AI in Insurance
CCC launches 2 new AI products for insurers to predict damages, total losses
CCC Intelligent Solutions has launched its next-generation AI-based photo analysis — First Look and Impact Dynamics, one of which extends into claims handling.
CCC says the products work ahead of the appraisal process to help users identify potential indemnity amounts earlier. They begin working at first notice of loss (FNOL) “enabling insurers to pull forward key decisions that work to optimize and accelerate downstream processing across APD and casualty claims.”
However, Michelle Hellyar, CCC corporate marketing senior director, told Repairer Driven News that CCC First Look and CCC Impact Dynamics don’t make claim decisions or determinations. Instead, they’re tools that insurers can use as part of their claims management process, she said.
“Both apply AI to photos of vehicle damage to generate predictions,” Hellyar said. “With First Look, AI is used to predict the point of impact or if a vehicle is likely to be repairable or a total loss, for example. With Impact Dynamics, AI is applied to predict the change in velocity at the point of impact, which can help an insurer evaluate potential injury, among other things.
“With both products, insurers can determine if and how they apply the AI-generated predictions to help route the claim for optimal claims processing. The claim routing and processing are based on their business rules and objectives.”
An Aha! Moment on Generative AI
A long series of conversations at InsureTech Connect revealed a truth about generative AI: Nobody knows where we go next.
Chief information officers, chief digital officers and others running digital innovation initiatives usually have to scrounge around for every bit of funding they can find. Not so with generative AI.
It has caught the public imagination so quickly that the world of innovation funding has flipped upside-down.
Every board knows it needs something intelligent to say about a generative AI strategy, which means every CEO knows they need something intelligent to say about a generative AI strategy. Those CEOs are turning to the in-house digital innovators and saying: "Help me figure out something intelligent to say about a generative AI strategy."
So every CIO, CDO, etc. finds themselves with money being thrown at them so they can set up a slush fund and experiment to help define a strategy -- or at least a placeholder that buys time for a strategy to be developed.
The CEO of an AI vendor I spoke with at last week's InsureTech Connect in Las Vegas said his sales cycle with major carriers used to be 12 months, or even 18, but the demand for generative AI is so feverish that he now may go from initial contact to contract in four to six weeks. He says one prospect saw a demo and asked for a contract on his way out the door.
Now, throwing money at a problem in hopes of finding a strategy tends not to end well. But while no one I met at ITC -- or anywhere else, for that matter -- has a clear answer about how generative AI will play out, some do have smart advice on how to get starting on working out what that future could look like.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Commentary/Opinion
How Technology Is Changing Fraud Detection
Satellites and drones, AI-based analytics and photo analysis, and blockchain can reduce insurance fraud greatly.
Insurance fraud comes at a staggering cost to insurers: more than $300 billion in 2022, according to a study by ValuePenguin. In fact, 21% of auto insurance and 30% of homeowners insurance policyholders admitted to having misled their insurers to save money. (The research shows that younger Americans often don’t even recognize such fraud as a crime.)
Good news for insurers: Advances in technology are making it harder for consumers to fudge their insurance applications and claims, which makes it easier, in turn, for coverage providers to pay for actual losses while meeting their bottom lines. Here are a few technologies on the horizon that insurers are using to improve their fraud detection.
Divya Sangameshwar is an insurance expert and spokesperson at ValuePenguin by LendingTree
News
Allstate’s Q3 revenues reach $14.5B, GEICO’s earnings also up
Allstate’s total revenues reached $14.5 billion during Q3, representing a 9.8% year-over-increase, the insurer said when announcing its financial results for the period.
The company said its $1.3 billion increase could be attributed largely to a $1.1 billion increase in property liability income from higher average premiums.
“Allstate’s focus on improving profitability while implementing our growth strategy made excellent progress this quarter,” said Tom Wilson, Allstate’s president and CEO, in a press release. “…Property liability had an underwriting loss in the quarter of $414 million, however, reflecting continued increases in auto insurance loss costs, elevated catastrophe losses, and adverse prior year loss development
Meanwhile, Berkshire Hathaway reported insurance underwriting profits for GEICO of $2.4 billion during Q3, up from the $1.07 billion in losses during the same period last year.
For the first nine months of this year, the conglomerate earned nearly $4.56 billion through its insurance company. During the first nine months of 2022, GEICO lost $190 million.
Separately, rising auto insurance rates throughout the nation have prompted discussions among consumer advocacy groups, industry stakeholders, and policymakers.
