AI in Insurance
More photo-based claim fraud may soon pair with AI use in insurance | Repairer Driven News
Now that virtual and photo-estimating have become commonplace in insurance claims processes, collision repairers likely are aware of the challenges it can potentially cause — undervalued vehicles, undervalued damage, extended length of keys to keys, et cetera. But have you ever thought about how artificial intelligence (AI) could help make fraudulent claims possible?
Using AI-generated photos of himself as examples in a recent social media post, Cambridge Mobile Telematics’ Ryan McMahon shared that the technology isn’t quite there yet to produce fraudulent photos in claims but it will be with time.
“Today, there are a number of applications that use photos to estimate damage from crashes,” McMahon wrote. “Generative AI applications like Midjourney can be used to enhance these photos in ways that Photoshop never could and they’re easy to use and only going to get better.
“Imagine a situation where small damage from a collision can be enhanced significantly to match exactly what these tools are expecting to see. In fact, it sounds [like] the perfect use case for generative AI. Now, all of a sudden the estimates far exceed reality.”
He also shared that he recently heard some great use cases for generative AI from Adrian Jones. Generative AI creates novel things such as artwork, music, and text which are not often used in insurance, according to Jones. He said algorithmic or predictive forms of AI are used in insurance to provide “straight-through” quotes and assist in claims processing.
That got Repairer Driven News thinking, what could the ripple effects of AI in insurance claims handling be? So we spoke to Jones, who is an insurance investor, for some insight on the topic.
“It’s like virus/antivirus, meaning people use new technologies to create new frauds and insurers use new technologies to try to detect and prevent new frauds,” he said. “You’re already seeing it with AI, for example. There are sophisticated ways of editing photos using AI and there are ways of detecting edits.”
In addition, there are companies that say they can verify the time, date, and place of a photo or there’s always the option to have a video chat with customers to see the damage, Jones added.
Commentary/Opinion
It’s Time to Revisit the Design of Property Insurance - Digital First Magazine
Well, the tables are turning on those experts at managing risk- property insurers.
Rising claim costs, lag time between rate requests and rate increase approvals, intellectual capital loss within claim and underwriting staff, regulators with seemingly tunnel vision regarding how residents need to be treated and reinsurance relationships that are in deep chill are factors that are contributing to less eagerness within property insurer ranks to hold the traditionally drawn product and rate lines.
Property owners cannot celebrate schadenfreude for the carriers; if carriers get the risk management sniffles then property owners will contract risk management flu.
If the current challenges in the Florida and California markets are taken as examples of the scenarios noted above then it is clear that macro changes are needed in the manner in which property insurance is designed and distributed.
As a passionate follower of global insurance innovation initiatives, Patrick Kelahan consults within the Insurtech, fintech and health tech industries as a co-founder of The Insurance Elephant Company, a startup industry consultancy
Arity exec: Collaboration needed to address ‘concerning’ distracted driving developments | Repairer Driven News
Stakeholders must work closely together to combat distracted driving as in-vehicle infotainment systems and other onboard electronics divert eyes away from the road, says an executive from a mobility and data analytics company.
Joel Pepera, director of Arity’s telematics product development, said he’s working to raise awareness around some “concerning developments” that could compromise roadway safety.
“Certainly, there are multiple ways that people can drive distracted. It didn’t just start with technology,” Pepera told Repairer Driven News. “On the mobile [phone] side, of the trends we’ve been tracking over the last four or so years, we’ve seen about a 30% increase in the incidence of distracted driving and that’s really tracked with some spikes in accident frequency and severity as well.
“That really is a concerning trend, and to the extent that these infotainment features feed into that, I think is cause for alarm.”
The insurance industry and the millennial workforce | PropertyCasualty360
The insurance industry is in the midst of a talent crisis.
According to the Bureau of Labor Statistics, in 2022, it was second-to-last in national industry rankings for recruiting new talent. Attracting and retaining talent is a concern across all industries, with 10.8 million job openings and only 5.7 million unemployed workers, according to the Bureau’s 2023 report. In my 25 years in insurance and technology, I’ve witnessed multiple hiring trends; however, this is a uniquely challenging time for the insurance industry.
An aging workforce
Hiring top talent is a particular problem for insurance companies. Most of our workforce is either at or quickly approaching retirement age. Nearly half a million insurance employees plan to retire in the next few years, according to the U.S. Bureau of Labor Statistics.
In addition, early- and mid-career workers are not flocking to the insurance industry. The Pew Research Center found that only 4% of millennials (generally defined as those born between 1981–1996) are open to a career in insurance. This dilemma creates an urgent crisis; that same study found that millennials are on track to make up 75% of the national workforce by 2025.
An outdated perception
It’s hard to point to any one factor as the reason millennials are reluctant to embark on careers in insurance. However, I believe an outdated perception of the industry is a factor.
