News
90% of businesses surveyed unaware of strict corporate reporting requirements beginning Jan. 1
Based on a National Federation of Independent Business survey, 90% of respondents are unfamiliar with the reporting requirements of the Corporate Transparency Act (CTA).
Businesses with 20 or fewer employees and under $5 million in revenue will be required to report the personal information of owners, board members, senior employees, attorneys, and others beginning Jan. 1.
Based on a National Federation of Independent Business survey, 90% of respondents are unfamiliar with the reporting requirements of the Corporate Transparency Act (CTA).
New York governor signs Auto Insurance Consumer Relief Act
New York Governor Kathy Hochul signed into law the Auto Insurance Consumer Relief Act, which will allow insurance companies to waive pre-insurance photo inspections for private passenger vehicles.
According to the Independent Insurance Agents & Brokers of America, Inc.’s New York chapter (Big I NY), these inspections have long been an unnecessary and undue burden on policyholders.
The new law will go into effect on May 15, 2024, and will be effective until October 1, 2027. Until then, the industry will continue operating under current New York state law, which requires “many customers to obtain a pre-insurance photo inspection to get comprehensive and collision auto insurance coverage, even when their insurance carrier does not believe it is necessary to prevent insurance fraud,” according to Big I NY. If a policyholder fails to complete the photo inspection process within 14 days, the collision and comprehensive coverages are terminated.
Ted Walsh, Big I NY board chairman and president of Walsh Duffield, noted the law’s signed marked a big day for New York policyholders and independent insurance agents alike.
“For too long, the car insurance photo inspection mandate has been a burden and an inconvenience for hard-working New Yorkers. Modern solutions for combatting fraud have made the regulation unnecessary and obsolete,” Walsh said in a release.
The purpose of pre-insurance inspections, which take around 15 minutes and are free, is to prevent fraud and reduce the cost of full-coverage auto by accurately documenting a vehicle’s condition, according to Carco Group, the company that performs these inspections.
Other states that require pre-insurance inspections are Florida, Massachusetts, New Jersey and Rhode Island, according to The Zebra, which noted each state has different inspection requirements.
Commentary/Opinion
What's behind insurance layoffs? – AM Best digs into key factors
Artificial intelligence (AI) has been a topic of discussion following recent news of batches of layoffs in the insurance industry. Many insurance giants have announced significant job cuts as part of cost-cutting measures.
In a commentary, AM Best noted AI will eventually reshape the occupations in the industry but also emphasized that while AI has increased productivity for insurers it is not the main cause of recent layoffs.
AM Best said it’s too early to say that AI is the reason behind the recent job losses in some insurance companies, describing this time to be the “nascent stage.”
Data from the US Bureau of Labor Statistics revealed the hiring rate in the insurance industry and related fields has slowed to an estimated 1,100 positions in October. This was down compared to September numbers, showing around 3,900 people were hired, as well as July numbers, showing 8,300 workers were hired by insurers and related companies.
InsurTech/M&A/Finance💰/Collaboration
Up and Down: InsurTech Funding Headed for Six-Year Low
Trackers of InsurTech deals revealed a 19-20 percent uptick in InsurTech funding for the third-quarter of 2023,compared to second-quarter totals, but year-to-date deal volume is less than half of last year’s nine-month total.
While the exact tallies in CB Insights “State of InsurTech” and Gallagher Re’s “Global InsurTech” reports are slightly different, both reports also show InsurTech funding totals on track to fall to the lowest level in six years for full-year 2023.
The CB Insights report puts total InsurTech funding at $3.4 billion for the year so far, down from $7.4 billion for the same period last year.
hyperexponential and Akur8 collaborate for cutting-edge InsurTech pricing solutions
hyperexponential, known for its pioneering work in pricing decision intelligence (PDI) for insurers, and Akur8, a leader in using Transparent Artificial Intelligence for insurance pricing, come together with complementary strengths to revolutionize the InsurTech sector.
The core purpose of this collaboration is to leverage their individual capabilities to create an automated, data-driven system for accurately pricing commercial and specialty insurance products. This alliance aims to enhance the precision and efficiency of insurance pricing models, thereby benefiting insurers and policyholders alike.
Delving into each company’s contributions, hyperexponential, with its expertise in pricing decision intelligence, brings to the table its platform, hx Renew. Designed by actuaries, hx Renew aids insurers in building advanced pricing tools that effectively handle small and fragmented data sets. This enhances underwriting workflows and pricing decisions, integrating data at every stage from model construction to policy binding.
