AI in Insurance
In the right hands generative AI can cut the bias from insurance decisioning
Advances with artificial intelligence is making it harder to spot deep fakes. What are individuals and businesses to do in relation to their interactions with the digital world? With certain business sectors, is the impact set to be greater?
It would appear to be with key sectors where fraud can take place, such as finance in general and the insurance sector specifically. But in what form might the hazard present themselves?
To help to answer this, an insurance expert (Arity’s Peter Levinson) has been considering the role of generative AI (and its rapid adoption) in the wider insurance market – particularly when it comes to individual rate pricing from insurers using it to predict risk.
While AI is not brand new to the industry, Levinson says that the renewed attention on AI is unearthing an opportunity for insurance to update its historically complicated (biased) relationship with AI to use data for good.
Considering first the role of artificial intelligence in sectors like insurance, Levinson recounts: “AI has been a key component of the insurance industry for decades. One of its most widely recognized use cases is usage-based automotive insurance programs that help carriers price customers more accurately and fairer based on how they drive and their behaviors driving, not by who they are or where they live.”
However, the current trajectory is significant, leading Levinson to observe: “The renewed attention and focus on AI right now is unearthing an opportunity for the industry to refresh its historically complicated and often biased relationship with AI and take the opportunity to find a path forward to use data for good.”
In terms of how?, Levinson says: “By putting customers first – ensuring customers know exactly how and why their data is being used and how it benefits them. Then, by creating highly personalized, unbiased insurance programs that cater to individual needs.”
News
World registers hottest day ever recorded on July 3
Monday, July 3, was the hottest day ever recorded globally, according to data from the U.S. National Centers for Environmental Prediction.
The average global temperature reached 17.01 degrees Celsius (62.62 Fahrenheit), surpassing the August 2016 record of 16.92C (62.46F) as heatwaves sizzled around the world.
The southern U.S. has been suffering under an intense heat dome in recent weeks. In China, an enduring heatwave continued, with temperatures above 35C (95F). North Africa has seen temperatures near 50C (122F).
Personal Lines Driving Premium Growth; Commercial Lags: Swiss Re Analysis
After 15 consecutive quarters of lagging premium growth in commercial lines, personal lines became the main driver again, according to a Swiss Re report released last week.
According to the reinsurer’s U.S. P/C outlook report, first-quarter 2023 direct premiums written were 8.4 percent higher than in first-quarter 2022.
The net combined ratio, at nearly 103 percent, was the worst first-quarter underwriting result in over a decade.
Swiss Re noted the increase was driven by strong rate gains in personal lines and commercial property.
Fireworks damage? Your insurance policy might cover that
Fireworks caused $59 million in direct property damage in 2021, according to the National Fire Protection Association.
Homeowners and renters insurance pay claims for property damage and liability.
There are exceptions to coverage, though. For example, a policy may have exclusions that deny claims for illegal fireworks.
Fireworks-related damage may be covered by your renters or homeowners insurance policy — but not always.
“The very short answer is: Usually there’s coverage,” said Peter Kochenburger, executive director of the insurance law program at the University of Connecticut and deputy director of the university’s Insurance Law Center.
“It does depend on a number of details,” he added.
What homeowners and renters insurance likely cover: - The typical homeowners insurance policy has two coverage areas. - One is for property: your home and the things in it. The second is for liability; this covers you if you’re liable for injury or property damage to another person, perhaps a friend or neighbor harmed by an errant firework. The latter coverage is generally available anywhere your liability occurs in the U.S. - A renters policy is similar but wouldn’t cover the physical structure of the home — only the things in it.
Fireworks caused $59 million in direct property damage in 2021, according to the most recent data from the National Fire Protection Association.
Analytics Company Says Sponsored Google Search Returns Driving Litigation Surge
National law firms are investing $10 million to $12 million annually each to direct Google searches to websites that they control in an effort to find new clients to file lawsuits against insurance companies, according to 4Warn, a New Hampshire-based data analytics company.
Joseph Petrelli, co-founder of 4Warn, says that the surge in new litigation created by search-engine optimization techniques led directly to the insolvency of several Florida insurance carriers. His company provides consulting services to insurers to mitigate against what Petrelli calls “technology enabled claims instigation.”
