AI in Insurance
AI: at the Center of CLaiMS
The open challenge to insurers and AI solution providers is coming together to develop meaningful business cases including loss avoidance, mitigation and payout accuracy beyond efficiency gain.
Exactly one year ago today, ChatGPT was officially introduced, sending the business world, pundits and laypersons alike into a frenzy.
It’s truly an understatement considering how many aspects of work, life and business are projected to be at risk or at a minimum, will be redefined to some degree. Conversations are nonstop about the incredible potential vs. man’s existential demise as AI is now considered much closer to parity with human thinking than previously thought possible. What happens once AI catches up to then surpasses human thinking is hard to fully imagine.
At a high-level AI encompasses; Machine Learning (ML), Deep Learning, Generative AI, Large Language Models (LLM) and the current favorite Generative Pre-Trained Transformer (GPT). For purposes of this article, we will not attempt to explain these further.
Alan Demers and Stephen Applebaum
Extreme Weather Forecasts by AI May Help Insurers Facing a Risky Climate Future
As violent weather becomes more common, the insurance industry is turning to artificial intelligence to warn of dangers such as wildfires, flooding and droughts
Traditional insurance models rely heavily on historical data to predict future risk. But as climate change bringing more extreme and unpredictable weather — global insured losses from natural disasters surpassed $130 billion in 2022, according to Aon — insurers need new tools.
One of those new tools is artificial intelligence, with companies turning to the tech to make more precise predictions for smaller areas and create improved climate models.
While AI adoption in the space is still in its early stages, insurers are actively putting models into production to understand the risk and transform underwriting. More accurate risk pricing through AI may be key to insuring an unpredictable future.
"Insurance is a model-driven business to price risk. AI is all about better models," said Attila Toth, CEO of weather risk modeling company Zesty.AI.
While major catastrophes like hurricanes and earthquakes have traditionally been the biggest concerns for insurers, so-called “secondary” climate perils like wildfires, inland flooding, hail storms and droughts are quickly emerging as primary threats. These types of extreme weather events tend to be localized but increasingly frequent and severe due to climate change. They now account for the majority of insured losses globally and are less well understood.
Jackie Snow
Research
The World's Largest P&C Insurers, 2023
State Farm Mutual Automobile Insurance Co. is the largest global property and casualty insurer with $77.59 billion of direct premiums written, according to a new ranking by S&P Global Market Intelligence.
US companies dominated the top 50 nonlife insurers, taking 20 of the global spots and accounting for more than 40% of total premiums.
China accounted for the next-largest share of premiums, at 12.4%, and it is also home to the world's second-largest property and casualty (P&C) insurer: The People's Insurance Co. (Group) of China Ltd.
Buoyed by the US, North America dominated the top 50 list, accounting for almost 46% of premiums globally. European companies accounted for 33.5%, while Asia represented 20.7% of premiums.
Creating the Tipping Point for Insurance IoT: How HSB and Its Partners Are Creating a Playbook for the Future
Over the past several years, the property/casualty insurance industry’s use of Internet of Things (IoT) has significantly accelerated. Beyond auto telematics, P/C insurers—from major carriers to risk pools—have been implementing sensor programs to address property and equipment risks.
Executive Summary
Munich Re’s HSB has been at the forefront of the industry’s paradigm shift toward IoT. Here, Gordon Hui, SVP of HSB’s Applied Technology Solutions, and Matteo Carbone, founder of the IoT Insurance Observatory, describe the multiyear journey of HSB and its partners in using IoT to reduce non-cat property risks, enhance customer experience, improve sustainability and to innovate protection products—the four main drivers of IoT adoption outlined by IoT Insurance Observatory for the insurance sector. Continuing innovation includes using sensor data to trigger coverage of existing risks and developing performance guarantees for sensors tracking electrical hazards, potential water damage and the condition of machinery.
Overall, the philosophy of predicting and preventing loss has been well-established as the general trajectory of the industry, as highlighted in the Geneva Association-IoT Insurance Observatory report “From Risk Transfer to Risk Prevention.”
HSB (part of Munich Re), however, has been at the forefront of the industry’s paradigm shift toward IoT. The company develops and distributes specialty insurance products and services through independent agents and brokers, and through reinsurance arrangements with multiline insurance companies. One of those services is Sensor Solutions by HSB, which allows insurers to harness the potential of IoT through leading-edge technology, insurance expertise and programmatic support. Current clients include Nationwide, Liberty Mutual, Philadelphia Insurance, New York School Insurance Reciprocal (NYSIR), Insurance Board and The Hanover Insurance Group Inc.
News
Insurtech: Insurance Carriers Want Gig Firms To Use Telematics, According To Industry Professional
Insurance is the biggest expense for gig companies, according to a recent update.
Uber says its insurance costs “are roughly 10% of its gross bookings, exceeding $11B in 2022. Insurance-related costs are also rising every year.”
In 2022, a top 10 auto insurer reportedly “increased its premium written in the gig economy space by 95% from the previous year to $940M.”
