AI in Insurance
Patra Introduces AI to its All-In-One Policy Checking Service Offering, an Industry First
Patra, a leading technology-enabled service provider to the insurance industry, announced the introduction of PolicyChecking.AI, a tech-enabled policy checking service powered by Patra's proprietary (patent pending) automation technology including Artificial Intelligence (AI), Machine Learning (ML), and Natural Language Processing (NLP). PolicyChecking.AI's combination of innovative artificial intelligence, advanced workflows, and trained insurance professionals as 'human in the loop', delivers unsurpassed value and quality for Patra clients.
Policy checking is a critical activity for insurance agencies to ensure their clients are properly insured, and to help avoid legal exposure should their clients experience a loss without the right insurance coverage in place. Traditionally, agencies performed policy checks manually, comparing 100+ page documents against other 100+ documents, as well as data in agency software applications, using only their eyes as tools. Many agencies have long entrusted this critical activity to Patra, whose workflows and global teams have improved efficiency and quality. However, with the launch of PolicyChecking.AI, Patra has materially advanced this critical process for the insurance industry.
Lemonade Sets New Record by Settling Claim in Two Seconds
Lemonade, the InsurTech firm known for its use of AI and machine learning, has achieved a remarkable feat by settling an insurance claim in just two seconds, setting a new world record in the process.
Lemonade has built a reputation for leveraging advanced technology to enhance customer experiences and has now taken a major step forward in streamlining and revolutionizing the insurance claim process.
Reports say that Lemonade through their proprietary claims resolution system, the insurtech managed to settle a legitimate insurance claim within an astonishing two seconds, a feat that was previously considered unattainable.
According to executives, within the two-second timeframe, their chatbot named AI Jim evaluated the claim, checked the policy conditions, performed numerous anti-fraud algorithms, and ultimately approved the claim. The chatbot then swiftly sent the payment instructions to the bank and notified the policyholder of the accepted claim.
“My experience with Lemonade was great! The claim was processed in a few seconds. There is nothing more that I could have hoped for. Thanks again for the support and great service!” wrote Federico F. the customer in question.
“As of today, the time to beat is two seconds. We hope that others will rise to the challenge,” said Daniel Schreiber, CEO and co-founder of Lemonade. “Our #1 job is to be there for our customers in times of need, and being powered by AI lets our claims bot, Jim, review and approve claims fast and with zero hassle for our customers, 24/7. This is what 21st century insurance feels like.”
Currently, the company handles almost half of its claims using AI technology.
AI and email address intelligence: revolutionising insurtech
“In few other industries is AI’s underlying sustenance – data – as abundant and important as in the insurance industry, making the mastery of this area of technology a key competitive differentiator for insurers moving forward into the digital future.” - Deloitte
The insurance industry is on the precipice of a long-awaited revolution. Artificial intelligence (AI) is burgeoning throughout almost every industry, and insurtech specifically, is seeing a push for adaptation and innovation. In this fast-paced world, where success relies on building a sustainable and scalable business model, innovative solutions that effectively tackle industry challenges while staying ahead of the curve are crucial for survival. Among the transformative technologies revolutionising the sector, the convergence of email address intelligence and AI emerges as a game-changer.
According to McKinsey, "as AI becomes more deeply integrated in the industry, carriers must position themselves to respond to the changing business landscape".
Insurtech companies are at a critical juncture where there is potential to either thrive or fail in 2023. To thrive, they must leverage cutting-edge technologies that address challenges including inflation and economic instability, tough funding and cybercrime, while staying ahead of market disruptions.
“The increased emphasis on digital technologies and a greater willingness to embrace change” will position insurtech to better incorporate AI into daily operations, according to McKinsey. By harnessing the power of these two forces, companies can overcome challenges, drive operations, and unlock new opportunities in the evolving dynamic landscape.
Why insurance's mixed feelings over ChatGPT isn't a bad thing
For every person that sings the praises of ChatGPT and other artificial intelligence (AI)-driven technologies, there’s another that sees doom and gloom over AI’s growing influence on insurance.
Experts have called out ChatGPT, a large-language model trained by OpenAI, for its propensity for generating inaccurate text, its potential for biases, and vulnerability to security and privacy risks.
Despite the ambivalence over ChatGPT and AI, one insurtech leader believes it’s still too early to cast judgment on the technology.
“I think we’re so early in this discussion that you’re still seeing those two sides play out,” said Jason Walker (pictured), president of Agency Revolution, a San Diego-based firm that provides websites and marketing automation software for insurance agencies and brokerages in the US and Canada.
“You’ve got people on both sides of the line. Is it good or is it bad for our space, for our industry, for the world at large?” Walker asked. “But from our perspective, there are pragmatic applications for AI that can be used today to empower the insurance agency.”
New advancements in insurance always create initial trepidation, Walker pointed out. It wasn’t that long ago that the industry was rocked by these AI-powered platforms.