Munich Re posts strong Q3'23 results as P&C combined ratio strengthens to 82%
European reinsurer Munich Re has lifted its annual guidance for its net result to €4.5 billion after reporting a solid set of third quarter and nine month 2023 results, as the firm closed a third consecutive quarter with a net result above pro-rate guidance.
For Q3 and 9M 2023, Munich Re has posted a net result of €1.2 billion and €3.6 billion, respectively, compared with €1.1 billion and €4.2 billion, respectively, a year earlier.
Group-wide, insurance revenue fell by less than 1% to €14.5 billion in the quarter, but rose 3% to €42.9 billion in 9M 2023.
Within reinsurance, the segment contributed €995 million to the Group net result in the quarter, up from €851 million in Q3 2022, while the 9M 2023 result fell from €3.6 billion to €2.95 billion. Insurance revenue fell 6% year-on-year to €9.5 billion in the quarter, while the technical result increased to €1.6 billion.
The firm’s property and casualty reinsurance business produced a net result of €664 million in Q3 2023 compared with €309 million a year earlier, although as a result of a one-off effect in the quarter, insurance revenue decreased 5% to €6.9 billion. The P&C reinsurance combined ratio strengthened 6.9 percentage points to 82% in the quarter, but increased 3.1 percentage points to 83% for the nine month period.
AM Best turns positive on E&S lines insurance segment
AM Best has revised its outlook on the excess and surplus (E&S) lines insurance segment to positive from stable, citing increased business due to declining capacity in commercial lines and some personal lines markets.
The rating agency also referenced strong underwriting results, which are driving favourable operating profitability and strengthened capital positions, as a key reason for the revision.
AM Best observed that admitted carriers continue to constrict their underwriting criteria, leading accounts to seek coverage in the E&S market.
“Lines of business being cast off by admitted carriers include commercial auto and directors’ and officers’ liability,” the firm explained.
Meanwhile, AM Best noted that cyber liability and coverage for the expanding legal cannabis industry also continue to leverage the capabilities of E&S carriers.
The rating agency continued, “As these accounts tap into the core competencies of the surplus lines market, these E&S participants are posting more favourable underwriting results and greater top-line growth than those in the broader property/casualty industry.
Allstate revamps mobile app
It includes new features through several partnerships
Allstate has released an updated version of its mobile app, introducing new features that cater to customers’ broader needs and “go beyond” traditional insurance services.
The update incorporates partnerships with GasBuddy, SpotHero, Risk Factor, and Allstate’s own Good Hands Repair Network.
It also includes several user-focused enhancements bringing improved access to ID cards, streamlined messaging capabilities, and a redesigned launch screen, according to a news release from the insurance giant.
"We’re listening to our customers, and these updates give them more personalized value and control to protect what matters most,” said Mike Antognoli, Allstate’s mobile product director.
“The Allstate mobile app offers a hotbed of innovation that’s transforming how people interact with an insurer.”
Extreme weather measurement is becoming more accurate: here’s why, and what it means for insurers
On 5 October, Typhoon Koinu passed over Orchid Island, a small landmass off the coast of Taiwan, with a reported wind gust of 213 mph.
If approved by the World Meteorological Organization, this observation would be among the highest wind gusts ever measured at a surface weather station.
For insurers it’s vital we keep track of how we measure extreme weather events like this one. But a huge challenge to the industry today is how we keep track of changing weather observation techniques, and the technologies that sit behind them.
As the accuracy with which we can record weather observations improves, and our global observation networks become denser, there is a good chance we will see more extreme weather events being recorded.
This is firstly because the world is installing more weather monitoring stations to capture extremes. To take Orchid Island as an example, the Lanyu weather station was established in 1941 – we have no idea what historical typhoons could have produced in terms of wind speeds prior to that date. Today, with the lower cost of weather stations and solar power with cell services, many areas of the world are installing new weather station networks. This will help us better understand regional extreme weather, particularly in regions that have previously had little monitoring coverage, such as Africa.
We must also account for improvements in technology, which are enhancing monitoring accuracy.
Taking hurricanes as an example, observations suggest that storms are more frequently undergoing rapid intensification (an increase in the sustained winds of a cyclone or hurricane of at least 35 mph in a 24-hour period). A commonly used method for estimating rapid intensification is the Dvorak Technique. Unsurprisingly, this technique has evolved significantly since it was first introduced in the 1960s, and today modifications continue to be made to improve its accuracy. We now know that it’s likely that in the past certain storm intensities would have been underestimated by the Dvorak Technique, due to limited information.