As costs grow, gig companies are “seeking ways to lower costs. At the same time, insurers are looking for ways to reduce risk in their book of business.” They’re encouraging gig companies to leverage telematics “to lower expenses.”
In a recent video from Liberty Mutual, Nick Grant, SVP and Co-lead of Liberty Mutual Mobility Solutions, discussed how gig companies can “use telematics to reduce costs by making drivers safer.”
As noted in a blog post:
“In utilizing telematics in the shared economy space, we’re able to create programs that on a commercial master policy create telematics variables and features that can help them save more money as they have better outcomes in terms of behavior-based driving.”
Grant then describes the ways in which telematics can “make drivers safer, including use cases like coaching drivers and prioritizing the safest drivers to get more higher-paying trips.”
Commentary/Opinion
Digital technology empowers claims adjusters
Adjusters across the insurance ecosystem are utilizing digital technology to assess, document and close claims.More insurance companies are investing in modern digital technologies to reduce their costs, increase revenue and stay competitive. In fact, the top sources for cost reduction among insurers today involve digital transformation, technology modernization, and data and analytics, according to a recent Accenture survey of global equity analysts. That compares to the rush by insurers to pursue third-party outsourcing or offshoring models to cut their costs in prior decades.
One proven way that insurers can embrace the new trend for a digitally enabled operating model is to give claims adjusters in the field better tools and capabilities to perform their jobs more effectively. The professional life of a claims adjuster involves a challenging series of processes to assess new claims, gather the necessary documentation, and execute actions to resolve a customer's case. Each step along the way requires due diligence and close attention to detail, and that is where technology can help.
The core role of any adjuster is to inspect for property damage or personal injuries and determine how much compensation the insurer should provide to cover the losses. The initial discovery process involves interviews of claimants and witnesses, along with an inspection of the relevant home, auto or business. Adjusters must also do additional research to review any video evidence or police reports. Yet once the case has been fully documented, the adjuster is just getting started on the path towards remuneration and closing the case.
Khadim Batti. CEO And Co-Founder , Whatfix
Three keys to a great P&C commercial programs claims team
Challenges specific to P&C commercial programs require a higher degree of understanding and expertise.
In the complicated realm of claims adjusting within property and casualty (P&C) commercial programs insurance, developing a first-rate claims team is no minor feat.
This article looks into the complexities of the P&C commercial programs space. It offers insights into major pain points, provides valuable guidance to professionals wrestling with complex claims, and explores the factors that characterize an exceptional P&C commercial programs claims team.
It’s a fact: Commercial program claims are more complicated.
P&C commercial programs insurance deals with protection for property assets and liability risks for businesses. It’s designed to meet the unique needs of commercial organizations, providing coverage for a range of perils that may affect their property and operations. The series began with an introduction to claims adjusting fundamentals, lessons learned from years of on-the-job experience about what it takes to perform the job successfully. These included: the power of a thorough investigation, the importance of transparency, why timing matters, how reserving claims can be complicated, and how a focus on empathy and customer service ultimately leads to equitable outcomes.
While the same lessons apply equally to the P&C commercial programs space, there’s an additional layer of complexity. Let’s explore the three factors that can help you develop and sustain an outstanding P&C commercial programs claims team.
Louis Pippin (lpippin@venbrook.com) is chief claims officer at Venbrook Group. Melanie Thompson (mthompson@onesourcecms.com) is a senior claims adjuster and SVP at OneSource Claims Management.
InsurTech/M&A/Finance💰/Collaboration
Carriers Turn to Insurtech Leaders to Mitigate Risk Exposure
Many insurers’ systems date back to the 1980s or 1990s when mainframes ruled, and that’s a big problem for carriers that want to be competitive. “Legacy systems lack integration, which affects the flexibility and capabilities needed to connect with other systems and reinsurance partners,” said Crowe.
“These clunky systems make it impossible to obtain advanced analytics and execute reporting, which greatly impacts their ability to assess risk and make decisions. Simply put, legacy systems are holding back carriers from success.”
One reason carriers resist wholesale modernization is cost, another is fear of disruption to their daily operations during the upgrade. Both concerns are valid, however, depending on the insurtech vendor selected, they may not even be an issue. For example, with Focus Technologies’ PolicyPort®, functionalities can be rolled out gradually, with minimal disruptions to business. In this way, carriers can realize improvements while still maintaining daily operations before the full upgrade is even complete. (Focus Technology is a subsidiary of Team Focus.)
Pete Crowe, president, Team Focus Insurance Group
MAPFRE and Cyberwrite partner to promote cyber protection for SMEs with AI - Insurtech Israel News
MAPFRE and technology provider Cyberwrite have joined forces to help the insurer’s clients reduce the risk of cyber-attacks with AI.
The Spanish firm explained that Cyberwrite will provide it with a cyber insurance risk platform for SME companies, with the aim of having a more accurate knowledge of the risk at the time of underwriting and renewing its cyber insurance.