Petrelli said his company searched for patterns after purchasing from Google a database with trillions of search engine results related to insurance. He and 4Warn cofounder Todd Kozikowski presented their findings during a webcast last week with Artemis, a website that reports on the reinsurance industry.
“We’ve always had litigation in the insurance industry,” Petrelli said. “What we are talking about now is the ability to accelerate claims frequency by opportunists.”
4Warn is not the first company to note an increase in insurance litigation. Lex Machina reported last month that there was a 30% increase in the number of lawsuits involving insurers in federal court since last year. The number of federal insurance lawsuits has been rising steadily since 2017, Lex Machina said.
Petrelli said the impact of a successful lawsuit against an insurer once went no further than the cost of the award. But that was before technology.
“Now the litigator can get funding via a litigation marketing firm and say, ‘Go find me as many policyholders as you can of XYZ Insurance Co. because they have a bad policy provision,” he said. “The opportunists know that it going to take at least a year for a filed correction the department of insurance to address the issue until that gets rolled on to the other policyholders.”
Commentary/Opinion
Did SCOTUS Just Kill DEI? | Insurance Thought Leadership
The U.S. Supreme Court decision banning the use of race in college admissions imperils corporate programs on diversity, equity and inclusion.
Ever since the U.S. Supreme Court handed down a decision last week that bars affirmative action in college admissions, I've been waiting for the other shoes to drop. And they are starting to. Many are wondering, in particular, not just about what happens to talented kids of color as they apply to elite universities but about the effects on diversity, equity and inclusion (DEI) programs at corporations.
I don't expect the effects will be major in the short term, but the win at the Supreme Court will surely embolden those arguing that race can no longer be a factor in decisions about hiring and promoting and will lead to all sorts of legal challenges. So, companies should keep a weather eye out to make sure that their DEI programs stay within the changing boundaries of the law.
The issue is especially important in the insurance industry, which -- to its credit -- has been attentive to DEI.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Viewpoint: 5 Tips for Creating More Seamless Claims Technology
No matter where you stand in the insurance ecosystem, all roads lead back to the prime directive – serving insured parties in their hours of need. We’re here to fulfill the promise of insurance by analyzing losses, collecting information, and facilitating benefit claims.
We can’t do the claims professional’s job without the support of technology. In my nearly 30 years of industry experience – as a fraud investigator, adjuster, third-party administrator, claims manager, and senior claims management executive – I’ve watched that technology mature. My present role as head of claims for a complex, multi-tiered organization, responsible for a wide of range of P&C business involving multiple programs, including commercial property and general liability, as well as auto and personal accident, has given me a unique perspective on what’s required to develop robust technology that supports us and insured parties in the most substantial ways possible.
Technology is a pain point. My team supports numerous distinct entities, operating differently, that all need to communicate. We’ve had different payment codes, reserve codes, note entries, and audit structures. Complicating matters was the issue of legacy platforms and those modernization and integration issues. Any time you make a transition, one big challenge is simply getting payments out. We knew that any platform had to have a claims repository to hold financial and demographic data, and images. Additionally, to build out a general ledger for billing and to communicate with the bank, the system also had to integrate the accounting function. So, IT, accounting, operations, and adjusters all use the system in different ways, but all need to be on the same page.
Louis Pippen, Chief Claims Officer, Venbrook Group
InsurTech/M&A/Finance💰/Collaboration
Ford Pro Insure, backed by Pie Insurance, debuting in 3 states
Ford Pro Insure, which offers coverage for commercial vehicles and fleets, is launching in Arizona, Illinois and Tennessee, according to the automaker, which reported it expects to expand to other states later this year.
Pie Insurance is handling distribution, underwriting, servicing and claims duties, and policies will be issued by policies issued by The American Road Insurance Company, an admitted insurance carrier and subsidiary of Ford Motor Company and Ford Credit.
The policies will also allow fleet owners to leverage vehicle data to enhance safety, improve efficiency and lower insurance costs, according to the automaker.
According to Jim Drotman, Ford Pro FinSimple executive vice president of commercial financing and insurance, the carmaker is working to establish capabilities in areas important to commercial customers, with insurance being among those critical spaces.
Drotman explained that Pie’s background in commercial coverage will allow the company to quickly offer a seamless financing and insurance option to customers.
