AI in Insurance
Technology Is Moving Fast; Can Insurers Keep Up?
As evidenced by the recent popularity of generative AI tools, the tech landscape in insurance seems to be moving at an increasingly fast pace.
“The AI space as a whole is moving faster than I think we’ve ever seen any technology move, ever,” said Jason Kolb, founder and CEO of InsurTech Dais. “In the 20 years that I’ve been in technology, I’ve never seen anything move this fast.”
But how can insurers weigh the challenges against the opportunities? Anand Rao, global AI lead at PwC US, said that this can be a tricky balancing act for insurers as, in some cases, technology seems to be evolving faster than the time it takes to even implement it into an organization.
“I think what’s interesting about the dynamic from the technology side is things are moving much faster than the way in which insurers are able to cope,” he said. “All these things are coming one after the other. It’s not that the insurers are not acting but that the pace at which they’re acting and the pace at which the technology is moving is sort of difficult to cope — not just for insurers but for anyone, for that matter.”
Elizabeth Blosfield, Deputy Editor, Carrier Management
Amid Wave of AI-Related Risks, Will Insurance Be Enough to Protect Companies?
In face of the spike in AI-related litigation over the past couple of months, such risks could soon prove costly for many organizations, leaving companies with one last barrier of defense: insurance.
While there is no such thing as an AI-specific insurance policy—yet—enterprises’ existing coverage may protect them against some of the litigation threats created by artificial intelligence. But as the risk for regulation and waves of lawsuits grows, the extent to which insurers will protect companies is uncertain.
During the “Insurance Considerations for Deploying AI/ML Tools and Technologies” webinar hosted by Clark Hill on Wednesday, legal professionals highlighted some of the key risks associated with artificial intelligence and the insurability—or lack thereof—of these risks under traditional coverage.
Does Insurance Cover AI Risks?
While the majority of existing insurance policies don’t explicitly mention AI, legal professionals noted that many of the risks that companies face because of the technology are protected in some shape or form by their existing coverage.
Take for example, the cybersecurity risks that come with using AI or, more recently, with generative AI. Most organizations likely have a cybersecurity policy that may protect them from some of the ransomware, data breach and other cyber liabilities. But the sophistication of cyber threats that generative AI can spur should bolster organizations to take another look at such policies.
“You really need to know what your vendors’ terms and conditions say and what your cyber policy covers,” said Jennifer Stivrins, partner at Kissel Straton & Wilmer.
Still, cyber policies are only one part of the puzzle when it comes to protecting organizations against cyber risks, she said, as other types of policies may also include some limited cybersecurity coverage.
Commentary/Opinion
How digital may help insurance agents deliver financial advice
One of the most interesting aspects of digital transformation in the insurance industry right now is among insurance companies looking to grow through financial planning and advisory services. With demand for financial advice on the rise, insurance companies are in a strong position to win a greater share of wallet, but offering true omnichannel financial advice may not be quite as straightforward.
Adding a digital, investor-led option (often referred to as a robo advisor) is a common starting point, but the world of financial advice is often more nuanced than what a digital-only solution can provide. For example, in a recent WSJ article, much can be learned about getting digital transformation right from life insurance, which has been slower to adopt a digital-first experience, in large part due to the personal nature of those decisions and the discussions that surround them. Innately personal and often very sensitive, it is no surprise that many previous attempts to digitize the process around life insurance policies have been met with resistance.
But with increasing competition, changes in demographics, and advances in technology, financial advice is ripe for a new form of digital transformation – one that puts well-timed, human advice at the center.
Mike Sha, CEO of SigFig
News
July 2023 Labor Market Pulse | The Jacobson Group
The insurance carriers and related activities sector experienced its third consecutive month of record high employment in June, reaching 2,945,300 individuals.
Industry wages are also continuing to rise, with a 6.1% overall increase compared to one year ago. Meanwhile, the insurance unemployment rate rose to 3.2% last month – the highest the industry has seen since June 2021. Yet, this spike is likely an anomaly, given the industry’s recent wage and employment gains.
As we move through the second half of the year, the industry appears to remain largely resilient. We invite carriers to participate in our Q3 2023 Insurance Labor Market Study, conducted in partnership with Aon-Ward, and share their organizations’ expectations for the next 12 months.
AT-A-GLANCE NUMBERS
- Unemployment for the insurance carriers and related activities sector increased to 3.2% in June.
- The insurance carriers and related activities sector gained 3,200 jobs in June.
- At more than 2.9 million jobs, industry employment increased by approximately 32,200 jobs compared to June 2022.
- The U.S. unemployment rate increased to 3.6% in June and the overall economy added 209,000 jobs.
Lemonade's 2023 Giveback Totals More Than $2 Million, Donating to 58 Charities Selected By Customers
Now in its seventh year, the Lemonade community has given back $8,160,775 since the program debuted in 2017, said Scott Harrison, Founder and CEO of charity****
Lemonade, (NYSE:LMND) the digital insurance company driven by AI and social impact, announced its 2023 Giveback, marking the seventh consecutive year of giving back to dozens of local and global charities chosen by customers.