The insurance space is perceived as slow-moving, lacking innovation and vitality, not very diverse, and packed with legacy technology and outdated business models.
Fortunately, the industry is undergoing accelerated digital transformation. KPMG’s 2020 CEO Outlook COVID special edition survey found that 85% of CEOs in the insurance space felt the pandemic jump-started both improving current technologies and creating next-generation operating models. Unfortunately, it seems public perception has yet to catch up.
Ironically, one solution to technological inertia is hiring a tech-savvy workforce. Digital natives who grew up with the internet, smartphones and transacting online. They are inherently early adopters because they matured during rapid technological advancement. The combination of seasoned insurance veterans who understand the industry fundamentals and new tech enthusiasts is the key to success.
Julie Schieni is vice president of Financial Services at InvoiceCloud. These opinions are the author’s own.
News
September 11 Anniversary 2023
The 22nd anniversary of the 9/11 terror attacks is marked with solemn ceremonies across the US.
The United States and countries abroad will soon pause again to remember the tragic events of September 11.
The 22nd anniversary commemorations of the terror attacks that killed almost 3000 Americans will occur in New York City, Virginia, and Shanksville, Pennsylvania.
Chubb Report Gauges the Embedded Insurance Opportunity | Insurance Innovation Reporter
Results in emerging markets prefigure a significant growth opportunity for banks and insurers in North America, with executives globally expecting to generate more than 10% of their revenue through embedded products.
Embedded insurance has been gaining steam as a potential avenue of growth, and a new report from Chubb (Warren, N.J.), the world’s largest publicly traded property/casualty insurer, validates global consumer demand for such products and quantifies some of the threats and opportunities insurers face. Insurers and banks are ramping up to meet rising consumer demand for insurance bought through the digital channel, a trend led by emerging markets in Latin America and Asia, but also gaining steam in North America and elsewhere.
Among the findings of the report, “Banks and the Digital Wallet Race: The Embedded Insurance Strategy,” are that 56 percent of consumers are interested in purchasing more insurance, and 81 percent of financial executives that make decisions about insurance products believe that embedded insurance will change from a “nice to have” to a “must have.” The study found that 56 percent of those executives expect to generate more than 10 percent of their revenue from embedded insurance within three years. Today, just one in five firms reports that level of revenue.
Anthony O'Donnell, Executive Editor of Insurance Innovation Reporter
Property insurance crisis prompts Senate hearing | Insurance Business America
Washington lawmakers have come together to discuss the growing insurance crisis spurred by climate change-induced natural disasters and the exodus of insurers from high-risk states like Florida and California.
The Senate Committee on Banking, Housing and Urban Affairs convened a hearing on Thursday to explore potential solutions, receiving testimonies from insurance industry experts and consumer advocacy groups.
Witnesses at the hearing raised concerns over surging insurance premiums as the US faces a record-setting year for weather-induced property damage.
Swiss Re previously reported that the first half of 2023 saw nearly $35 billion in insured losses from severe convective storms. With the devastation caused by Hurricane Idalia, initial estimates have posited that this total could increase by billions more.
InsurTech/M&A/Finance💰/Collaboration
Coaction Specialty Secures ~$200 Million in Growth Capital
Coaction Global, Inc (Coaction), a privately-held specialty insurance group, announced the completion of a ~$200 million capital raise to support growth as Coaction continues its transformation into a full-service specialty insurance company.
The equity raise was led by existing investors, TowerBrook Capital Partners L.P. (TowerBrook) and Further Global Capital Management (Further Global).
“This new capital will support our continued growth and demonstrates the strong ongoing support of our investor group,” said Jonathan Ritz, CEO of Coaction. “We have made significant progress executing our transformation plan over the past two years and continue to see abundant opportunities in the market to deploy the additional capital in a prudent and disciplined manner.”
CLARA Analytics Raises $24M in Series C Funding, Accelerating AI Adoption for Insurance Claims
CLARA Analytics (“CLARA”), a leading provider of artificial intelligence (AI) technology for insurance claims optimization, today announced its $24 million Series C funding, bringing its total funding to $60 million. This round was led by new investor Spring Lake Equity Partners, with participation from existing investors including Aspen Capital Group, Oak HC/FT and QBE Ventures.
“We’re excited to have Spring Lake Equity Partners as our new lead investor. We see this funding as a tremendous vote of confidence, especially in light of the very tight funding environment.”
“Insurers are facing increased pressure to manage losses and expenses, and they have awakened to the value that AI can generate in claims management. We have witnessed this first-hand, having experienced significant growth in our customer base and more than doubling our annual recurring revenue. We have continued to increase our penetration of the workers’ comp industry while also expanding into auto liability and general liability,” said CLARA Analytics CEO Heather H. Wilson. “We’re excited to have Spring Lake Equity Partners as our new lead investor. We see this funding as a tremendous vote of confidence, especially in light of the very tight funding environment.”