On the other hand, Akur8’s proprietary Transparent AI technology is tailored for insurers to automate rate making, improving the speed and accuracy of pricing processes while maintaining transparency and control over the models.
Research
Feds want speed reduction tech in every new car. Are American drivers ready?
On a Saturday afternoon in January 2022, a 2018 Dodge Challenger ran through a stop sign in Las Vegas, picked up the pace to a speed of 103 miles per hour and flew through an intersection on a red light. The Dodge struck the right side of a Toyota Sienna minivan, which carried seven occupants, causing four more vehicles to crash. The driver and passenger of the Dodge, as well as every passenger in the minivan, died.
The National Transportation Safety Board, a U.S. government agency that investigates such accidents, found that in this scenario and many others like it, a technology that limits the speed of vehicles could have mitigated the scale of this tragedy. The driver, who was found to have cocaine and PCP in his system which impaired his decision-making, had a record for breaking the speed limit.
The NTSB concluded that intelligent speed-assist technology (ISA) should be standard equipment in all new vehicles to prevent needless deaths. It’s no longer enough, the agency argues, to rely on states to deter driver speeding and recidivism. The agency, which doesn’t have the power to make regulations, is calling on the National Highway Traffic Safety Administration (NHTSA) to mandate the use of this technology going forward.
AI in Insurance
UnitedHealth uses faulty AI to deny elderly patients medically necessary coverage, lawsuit claims
The families of two now-deceased former beneficiaries of UnitedHealth have filed a lawsuit against the health care giant, alleging it knowingly used a faulty artificial intelligence algorithm to deny elderly patients coverage for extended care deemed necessary by their doctors.
The lawsuit, filed last Tuesday in federal court in Minnesota, claims UnitedHealth illegally denied "elderly patients care owed to them under Medicare Advantage Plans" by deploying an AI model known by the company to have a 90% error rate, overriding determinations made by the patients' physicians that the expenses were medically necessary.
"The elderly are prematurely kicked out of care facilities nationwide or forced to deplete family savings to continue receiving necessary medical care, all because [UnitedHealth's] AI model 'disagrees' with their real live doctors' determinations," according to the complaint.
Medicare Advantage plans, which are administered by private health insurers such as UnitedHealth, are Medicare-approved insurance plans available to elderly people as an alternative to traditional federal health insurance plans, according to the U.S. Centers for Medicare and Medicaid Services.
The use of the allegedly defective AI model, developed by NaviHealth and called "nH Predict," enabled the insurance company to "prematurely and in bad faith discontinue payment" to its elderly beneficiaries, causing them medical or financial hardships, the lawsuit states.
AI in financial services presents opportunities, challenges
The rise of technology in the financial services industry presents opportunities as well as challenges. Experts on financial technology and policy discussed how artificial intelligence could influence financial services during a recent American College webinar. Companies are experimenting with or using AI in portfolio optimization, tax analysis, even relationship management, said Azish Filabi, executive director of The American College Maguire Center for Ethics in Financial Service.
“Generative AI has a lot of potential for helping with client interactions. But generative AI is not being used consistently,” she said. “There is still a lot of work that needs to be done to integrate it into the industry.” Filabi said the industry “is still in the learning phase” where AI is concerned. She compared the use of AI in financial services to the introduction of the pocket calculator decades ago. “Calculators at one point changed the way math was taught,” she said. “But AI tools have a lack of consistent answers, raising questions around accountability and liability. AI creates a whole new category of legal risk because you don’t get consistent results from AI. The technology doesn’t necessarily tell you why the answer is different one time than it is another.”
In July, the Securities and Exchange Commission proposed new rules that would require broker/dealers and investment advisors to take certain steps to address conflicts of interest associated with their use of predictive data analytics and similar technologies to interact with investors.
The SEC said the goal of these rules is to prevent firms from placing their interests ahead of investors’ interests. Early days of AI“So far, we’ve seen early days on AI’s effect on the retirement environment,” said David Blanchett, managing director and head of retirement research at PGIM DC Solutions and an adjunct professor at The American College. As an example, he cited AI tools that help individuals figure out the best place to retire.