“Businesses of all sizes, including SMEs, are being targeted by cybersecurity threats,” MAPFRE said.
The firm continued, “According to the latest data from Statista, by the end of 2022, the cost of cyberattacks stood at around $8.44 trillion, and by 2027 the figure is expected to triple to $23.84 trillion. With the stakes so high, insurers need more data to help them understand and manage risk.”
Cyberwrite leverages AI to offer on-demand, real-time cyber risk analysis through its 4SEEN algorithm. MAPFRE observed that in seconds, Cyberwrite can generate multilingual reports with contextual cyber data, comparing companies worldwide to industry peers, regulatory framework gap analysis, and financial quantification of potential losses.
InsurTech NY Wraps up its 2023 Growth Stage Accelerator Cohort
InsurTech NY, the largest InsurTech community in North America, wraps up its fourth growth-stage InsurTech accelerator cohort.
InsurTech NY's carrier and broker members selected 41 startups, from a pool of more than 155 applicants in 20 countries, to participate in the hybrid insurance accelerator program. The accelerator ran two months and provided resources to help startups with traction, talent, and financing.
2023 Insurance Accelerator Cohort
"This cohort was one of the most diverse. Startups represented areas of focus from workplace safety to carbon credit insurance." said David Gritz, Managing Director of InsurTech NY. "We now have helped accelerate 121 startups and have reached a milestone where our alumni and exited founders mentor our current cohorts."
The 2023 Cohort included:
Property and Casualty Lines: Agtools, Allium Data, altumAI, Batteryze, Billy, Claim Genius, DocLens, Draftrs, Edify, Floatbot, Gigaforce, Kita, Kwant, Kyber, Modjoul, Mac Intelligence, Optimalex, Otonomi, Previsico, Property Scout, Salient Predictions, Stere, ThingCo, and Voxel
People
Markel announces Bob Cox, President and COO, will leave the company at the end of 2023; company provides update on leadership structure
Markel, the insurance operations within Markel Group Inc. (NYSE: MKL), announced today that Bob Cox, President and Chief Operating Officer, Global Insurance Operations, will be leaving his role December 31, after five years leading successful, profitable growth strategies for the company's global insurance operations.
"Bob joined us five years ago bringing his more than 35 years of insurance leadership experience to lead efforts on accelerating our strategies to deliver the best value and services for our customers across the globe," said Jeremy Noble, President. "He has built a strong foundation to position us for long-term, profitable growth, including evolving our products, broadening our distribution channels, and enhancing our global operations. We are grateful for his leadership and contributions to Markel."
Cox joined Markel in 2018 to oversee Markel's global insurance operations—its Markel Specialty and Markel International divisions. Prior to joining Markel, he held executive leadership insurance positions, including extensive experience in all areas of specialty and commercial property and casualty insurance.
"I am incredibly proud to be part of the Markel team and the collective progress we have made in offering our customers and partners superior service and solutions," said Cox. "I have tremendous admiration for the Markel team, and I know they will continue to grow and innovate in the pursuit of long-term success."
The Hartford Announces Leadership Changes
- Morris “Mo” Tooker named head of Commercial Lines
Melinda Thompson named head of Personal Lines
Don Hunt named general counsel
Chris Jones named head of Small Commercial; Tracey Ant named head of Middle & Large Commercial
The Hartford announced key leadership appointments that will take effect in 2024. Tooker was named head of Commercial Lines. In this new role, he will lead Small Commercial in addition to retaining his oversight of Middle & Large Commercial, Global Specialty and Enterprise Sales & Distribution.
Thompson, currently chief operating officer for Personal Lines, will become head of Personal Lines. Stephanie Bush, presently head of Small Commercial and Personal Lines, will retire after more than three decades with the company.
Hunt, currently The Hartford’s deputy general counsel and corporate secretary, was named general counsel and head of Law, Compliance & Government Affairs. He will succeed David Robinson, who will retire after 17 years at the company. Tooker will continue to report to Chairman and CEO Christopher Swift and, once they assume their new roles, Thompson and Hunt also will report to Swift.
“These new appointments validate our strategic approach to succession planning and executive development and showcase the company’s outstanding pipeline of talent,” said Swift. “As we look to the future, I am energized by the opportunities that lie ahead for The Hartford. I have tremendous confidence in the strategic focus, ability to execute and leadership of Mo, Melinda, Don and our entire management team as we continue to expand our strong market position and deliver value to shareholders.”
EMEA
Navigating the insurtech landscape: A glimpse into the future
Why the insurtech community is gathering momentum
As we look towards 2024, the insurtech landscape is undergoing a profound transformation, propelling itself into the forefront of the global insurance industry - with a particular focus on the UK.
Insurtechs recognise the immense value of connecting with major insurance hubs worldwide. In the United Kingdom, Insurtech UK (IUK) is leading the charge, fostering collaborations with key players in the US, Europe, and Asia to help members scale their operations. Already hosting agreements with hubs in Connecticut and Gibraltar, IUK is seeking to strengthen ties with other insurtech hubs in 2024.