The new round further establishes CLARA’s leading position as the AI platform provider of choice for insurance carriers and self-insured organizations. CLARA intends to use the investment to further enhance its platform’s leading AI capabilities, including generative AI, predictive modeling, and natural language processing capabilities.
“The insurance industry is facing a perfect storm of forces that have been driving losses higher in recent years,” said Jeff Williams, Partner at Spring Lake Equity Partners. “CLARA’s AI platform is the missing ingredient that empowers several of the world’s most innovative carriers and self-insured companies to rein in spiraling loss costs and deliver tremendous value to policyholders and shareholders. CLARA is poised to dominate this space because they are laser-focused on claims optimization and delivering a substantial return on investment for their customers.”
Jetty raises $2 million
According to Crunchbase, Jetty secured $2 million in funding from Citi Ventures, Experian Ventures, Fundrise, and PayPal Ventures. The company’s total funding now stands at $65.5 million. Notably, Farmers was an earlier investor in the company.
Over the past year, Jetty’s workforce has expanded by 13%, to around 140 employees.
Jetty is primarily involved in the insurance and financial services sectors, targeting real estate companies. Their product offerings include:
- Jetty Deposit: An alternative to conventional security deposits.
- Jetty Credit: A service that reports tenants’ rent payments to all major credit bureaus.
- Jetty Rent: An insurance product tailored for renters.
The company has established partnerships with entities like Kushner, Freddie Mac, and Asset Living. In terms of underwriting, both Jetty Deposit and Jetty Rent are backed by State National .
After Countrywide Pause, InsurTech Hippo Slowly Reemerging Next Week
A profitability problem that would have otherwise taken InsurTech Hippo half a year to correct is on the mend after just 30 days, the chief executive officer said at an investor conference Thursday.
Speaking at the Keefe, Bruyette & Woods Insurance conference, Rick McCathron also reported that a nationwide pause in writing new business on Hippo paper, which was put in place last month, will start being lifted—slowly—next week.
“We’re going to start turning the spigot back on in a very selective way in areas in which we think that we are priced adequately,” McCathron said, continuing an analogy to a leaky hose that he introduced in answer to the opening question from KBW Director Tommy McJoynt.
EagleView’s Owners Explore Sale of Aerial Imagery Provider
The private equity owners of EagleView Technologies — an aerial imagery and data analytics service widely used by property insurers’ claims departments — are exploring a sale that could value the company at about $2 billion, including debt, according to people familiar with the matter.
Vista Equity Partners and Clearlake Capital, the owners of EagleView, have hired investment banks William Blair and Rothschild & Co to advise the company on its sale process, the sources said, requesting anonymity as the matter is confidential.
EagleView generates about $300 million in revenue and 12-month earnings before interest, taxes, depreciation, and amortization (EBITDA) of $165 million, the sources said.
Clearlake and Vista declined to comment. EagleView and Rothschild did not immediately respond to requests for comment.
In 2015, Vista took a majority stake in EagleView. In 2018, Clearlake bought a significant stake from Vista, becoming an equal owner in EagleView.
Bellevue, Washington-based EagleView Technologies is a provider of software that can be used to measure rooftops with satellite images from the sky, mainly used by insurance companies to make more accurate decisions.
The company is utilizing a vast library of images and its patented 3-D measurement software to provide software tools to customers in industries such as insurance, construction, government and public utilities.
In the past, the company’s tools have been used to help improve police and fire department response times and also to help cities prepare for emergencies and natural disasters.
Matic Insurance Launches New Partnership with Dart Bank
Insurtech leader to provide home and auto insurance to Dart Bank community bank members
Matic, a leading digital insurtech platform, and Dart Bank announced today a strategic partnership to provide P&C insurance products to Dart Bank customers. Under the partnership, Matic’s innovative insurance marketplace of 50 A-rated carriers will be integrated into Dart Bank’s customer offerings.
Since its inception, Matic has transformed the landscape of the insurtech industry by embedding insurance into the home and auto ownership experience. Through this exclusive partnership, Matic will deploy home and auto insurance across Dart Bank’s mortgage originations, servicing, and banking channels.
"This partnership represents a significant milestone in our pursuit of delivering meaningful solutions to the clients of Dart Bank that will enhance their daily lives," said Bryan Clark, Sr. Vice President of Mortgage Banking, Dart Bank. "This will be especially beneficial as we continue to incorporate technology innovation and digital solutions into our customer offerings."
"Matic was built to cater to the dynamic nature of the banking industry, enabling a seamless integration of insurance across the customer lifecycle," said Matic CEO and co-founder Ben Madick. "We are thrilled to be an integral part of Dart Bank’s vision to streamline and enhance the banking and lending experiences."