Innovation
Earth Observation Will Fundamentally Change Insurance
For those in the property/casualty industry paying attention to Earth Observation, 2023 has been a banner year. In early August, NOAA announced a significant loosening of regulations for commercial observation satellites, removing over 30 restrictions imposed in 2020. The decision was an encouraging one for industry leaders in the US, positioning them to compete on a global scale—and indicating regulation may finally be catching up to satellite technology.
The implications for P&C insurance cannot be overstated. With a more generous regulatory environment, carriers can expect higher-resolution imagery, lower launch costs, and increased use case innovation. As impressive as this technology is today, the next 3-5 years will see exponential growth in the value it creates for insurers. I believe we are entering a new age for Earth Observation technology, and for insurers too – if they play their cards right.
The Current Trajectory of Earth Observation
What is the state of Earth Observation (EO) today, and where is it going? More importantly, what does it all mean for insurers? To answer these questions, it is helpful to consider two key factors: quality of imagery resolution and frequency of coverage.
Satellite imagery has historically lagged behind other sources when it comes to high resolution (i.e., 5-10 cm). But this is largely due to legal restrictions imposed by regulatory bodies, not limitations inherent to the technology. In fact, thanks to recent improvements in sensor technology and their pay-loads, very low earth orbit (VLEO) satellites will offer greater precision and refresh than ever before. As regulations continue to adapt, we may soon see resolutions comparable to aerial imagery providers.
Oyster Launches Usage-based Rental Insurance
Oyster, a modern insurance platform for commerce, announced that it has launched a new rental insurance product. This offers the first usage-based rental insurance program in the U.S., providing rental shops and marketplaces with theft and damage coverage for their rental bikes, ebikes, kayaks, and paddleboards through Oyster's modern platform.
"The expanding rental market presents risk challenges for businesses due to the distinct nature of renting an item," said Vic Yeh, Co-Founder and CEO at Oyster. "Leveraging Oyster's tech-driven underwriting platform, we are now able to provide comprehensive coverage for the rapidly growing rental market."
Oyster's rental insurance enables businesses to safeguard their rental assets for rental, lease, and subscription. Its usage-based pricing model ensures that riders or businesses only pay for insurance during the duration of the rental. The coverage encompasses protection against theft, damage, and natural disasters, spanning from a single day to over a year. Integrated seamlessly into Oyster's platform, businesses can effortlessly offer this coverage to their customers with a user-friendly interface and a real-time digital experience..
2024 PREDICTIONS
ISG Study: AI, Customer Experience Are Top 2024 Spending Priorities for Banking, Financial Services & Insurance
Speakers from Chubb, Allstate, Nationwide, Credit One Bank, Zions Bancorporation, Everyday Life, Hagerty and more will be featured at the ISG TechXchange: BFSI event, December 5
Banking, financial services and insurance (BFSI) institutions plan to leverage AI and other technologies to meet their top 2024 goals of improving customer experience, complying with regulatory requirements and optimizing costs, new survey research from leading global technology research and advisory firm Information Services Group (ISG) (Nasdaq: III) finds.
ISG will present the full study findings at the ISG TechXchange: Banking, Financial Services and Insurance event, December 5 at 360 Madison Avenue, New York City. Experts from Chubb, Allstate, Nationwide, Credit One Bank, Zions Bancorporation, Everyday Life and Hagerty will be among the speakers joining ISG advisors in exploring the technology and business strategies that will most impact the BFSI sector in the coming year.
Economic uncertainty has put a laser focus on costs,” said Owen Wheatley, ISG lead partner for Banking and Financial Services and co-host of the event. “Tech modernization and transformation are key to growth and to defending against non-traditional BFSI competitors. To square the circle, enterprises intend to leverage cost optimization in their managed services agreements to fund 2024 transformation and modernization programs in customer experience and AI.”
Insurance Trends to Watch for 2024: Leading Change - Live with Ema Roloff and Expert Panel
Thu, Dec 14, 9:00 AM CST
Grab your favorite festive sweater and sit back and enjoy!
We are cooking up an end-of-year extravaganza with the team at Insurtech Insights! Join us for a fast-paced, value-packed session with a whole lot of fun baked in.
Host Ema Roloff will bring on Industry Leaders in rapid-fire succession to have them share the top trend they will be keeping an eye on in 2024. Things will move fast, so make sure to set aside the time to join us for the entire event so you don't miss a trend!
Presented by InsurTech Insights