Andrew Siffert, SVP and senior meteorologist, BMS
InsurTech/M&A/Finance💰/Collaboration
DOXA INSURANCE HOLDINGS ANNOUNCES ACQUISITION BY GOLDMAN SACHS ASSET MANAGEMENT
DOXA Insurance Holdings (“DOXA” or the “Company”), one of the fastest growing niche underwriting and distribution companies in North America, announces it has entered into a definitive agreement to be acquired by Goldman Sachs Asset Management (“Goldman Sachs”).
This private equity investment by Goldman Sachs marks a pivotal moment for DOXA, propelling the Company towards its next phase of expansion. The investment will help fuel DOXA's ongoing acquisition strategy in addition to its organic growth initiatives. DOXA's management team and employee shareholders will remain significant investors alongside Goldman Sachs.
Since its inception in 2016, DOXA has demonstrated exceptional growth, bolstered by its integrated, family of companies approach. The Company's portfolio spans specialty MGA, wholesale, affinity, and alternative risk segments generating over $600 million in written premium. With a presence across the United States, DOXA solves complex coverage issues for numerous industries in need of specialized insurance solutions.
*Waller Helms Advisors acted as exclusive financial advisor to DOXA in connection with this transaction.
Hippo CEO addresses Spinnaker Insurance sale rumors
Hippo Insurance may not “have to have” Spinnaker Insurance but the insurance company remains one of the “jewels within the Hippo crown”, Hippo CEO Rick McCathron (pictured) told Insurance Business as he declined to comment on sale speculation that has geared up around the business.
“Our view is we’re not going to comment on a rumor because … rumors are always flying and we’ve had rumors about Spinnaker for a couple of years,” McCathron told Insurance Business.
“We’re thrilled with Spinnaker as an asset, we’re thrilled with the contribution it makes to our earnings, we’re thrilled with the partnerships and the growth of that company, and we do want to have control over our own balance sheet.
“Do we have to have Spinnaker to partner with customers and our homeowners’ insurance program? No, we don’t, but it de-risks our business a lot when we do have our own carrier, we do have our own capacity, and we can file our own rates and our own guidelines.
Futuristic Underwriters launches to transform P&C insurance
The managing general agent (MGA) is taking a tech-enabled approach to the space, that it believes will assist it reduce commercial property & casualty risk by leveraging the power of technology.
The launch has come following a challenging time for commercial insurance sector, as premium’s continue to rise, on top of an ever-evolving regulatory landscape.
This was exemplified in 2022, as the U.S. property and casualty sector ended the year with a net combined ratio of 102.4, according to the Insurance Information Institute, resulting in underwriting losses. These issues have left insurers, brokers, and policyholders dissatisfied and unprofitable, highlighting the need for innovative solutions.
As a result of this, Futuristic Underwriters is aiming to combat these adverse trends, focusing on industries such as contractors, manufacturers/distributors, real estate, professional service organisations, auto, and other P&C lines.
Their approach extends beyond data-driven underwriting and incorporates next-generation technologies like Artificial Intelligence, and aims to improve the overall insurance experience by offering an efficient distribution platform, proactive claims handling, and tools to reduce risk.
Awards
Demotech Named "Niche Financial Analysis Provider of the Year [Insurance]"
Demotech, Inc. has been advised that it has received the Global 100 Award as "Niche Financial Analysis Provider of the Year [Insurance]"** for the tenth consecutive year, 2015 through 2024, inclusive.
Joseph Petrelli, President and Co-founder, Demotech, noted: 'I believe that ten consecutive years securing Niche Financial Analysis Provider of the Year [Insurance] reflects our thought leadership in financial analysis, consistency and capability of our process to identify financially stable insurers. It is also an affirmation of the critical role of independent, regional and specialty insurers. Global 100's process prevents ballot-stuffing. Firms are shortlisted based upon comprehensive criteria, and, then, an independent panel reviews the votes, based upon the strategic nature and complexity of work, the scale of work and the utilization of innovative processes."
Sharon Romano Petrelli, CPCU, AIAF, CCP, ARC, Chief Financial Officer and Co-founder, added, "Since our incorporation on September 9, 1985, Demotech has been analyzed and successfully vetted thousands of times. Our experienced, credentialed team of long-tenured analysts have a breadth and depth of experience and expertise that few have attained. Although our analysts understand the insurance business, they will never tell you how to run your company."