“Some platforms that ultimately did not make it because they weren’t returning correct results, or they didn’t have the proper integrations with solutions that were already in the space,” he said. “The fear factor decreased as the solutions continued to evolve and proved that it is possible to allow a consumer to do accurate rating online, or at least with the agencies’ help.”
Walker compared rating and quoting platforms to ChatGPT because both “handle sensitive information in an industry that’s highly regulated.”
News
S&P forecasts further increases in P&C insurance premiums through 2023
“We expect P&C insurance premiums for commercial properties, including multifamily, will keep rising through 2023,” suggests S&P Global Ratings credit analyst Raymond Kim.
Its review found that from 2020 to 2022, expenses for rated multifamily affordable housing properties in the U.S. increased by a higher percentage year over year than revenues.
S&P Global Ratings says that property insurance premiums are an increasing percentage of total expenses, a trend that will likely continue to accelerate.
According to the rating agency, this is partly due to the material increases in insurance claims resulting from the greater frequency of weather-related damages and the inflation-affected cost of repairs.
“The U.S. P&C market has reported multiple years of elevated weather-related losses, highlighting the burgeoning threat of climate change and the growing importance of secondary perils like convective storms, wildfires, and flooding that exacerbate losses,” explains the firm.
S&P states that the properties with the largest increases in insurance expenses are located in diverse markets throughout California, Connecticut, New York, Virginia, and Washington.
Most property insurers obtain reinsurance to offset the costs of major events such as named hurricanes, however, S&P notes that reinsurance costs have also risen due to widespread weather-related events globally.
S&P believes P&C insurers might reduce their use of reinsurance, which could pressure their premiums by exposing earnings over time to natural catastrophe loss.
The rating agency concludes, “Although we have seen steady increases in expenses across rated low income housing tax credit properties, property owners have been able to raise rents to levels that have maintained strong debt service coverage.
“We will continue to monitor the insurance sector to identify any trends such as providers exiting markets or implementing severe increases in deductibles and premiums that could affect rating stability.”
Best’s Special Report: U.S. Property/Casualty Industry Posts $8.2 Billion Underwriting Loss in First-Quarter 2023
The U.S. property/casualty (P/C) industry saw an $8.2 billion net underwriting loss in the first quarter of 2023, compared with a $3.4 billion gain in the same prior-year period, according to preliminary financial results.
This financial review is detailed in a new Best’s Special Report, “First Look: Three-Month 2023 US Property/Casualty Financial Results,” and the data is derived from companies’ three-month 2023 interim statutory statements that were received as of May 30, 2023, representing an estimated 98% of the total P/C industry’s net premiums written.
According to the report, the combined ratio for the P/C industry deteriorated by 6.1 percentage points to 102.0 in the first quarter of 2023 compared with the same period of 2022. Catastrophe losses accounted for an estimated 6.9 points on the three-month 2023 combined ratio, three points higher than in the prior-year period.
Commercial insurance prices rise in Q1: WTW
U.S. commercial insurance prices increased 5.6% in aggregate during first-quarter 2023, up from 4.8% in fourth-quarter 2022, according to a report Tuesday from Willis Towers Watson PLC.
The first-quarter Commercial Lines Insurance Pricing Survey compares insurance prices on policies underwritten during the first quarter of 2023 to those charged for the same coverage throughout the same quarter in 2022, a Willis statement said.
Commercial property saw the largest hike with a double-digit increase, trending higher than in the prior quarter. Commercial auto also saw a double-digit increase, albeit slightly lower than in the prior quarter, Willis said.
Workers’ compensation and directors and officers liability saw price decreases similar to the prior quarter.
Survey data is based on both new and renewal business figures obtained directly from insurers underwriting the business. For this most recent survey, 43 participating insurers representing approximately 20% of the U.S. commercial insurance market, excluding state workers compensation funds, contributed data, according to the statement.
Cyber Insurance Premiums Surge by 50% as Ransomware Attacks Increase
US cyber insurance premiums surged 50% in 2022 as increased ransomware attacks and online commerce drove demand for coverage.
Premiums collected from policies written by insurers reached $7.2 billion in 2022 and tripled in the past three years, ratings firm AM Best said in a study released this week.
“Systematic risk is an ongoing concern,” Fred Eslami, an AM Best associate director, said in a statement. “Ultimately, the coverage provided to insureds may be decided by the risk appetite of the insurer, and to a certain extent, the coverage that reinsurers are willing to provide.”
Insurify: 10 U.S. cities with the highest flood risk
The Federal Emergency Management Agency (FEMA) reports that just an inch of water inside a home can cause as much as $25,000 worth of damage.
It follows that flooding is among the most destructive of major property-loss events.
And it’s not just coastal cities that live with the ever-present risk of flooding. Communities near rivers and aquafers also are at risk, and hurricane-related storm surge is a serious threat, too.
