last year was “three times higher on a net basis than it was in the 15 months prior to the announcement.”
10. CNA Paid $40 Million in Ransom After March Cyber Attack
CNA Financial Corp. paid $40 million in late March to regain control of its network after it was hit by a ransomware attack. The Chicago-based commercial insurer, which sells cyber insurance, paid the hackers after data was stolen and officials were locked out of their network. The attackers pressured the insurer to pay up quickly by raising the ransom demand, claiming the data they had was critical, and promising they would help restore everything if the company paid up. The story became part of the larger debate over whether ransom should ever be paid at all and whether the insurance industry itself encourages ransom seekers because it is willing to pay. The FBI discourages organizations from paying ransom because it encourages additional attacks and doesn’t guarantee data will be returned. The ransomware attack on CNA was among the major attacks reported in 2021. In May, Colonial Pipeline Co., operators of the pipeline that provides nearly half of the East Coast’s fuel supply, paid DarkSide, a ransomware gang believed to operate out of Russia, $4.4 million in Bitcoin and in June, JBS Foods USA paid a ransom of $11 million in Bitcoin. Increasing ransomware attacks have been a game changer for the cyber insurance market ad among the reasons insurers have been rethinking their approaches to the cyber insurance market and why cyber insurance prices have kept rising.