“The most impactful partnerships we have not only build giving into every aspect of the business, but also make generosity the easy choice for customers" said Scott Harrison, Founder and CEO of charity: water.
This year’s Giveback saw $2,008,847 go to 58 nonprofits chosen by Lemonade customers across the United States and Europe, ranging from causes working on better healthcare, humanitarian crises, civil rights, climate education, global poverty, and more. The Lemonade community’s donations since the company’s first Giveback in 2017 now totals $8,160,775.
A cornerstone of Lemonade's business model, Giveback allows customers to support charitable causes of their choosing by directing leftover premiums to organizations in need. Any Lemonade customer can select the charity they’re passionate about when getting Lemonade renters, homeowners, car, or pet insurance policies.
Innovations in the Insurance Industry in 2023
The insurance business has a reputation for being conservative and slow to embrace change. However, due to rapid technological improvements and increasing client expectations, the industry is undergoing tremendous transition.
Innovative technologies are reshaping the insurance industry, resulting in better client experiences, faster operations, and greater risk management. In this article, we will look at some of the most important insurance sector innovations and the benefits they provide to both insurers and policyholders.
Insurtech, or the use of technology to improve insurance procedures, has gained major traction in recent years. Insurtech businesses are utilizing technology to provide policyholders with a seamless and personalized experience.
Mobile Apps and Digital Platforms
Insurtech firms are creating digital platforms and smartphone apps to help customers manage their insurance plans more easily. Policyholders can use these platforms to buy insurance, access policy information, file claims, and pay premiums from the comfort of their smartphones or PCs.
FM Contributors
Solera Unveils Web Browser-based Intelligent Triage, Revolutionizing First Notice of Loss
Solera launches a plug-and-play based artificial intelligence service to help insurers make fast and accurate triage decisions based on damage photos and accelerate claim resolution
Today, Solera Global Corp launches its groundbreaking web browser-based Intelligent Triage solution, eliminating the need for extensive integrations or software installations. This global visual intelligence service empowers claims handlers to swiftly and accurately assess whether a damaged vehicle is repairable or a total loss, right from the First Notice Of Loss (FNOL). Insurers can simply add this solution to their current claims handling workflow, test drive with us and then if desired, can fully automate the triage process through API integration.
“Our product delivers valuable insights, optimizes time for claims handlers and loss adjusters, and keeps drivers safe by keeping unsafe vehicles off the roads says Bill Brower, Solera's VP of Industry Relations
Key Highlights
- Early identification of probable total losses, leading to prompt action and effective resolution
- Intelligent triage compatibility with any estimating platform
- Streamlined processes to save loss adjusters' time, especially for intricate cases
- Prompt identification of potentially unsafe-to-drive vehicles
- Improved policyholder safety and heightened satisfaction throughout the claims experience
- AI powered by an extensive image database, continuously learning and improving
- Smooth API integration with any existing claims management systems
Progressive Implements Mitchell's Estimating Platform to Help Streamline Appraisals of Light-, Medium- and Heavy-Duty Trucks
Mitchell, an Enlyte company and leading technology and information provider for the Property & Casualty (P&C) claims and Collision Repair industries, today announced that Progressive Insurance has implemented Mitchell Cloud Estimating TruckMax to help better manage appraisals of collision-damaged light-, medium- and heavy-duty trucks. Progressive is the largest U.S. insurer of commercial autos, with 16% market share in 2022.
The carrier, also a top seller of motorcycle insurance, first selected Mitchell's cloud-based estimating solution in 2019 for claims involving personal autos and motorcycles.
"With Mitchell Cloud Estimating TruckMax, we can better serve our customers—increasing appraiser efficiency and accuracy while decreasing cycle time," said Kevin Peinkofer, Progressive's Commercial Lines Claims General Manager. "The addition of this new solution means that we now have a single, integrated platform for appraisals of passenger vehicles, motorcycles, and light-, medium- and heavy-duty trucks."
"We look forward to supporting Progressive as it continues to grow its commercial auto and specialty lines of business," said Debbie Day, Executive Vice President and General Manager of Mitchell's Auto Physical Damage division. "Using Mitchell Cloud Estimating TruckMax and our portfolio of technology solutions, the top U.S. commercial auto insurer may complete appraisals and settle claims quickly and efficiently—helping to improve policyholder satisfaction, decrease cycle time and maintain focus on proper, safe repair." Available in the US and Canada, Mitchell Cloud Estimating TruckMax makes it possible for insurers and collision repairers to write estimates on the most common commercial trucks on the road today. It includes more than 57,000 unique configurations for medium- and heavy-duty trucks along with light-duty trucks and vans.
To help insurance appraisers and collision repairers increase estimate accuracy and reduce supplements, Mitchell Cloud Estimating TruckMax features integrated aftermarket parts pricing directly from suppliers, detailed exploded diagrams, in-house authored procedure pages, extensive labor data, and intuitive paint refinish calculations. Carriers may also use it with Mitchell's photo-based estimating technology to complete appraisals virtually. This industry-first, remote workflow can improve appraiser productivity by eliminating the need for in-person inspections on low-severity claims.