Although some states such as Louisiana and Florida are well-known for their high-flood risk, it’s less common for risk watchers to discuss cities, which is why some of the cities in the U.S. with high flood-risk scores may be surprising.
The slideshow above illustrates 10 U.S. cities that are among the most risky for damaging flooding, according to Insurify.
Insurify researchers paired FEMA’s 2023 flood risk scores with each city’s population, average home insurance costs and average home value in order to determine a geographically specific flood-risk score.
High-flood risk can negatively impact property values. But flooding experts often issue the following warning: Anywhere it can rain, it can flood. And that’s everywhere.
InsurTech/M&A/Finance💰/Collaboration
Precedent closes $9 million in Seed funding round as it introduces capability to digitize demand handling
Precedent, the insurance industry's first Digitized Demand Handling technology, announced today that it has closed $9 million in Seed funding, provided by Adir Ventures (Adir). The new capital will be used to bring Precedent's suite of products to more insurers as well as broaden and accelerate new product development.
The Seed financing follows Precedent's successful launch in late 2022 and incredible initial traction among the top Property and Casualty carriers in the United States. Precedent has a robust pipeline of top-tier insurance carriers. They are also adding and expanding partnerships with the major claims management, injury evaluation, and core systems platforms.
"This Seed equity round from Adir allows us to define this new category and assist the industry in efficiently resolving claims with plaintiff attorneys." - Grant Little
As part of the investment, Barry Karfunkel of Adir will join Precedent's Board of Directors and serve as the Chairman of the Board.
"Precedent's offering is well-timed to meet the growing interest in creating efficiency in the claim handling process while also reducing severity of liability claims," said Barry Karfunkel of Adir. "We believe the compelling ROI for Precedent's customers will drive broader market adoption of Precedent's technology, leading to more accurate outcomes, lower costs and new efficiency gains for insurers."
"Digital integration between insurance carriers and providers, such as body shops, revolutionized claims efficiency and customer service. Customers can now report a claim, receive an estimate, and arrange for repairs straight from their phones. Body shops utilize digital exchange platforms that verify auto damage estimates before submission, drastically reducing cycle time and rework. In contrast, plaintiff attorneys and insurance carriers' still use outdated means like mail, fax, and email to exchange critical and time-sensitive information. This paperwork requires manual review, leading to delays, inconsistencies, and costly variation in processing. Precedent's proprietary technology, trained on millions of pages of attorney documents, can identify, extract, and advise next steps."
Grant Little, Precedent CEOstated, adding "this Seed equity round from Adir allows us to define this new category and assist the industry in efficiently resolving claims with plaintiff attorneys, Adir's financial support, domain expertise and relationships will be extremely beneficial to us as we continue to grow."
High Definition Vehicle Insurance Announces New In-House Claims Organization, Expands into Oklahoma Trucking Insurance Market
High Definition Vehicle Insurance (HDVI), a commercial auto insurance provider, announced it will now process claims in-house to deliver a more streamlined, efficient and customer-focused experience. The company also launched its insurance products for commercial trucking fleets in Oklahoma, for policies effective beginning July 1.
“HDVI understands the significant impact claims processing times can have on fleets,” said Karla Ferguson, director of claims. “An efficient claims process ensures damaged vehicles are repaired or replaced promptly, minimizes downtime, and reduces the financial burden by providing timely reimbursement for repairs, medical expenses, or property damages.”
Ferguson leads a best-in-class claims team with over 60 years of combined experience working on claims in the trucking industry and a deep understanding of the unique challenges and risks associated with operating a fleet of semis. HDVI’s claims experts are aligned with its fleet services team to ensure they are aware of losses quickly, have access to related telematics data, and can tap into and understand how a particular fleet operates.
“By utilizing telematics data, our team can offer a more precise account of the accident, aiding in the determination of fault and the extent of the damages incurred, which can reduce the likelihood of fraudulent claims and ensure efficient, fair claim resolution,” Ferguson added.
Driver Technologies Closes $6M Strategic Funding Round
Driver Technologies Inc., an AI-based mobility tech company, announced the closing of a $6 million strategic funding round led by New York-based investment firm, IA Capital, and CT Innovations, the venture capital arm of the State of Connecticut.
Major insurers also participated in the round including Liberty Mutual Strategic Ventures, State Auto Labs/Rev 1, as well as investors from The Social Entrepreneurs’ Fund, ID8 Investments, C2 Ventures and Kapor Capital.
With the closing of this round, Driver Technologies has now raised more than $16 million.
“Our mission each day is to create a solution that helps democratize road safety for drivers as well as for everyone on our roads and streets,” said Rashid Galadanci, CEO and co-founder of Driver Technologies, in a company press release. “This funding will allow us to reach more drivers, reduce preventable accidents and limit distracted and drowsy driving, all while delivering privacy-focused, safe-driving savings to drivers, fleet owners and insurers. We also intend to expand our professional driver solution into international markets.”
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