AI in Insurance
Viewpoint: AI Investigations and Claims Gather Pace in the United States
Generative AI tools such as ChatGPT have been in the headlines since 2022, with many users (including children) using the tools to generate content with little thought as to the data protection risks associated with its use. Last month, we reviewed the various actions being undertaken by European data protection authorities in an effort to ensure that OpenAI, the creator of ChatGPT, is using the personal data obtained via the platform appropriateClaims Journally. Perhaps unsurprisingly, there are now updates from the United States as the regulatory and litigation backlash against OpenAI takes on a wider international outlook.
There is a key theme to the developments in the US which concerns the huge amount of personal data which is being used (allegedly scraped from the web) to train OpenAI’s products. The investigation and class actions filed highlight the moral, legal and ethical concerns regarding the development of generative AI products.
The past month has seen the commencement of an investigation into OpenAI by the Federal Trade Commission, and further understanding of how the litigation landscape for artificial intelligence technologies is likely to progress, with the first AI focused class action filed. These increasing regulatory pressures on OpenAI and class action lawsuits are indicative of the legal backdrop against which AI platforms will find themselves operating.
Hans Allnutt and Astrid Hardy
Allnutt is a partner with international law firm DAC Beachcroft, based in London. He leads the firm's cyber risk and breach response team. Hardy is a solicitor for the firm.
AI is changing the nature of work in the insurance industry
With applications of artificial intelligence technology spreading throughout the insurance industry, fresh approaches to job design, talent acquisition and training are needed to take full advantage
Cost containment or reduction is a constant challenge for insurers, particularly in light of recent inflationary pressures. Innovation is key to unlocking unmet markets and better meeting customer demands economically – not only in how carriers use emerging technology, such as AI, but in who (or what) does the work in a hot talent market where certain skills are in high demand.
The irony of technology delivering the human connection
A central feature of those strategies is finding an operationally and cost-effective balance between technology and people. For example, a key emerging customer experience trend has been keeping humans in the center of the service. It’s no surprise that interactions with a fellow human being helps customers feel more comfortable and engaged throughout the insurance claims lifecycle. The irony is that facilitating the most convenient customer experience often depends on technology.
This is the case with communication facilitated by AI-driven chatbots. Technology acts as the gatekeeper to a more targeted human connection. The advent of highly sophisticated AI language models called large language models (LLMs), such as ChatGPT, could be a game changer in how businesses interact with their customers. Given the capabilities of these new technologies, chatbots can become more conversational and capable of handling a wider range of customer queries. By reducing workloads for human customer service advisors, advanced LLMs can automate not only routine and repetitive tasks, but also variable and creative tasks that have been considered, until recently, ‘human only’. . The following capabilities can de-risk and create more resilience and agility during these transformations:
- Enabling Connections
- Achieving new ways of working
- Sustaining drive
About the Authors
- Tracey Malcolm is Global Leader, Future of Work and Risk, WTW.
- Max Fogle is Director, Executive Compensation & Board Advisory (New York), WTW.
- George Zarkadakis is Director of WTW’s Digital Incubator and leader of the Future of Work Strategy Advisory Services for Great Britain and Western Europe
Developers Working to Determine if AI Chatbot Falsehoods Are Fixable
Spend enough time with ChatGPT and other artificial intelligence chatbots and it doesn’t take long for them to spout falsehoods.
Described as hallucination, confabulation or just plain making things up, it’s now a problem for every business, organization and high school student trying to get a generative AI system to compose documents and get work done. Some are using it on tasks with the potential for high-stakes consequences, from psychotherapy to researching and writing legal briefs.
“I don’t think that there’s any model today that doesn’t suffer from some hallucination,” said Daniela Amodei, co-founder and president of Anthropic, maker of the chatbot Claude 2.
News
Connected claims for insurance now has a viable path with Sfara’s 3-in-1 solution
A simple SDK integration means carriers can now accelerate FNOL and claims handling by providing high-value, life-saving services that drive customer participation.
Sfara announces with it latest pre-integration, a 3-in-1 solution for insurance carriers to greatly expedite the reality of connected claims.