Property insurers' ratings under pressure as risk rises, Morningstar says
The credit ratings of global property insurers are coming under pressure as rising reinsurance costs force them to cut back on cover and retain more risks themselves, DBRS Morningstar analysts said in a research note on Wednesday.
Reinsurers, which insure insurance companies, have been raising rates in recent years due to growing losses that industry players say are in part driven by the impact of climate change.
Global reinsurance prices were up 27% in January compared to a year earlier, marking the sixth straight year of increases, Morningstar said, citing preliminary data from U.S. risk and reinsurance group Guy Carpenter.
It was the biggest annual increase since 2006, when prices rose in the aftermath of hurricanes Katrina, Rita and Wilma, the brokerage continued.
"We expect the tougher reinsurance market conditions to continue in the short to medium term, putting to the test insurers' risk management capabilities," Morningstar said, warning this could adversely affect insurers' credit ratings.
The brokerage said insurers who maintain optimum reinsurance levels without increasing premiums would see their underwriting profits deteriorate, while those that cut back on reinsurance cover could see more volatile earnings as risks materialise.
Insurers can opt to pay more for the same reinsurance package, or cut costs by restricting new business, withdrawing from certain regions or business lines or adjusting their strategy, such as by cutting costs on more frequent but less severe perils, Morningstar said.
InsurTech/M&A/Finance💰/Collaboration
Consumer IoT Platform Pepper Intros Cyber Insurance Offering
Pepper, a U.S.-based consumer IoT Platform as a Service (PaaS), has announced the availability of cyber insurance through a partnership with Embedded Insurance.
By leveraging Pepper’s IoT PaaS, partners are able to offer consumers value-add services, such as video storage and cyber insurance, in a seamless, integrated experience through the same app they use to control their connected devices.
The threat of cybercrime continues to grow for US consumers with more than 422 million victims reported in 2022 by the Identity Theft Resource Center. Additionally, the FBI estimates total losses topped $10 billion last year. As the need for cyber insurance increases, partners leveraging the Pepper IoT platform to power their connected consumer products can now offer end users the option to protect themselves from this growing threat. As a result, Pepper’s partners may be able to take advantage of a unique revenue share model while offering value-add services to end users.
With just a few clicks, consumers can sign up for a cyber insurance policy that offers superior digital protection. For a monthly premium starting at $5.28, consumers can protect themselves from a wide range of the most common digital threats, including:
Cyber attacks resulting in stolen financial account funds, fraudulent charges on your payment card, or your U.S. tax refund is paid to someone pretending to be you.
Cyber extortion – Cyber attacks in which someone threatens to share, destroy, use, or restrict you from using electronic data or electronic devices unless you pay a ransom.
Cyber bullying – Harassment or intimidation more than once involving the use of an electronic device leading to wrongful termination, false arrest, unfair discipline by an educational institution, or being unable to attend work or school for more than a week as a result of suffering mental injury.
Identity theft – Someone illegally uses your identity without your consent, usually for financial gain.
Data restoration – Cost to restore electronic data damaged by a cyber attack or cyber failure.
Device replacement – Cost to replace or fix electronic devices damaged by a cyber attack or a cyber failure. IoT B2B
Pepper’s full-stack IoT PaaS helps businesses develop, manage, and monetize connected solutions. From device manufacturers to insurance carriers, Pepper partners with companies providing white labeled solutions to break down barriers for consumer IoT and accelerate speed to market.
New InsurTech Partnership Simplifies the Claims Process for Millions of Policyholders
Bees360, the top provider of drone-enabled property inspection services powered by artificial intelligence (AI), and Hosta AI, the most advanced provider of AI-enabled interior property inspections powered by more than a decade of MIT research, have partnered to transform the insurance claims process.
Inconsistent data collection and varying methods of individual inspectors and adjusters with differing expertise complicate traditional processes in property and damage inspections. With more than six million home inspections conducted annually in the U.S. alone, insurers need consistent, accurate, and transparent processes of effectively managing such risks. Bees360 and Hosta AI address this challenge head-on by harnessing advanced technologies to improve the quality, efficiency, and accuracy of property inspections, to produce the most robust property dataset possible, and to enable superior claims service from the start.
"This partnership with Hosta AI means we are collectively bringing operational efficiencies and advanced interior data analytics to the insurance industry," said Andy Liu, CEO of Bees360. "By combining the power of aerial and interior inspection and advanced data processing, we are revolutionizing insurance claims processing and providing insurers with a competitive edge while delivering faster, more accurate results for policyholders."
The combined AI capabilities of Bees360 and Hosta AI offer a complete solution for property inspections and claims adjustments. Bees360 leverages state-of-the-art drone inspection technology and Hosta AI delivers an AI-powered Assessment Platform to address the interior, resulting in streamlined and accelerated claims processing.
"Our partnership with Bees360 allows us to harness their extensive aerial inspection capabilities and combine them with our expertise in advanced interior data processing,” said Henriette Fleischmann, CEO of Hosta AI. “By unlocking the potential of AI and machine learning, we can provide insurance companies with unparalleled insights to enable superior service and highly accurate claim settlement."
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