“Ford Pro customers have come to expect a complete set of products and services that ensure their fleets are the most efficient and productive business tools they can be,” Drotman said in a release. “Insuring their vehicles through Ford Pro Insure will be an important part of that seamless experience that helps many business customers lower their total cost of fleet ownership.”
The Role Of Insurtech In The Changing Workplace
Brian O’Connell of insuranceQuotes.com shares how employers leverage insurtech to improve employee benefits and navigate the changing workplace landscape.
Intro: Highly publicized trends like great resignation and quiet quitting significantly impact the workplace, so employers are turning to innovations to streamline and enhance employee benefits to improve employee recruitment and retention, says Brian O’Connell of InsuranceQuotes.
With the U.S. workplace in significant turmoil in 2023, employers are pivoting to more robust employee benefits and perks, with insurance technology expected to play a key role.
Remote work, rising layoffs, talk of a significant recession, and rising demand for more (and better) benefits and safer workplace safety all present a major challenge for employers, who increasingly rely on expanded insurance services to accommodate anxious employees.
“There’s a significant trend toward digitization of insurance services, which have traditionally been transacted via phone, fax, and paper,” says Josh Butler, chief executive officer at CompScience, an AI-based insurance company in San Francisco, Cal. “Now employers expect telemedicine, 24/7 phone-based nurse triage, and electronic claims filing, accelerating care administration and helping people to return to full employment as soon as possible.”
Accelerant Secures $150 Million in Funding Led by Barings LLC, Valuation Hits $2.4 Billion
Atlanta-based insurance company Accelerant has successfully raised $150 million in a recent funding round led by Barings LLC, a global investment firm owned by MassMutual.
This investment has placed Accelerant’s valuation at an impressive $2.4 billion, according to a report by Bloomberg.
This latest funding round comes on the heels of a successful fundraising effort last year when Accelerant secured approximately $190 million at a pre-money valuation of $2 billion. The company, which acts as a bridge between underwriters and capacity providers, has been steadily attracting investors and expanding its operations.
People
Insurance Disruption as a Purpose: MAPFRE Director of Transformation at ITC DIA Europe
Mónica García Cristóbal discussed a third wave of disruption in insurance, and principles MAPFRE applies to its transformation initiatives.
(Mónica García Cristóbal of MAPFRE on stage at ITC DIA Europe 2023.)
Mónica García Cristóbal, Director of Transformation, MAPFRE (Madrid) led with a question about whether disruption is happening in insurance during her keynote address, “Disruption as a Purpose” at ITC DIA Europe 2023 in Barcelona.
“Recently someone told me that insurance sector is like a bicycle—once you have an optimal design, there is little reason to change, and insurance hasn’t changed much in the last 100 years.”
García Cristóbal asked whether people shared this view or saw insurance as changing significantly, if in barely perceptible ways. Thinking that insurance has not been—or is not being—disrupted, suffered a flaw, she suggested. It failed to take into account very significant technological changes that are reshaping society, from the emergence of e-commerce to rapidly evolving artificial intelligence applications.
Insurance Innovation Reporter
Canada
Home-sharing app specifically for insurance to go national
A home-sharing digital platform dedicated to insurance is expanding nationally to help adjusters find temporary accommodations for insureds.
Tens of thousands of Canadians have been forced to evacuate because of an active wildfire season, and a new home-sharing digital platform dedicated to insurance is expanding nationally to help adjusters find temporary accommodations for insureds whose homes have been damaged and need interim relocation.
First launched in Quebec in 2016, SiniSTAR is an online marketplace platform connecting insurers and property owners. The company enables temporary housing for policyholders to be listed, found, and rented in disaster scenarios such as flood, fire, or tornadoes. Its unique bidding technology is designed to help keep claims costs down for insurers, while finding accommodations that suit the preferred needs of the policyholders.
“It’s a groundbreaking, tech-first product built for insurance companies across Canada, with multiple quotes for housing needs,” Alexis Vertefeuille, CEO and founder of SiniSTAR, told Canadian Underwriter in an interview. “We’re a bidding platform, not a reservation platform, and that’s a huge difference.
“There’s more informed legal documentation and no minimum-length contracts or extensions. We’re reducing costs for insurers, saving time for adjusters, and matching policyholders with the best temporary housing. That’s what we do, and we’re happy to create this home-sharing community across Canada.”