As recent insurance-industry announcements have made clear, offering free crash detection and professional emergency response to customers is a recognized path to the widespread adoption of technologies necessary for connected claims processing. Yet skepticism remains high within the industry about the feasibility of executing such a program.
Sfara’s 3-in-1 insurance solution puts an end to that skepticism. It introduces crash detection and life-saving emergency response as an offering to the customer. Plus, the solution can improve claims processing from intake to settlement using detailed crash data fully integrated into existing workflows used by industry-leading carriers.
“This is game changing for the insurance industry, which has been struggling for years to find a workable path towards digital FNOL and claims automation,” said Nino Tarantino, GM of Insurance for Sfara. “Sfara has solved the difficulties by pre-integrating backend technologies with the products of other industry leaders. Now, all a carrier has to do is integrate our SDK into their flagship app. ”
What's hampering personal lines auto insurers' profit?
US personal auto insurers continue to grapple with underwriting losses despite efforts to adjust premium rates, according to a recent report by Fitch Ratings.
Mid-year results from publicly traded insurers have indicated persistent challenges in the form of unfavorable claims severity and increased losses from catastrophic events.
As such, the credit rating agency predicted that “future profit improvement will continue to be hindered by unusually high loss severity.”
Its analysis pointed to a group of nine insurers that reported quarterly personal auto segment results, including Progressive, GEICO and Allstate.
Commentary/Opinion
Convergence and the Insurance Ecosystem
Companies must anticipate the future, innovate beyond their core and transform their capabilities as rapidly as technology allows.
KEY TAKEAWAYS:
- Convergence means many parts of the industry are consolidating, and strategic partnerships are proliferating. Platforms and marketplaces are springing up and bringing many product offerings together. Home life and the workplace are converging, as are technologies such as those that enabled the smartphone.
- Today's insurance services will become increasingly obsolete. Drawing on technology, insurers are already shifting their value proposition from “repair and replace” to “predict and prevent.” This shift will change almost every aspect of insurance, including skills requirements, product design, distribution and pricing models.
Stephen Applebaum and Alan Demers
InsurTech/M&A/Finance💰/Collaboration
CB Insights Names Cambridge Mobile Telematics a “Top 50 Most Promising Insurtech Startup”
CMT selected from a pool of 2,000 companies
Cambridge Mobile Telematics (CMT), the world’s largest telematics service provider, today announced that CB Insights has named it to the second annual Insurtech 50, showcasing the 50 most promising private insurtech companies in the world. In addition to auto telematics, this year’s winners are working on cyber insurance, climate risk, distribution, and more.
“This year’s Insurtech 50 winners are accelerating important innovations across an industry that has a direct impact on human health and well-being,” said Niall Williams, Lead Analyst at CB Insights. “From infrastructure to AI and analytics, our cohort is shaping the future of insurance in significant ways.”
“CMT is building the future of mobility with mobile sensing and artificial intelligence to bring safer roads, and we’re excited to be recognized as one of the most promising startups by CB Insights,” said Ryan McMahon, SVP of Strategy at Cambridge Mobile Telematics. “In just the past few years, we’ve grown globally to power over 95 telematics programs on five continents. We are proud to expand into new markets, bringing our technology beyond auto insurance into automotive, rideshare, on-demand delivery, and the public sector.”
Hippo pauses all new business countrywide
In an email reviewed by Coverager, delivered yesterday and addressed to an insurance agent, Hippo shared that it is pausing all new business countrywide “effective immediately.” The note also stated that Hippo will continue to monitor portfolio performance to reopen business on a state-by-state basis.
The article has been updated with the following statement from CEO Rick McCathron:
“As we stated in our Q2 earnings, Hippo is fully committed to near term underwriting profitability. These actions are temporary as we evaluate catastrophic risks, geographical diversification, enhanced underwriting and rate actions for the Hippo Home Insurance Program (HHIP). These changes do not impact our Insurance-as-a-Service or Services segments. We look for continued growth in those areas, outpacing the reduction in our HHIP segment.”
Bitcoin-denominated life insurance Meanwhile
Startup life insurer Meanwhile is betting that a target market of high-net worth individuals will respond to its bitcoin-denominated policies and premiums for coverage.
Co-founder and CEO Zac Townsend believes so strongly in the value proposition for bitcoin-based life insurance that Meanwhile's balance sheet, its financials and its operations are all conducted in bitcoin. He says Meanwhile's policies are meant to pass on intergenerational wealth, rather than the traditional life insurance function of protecting beneficiaries against loss.
SafetyCulture raises $34m while planning a $500m VC share sale
SafetyCulture has raised $34 million in funds while also planning a $500 million share sale from investors in next year.
SafetyCulture has announced a fresh $34 million in funding, pumping the Australian unicorn’s valuation up to $2.7 billion. But despite the fresh cash injection, it is also looking to recoup $500 million worth of shares from early investors in 2024.
The funding round was led by Morpheus Ventures and Marbruck Investments, which were joined by Index Ventures. The AFR had the drop on this one, reporting that OH&S startup clocked $132 million in revenue in the last financial year, which was a 32% uptick on the previous year.
SafeyCulture’s founder and CEO Luke Anear confirmed the latest raise closed in July. Like many in the startup ecosystem, the company shifted towards profitability due to global economic turmoil and a dryer investment pool. Speaking to SmartCompany earlier this year, Anear said this strategy would give the business an “infinite runway” to not only carry on current operations, but cherry-pick the staff it wanted.
Recommended Events
Connected Claims USA 2023 | Sept. 26-27 | Austin TX | $200 off this week only
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This presents your only chance to join 700+ of your claims peers to enhance customer service and engagement tactics, streamline your claims processes, finetune carrier-vendor alliances, and create adaptive, future-thinking claims strategies, centered on people, data and innovation.
I’m keen for you not to miss out, so here is $200 off for this week only – valid until 8/18 – to offset your travel costs! Book this week to get a $200 discount – use code TRAVEL200 when registering here before Friday, 18 August.
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Awards
QUBIE Wins “Home Insurance Innovation Of The Year” In 2023 PropTech Breakthrough Awards Program
SES Risk Solutions today announced that QUBIE has been selected as “Home Insurance Innovation Of The Year” in the annual PropTech Breakthrough Awards program. The awards are conducted by PropTech Breakthrough, a leading independent market intelligence organization that evaluates and recognizes standout real estate technology companies, products and services around the globe.
“By ensuring a more accurate and reliable risk profile through third-party data, QUBIE enables an objective and efficient underwriting process.”
QUBIE from SES Risk Solutions is a comprehensive and competitive nationwide property and casualty insurance solution that is tailored to the unique needs of a residential rental property owner. QUBIE is an automated quote, bind, issues system that provides users with automated underwriting results within seconds. It also offers unique billing flexibility for investors purchasing new properties as well as those that opt to escrow/impound insurance premiums through their mortgagee.
“We’re thrilled QUBIE is PropTech Breakthroughs’ ‘Home Insurance Innovation of the Year.’ We set out to design a solution that would dramatically cut down the time required to quote, bind, and issue policies, which significantly improves the user experience for brokers and investors,” said Shaun Shenouda, COO of SES Risk Solutions. “By ensuring a more accurate and reliable risk profile through third-party data, QUBIE enables an objective and efficient underwriting process.”
QUBIE harnesses machine learning, computer vision, and API integrations with third-party data providers to instantly gather property information and evaluate risk. The solutions’ proprietary rating algorithm offers a precise, data-driven risk assessment that considers factors such as property details, roof condition, building age, and more. As a result, QUBIE offers equitable premiums and more tailored coverage for clients. By sourcing property data from trusted third-party providers, QUBIE’s approach mitigates common issues of manual data entry and broker-provided information.
Entries are now open for the insurance industry's hottest
IBA launches its 10th annual search for the industry’s "hottest" professionals
The significant contributions of Insurance Business America’s Hot 100 have enabled the insurance industry to thrive despite recent challenges.
Now, in the 10th year of Hot 100, we are again searching for the newest and “hottest” industry leaders, whether they’re producers, innovators, or executives.
Submitting a nomination gives you an opportunity to recognize someone who has had a notable impact on the industry this year. Self-nominations are encouraged.
The 2024 Hot 100 list, proudly supported by ACORD, will be featured on IBA’s website in December.