AI in Insurance
Generative AI in Insurance - Where we are Today, Q3 2023 InsurTech Insights, launch of advocacy group InsurTech Coalition and more
A new perspective on an old-established industry. Find latest report, news and information about startups and innovations in the insurance industry, with a focus on best #insurtech initiatives and venture capital investments.
Generative AI in Insurance - Where we are Today
Recent technological breakthroughs in Generative AI have the potential to transform the insurance industry. Insurance is the ultimate data-driven business. Every day, insurers and brokers receive and generate massive quantities of data via email, call centers, PDF sand spreadsheets. This data, often granular and proprietary to the insurer, has never been comprehensively analyzed. But the emergence of large-language-models (LLMs) presents an opportunity for the industry to finally change that.
Alberto Garuccio, Your Weekly Insurtech Digest
AI ‘Copilot’: what does that mean in insurance?
Background
The idea for this special "copilot" edition came to me a few weeks ago as I was reading the funding announcement of a startup presenting itself as the "legal copilot." Now you might ask: what does this have to do with insurance? No worries, I'll get there. In short, it was during this reading that I became convinced that the concept of a "copilot" would be adapted to each industry. And, in this context, there was no reason why insurance should be an exception!
As a reminder, Microsoft introduced this "copilot" concept in March 2023 to highlight its new features—boosted with generative AI—integrated directly into its existing tools. Since then, the term has been widely used. To convince yourself, take a look at Google Trends: searches for the term "copilot" have been growing exponentially since the boom of generative AI—starting with ChatGPT—and, of course, since Microsoft's announcements.
In short, a tech giant introduces the term "copilot," and startups seize it in their respective industries. The opportunity was too good to pass up to explore this "copilot" concept more specifically in insurance.
That's why I'm delighted to have Damien Philippon, co-founder and CEO of Zelros, as his company has precisely launched—and trademarked—the concept of “The Insurance Copilot”.
Florian Graillot, Investor @ astorya.vc (InsurTech + Seed + Europe)
Risks, regulation in focus as AI boom accelerates
A rush of new generative artificial intelligence products in 2023 brought new attention and fresh concerns about the emerging technology.
The ongoing artificial intelligence boom received a new push over the last year as businesses across sectors race to adopt the new technology.
That increased attention has also drawn scrutiny across the board. AI: Beyond the Hype is a multipart series exploring these trends.
. OpenAI LLC's ChatGPT and the integration of AI capabilities into established software products, such as Microsoft Corp.'s launch of AI tool Copilot for its suite of software, have pushed AI into the forefront this year. A burgeoning industry has been born, with more than 1,500 companies exclusively operating in the AI software space globally, according to S&P Global Market Intelligence data.
That boom has led to new scrutiny centered on how AI is being used, with particular emphasis on whether its implementation threatens to eventually plunge entire professions into obsolescence.
"As the early experimentation phase of GenAI transitions into an early implementation phase in 2024, many companies are not sure how transformative GenAI will be, while others are charging ahead," said Nick Patience, lead analyst for AI and machine learning research at Market Intelligence. "They will still be looking to identify the most viable use cases, while vendors will be turning experimental features into usable products."
Growing interest
Though tech companies are spearheading the adoption of AI tools, the sector is far from alone in that pursuit. Consumer companies are scrambling to incorporate and tout their use of AI tools in both consumer and nonconsumer-facing applications.
AI-written articles spark liability concerns
Media organizations that publish artificial intelligence-generated content should be transparent about how and when they are using AI and ensure that human checks and balances are in place, brokers say.
Insurers are not excluding or limiting coverage for AI-related exposures, but media organizations can expect more questions about their use of AI-generated content when they renew their media liability policies, they say.
In November, Sports Illustrated was called out for publishing content allegedly created by AI-generated authors with fake bylines and writer profiles, as reported by the Futurism website.
In a statement issued in response to the report a spokesperson for Arena Group, the parent company of Sports Illustrated, said the articles in question were licensed content from a third-party company, Ad-Von Commerce and that AdVon had assured they were written and edited by humans.
Sports Illustrated is not the only media organization to have come under scrutiny in connection with AI-generated content.
Research
Internet of Things: who are the leaders in accident detection telematics for the automotive industry?
The automotive industry continues to be a hotbed of patent innovation.
Activity is driven by consumer demand for safety features, informed decision-making, and regulatory requirements, and growing importance of technologies such as sensors, Internet of Things (IoT), and artificial intelligence (AI). In the last three years alone, there have been over 1.7 million patents filed and granted in the automotive industry, according to GlobalData’s report on Internet of Things in automotive: accident detection telematics.
However, not all innovations are equal and nor do they follow a constant upward trend. Instead, their evolution takes the form of an S-shaped curve that reflects their typical lifecycle from early emergence to accelerating adoption, before finally stabilizing and reaching maturity.
Identifying where a particular innovation is on this journey, especially those that are in the emerging and accelerating stages, is essential for understanding their current level of adoption and the likely future trajectory and impact they will have.
300+ innovations will shape the automotive industry
According to GlobalData’s Technology Foresights, which plots the S-curve for the automotive industry using innovation intensity models built on over one million patents, there are 300+ innovation areas that will shape the future of the industry.
News
Zurich slashes claim times to just 13 minutes
- Insurer Zurich UK slashes average contents insurance claim times to 13 minutes for customers using new communication channel
- Refreshed video messaging service Hello Zurich sees a 400% increase in customer uptake
- Zurich continues to implement technology to help ease the claims process for policyholders
Waiting times for Zurich customers have been slashed dramatically after the insurer introduced video and WhatsApp messaging for customers making a claim.
Claims times have been cut to an average of just 13 minutes for customers using a new WhatsApp messaging option, while Zurich has seen a five-fold rise in the number of customers using the insurer’s new video messaging service, Hello Zurich.
Hello Zurich allows claims handlers to video call with claimants, building trust from day one while allowing handlers to capture visual information about the claim, significantly reducing time and hassle for customers and eliminating the need for long email exchanges.
Zurich is also employing the service for customers identified as vulnerable, who may be more comfortable discussing their claim face-to-face rather than over email or the phone.
DeSantis' proposed budget targets rising property insurance premiums
Florida governor Ron DeSantis has announced his proposed $114.4 billion budget for 2024, including a $409 million allocation aimed at easing property insurance premiums.
DeSantis’ proposal calls for a one-year exemption on taxes, fees, and assessments that would target homeowners with properties valued up to $750,000.
These exemptions translate to a 6% reduction for the average Florida homeowner, according to a report by the Orlando Sentinel, which cited information presented by the governor’s staff.
Florida has seen insurance premiums triple over the past five years, according to the Insurance Information Institute (Triple-I). Average annual payments have gone over $4,200, while the national average sits at $1,700.
VIU by HUB Now Offers Landlord Insurance for Rental Properties or Secondary Homes on Its Digital Broker Platform
Policy provides property damage protection for individuals owning fewer than five properties
VIU by HUB (VIU), an omnichannel insurance brokerage platform, announced today the launch of landlord insurance to protect investment rental properties and secondary homes. Landlord insurance typically includes two different types of coverage, property damage and liability protection, and offers financial protection from damage caused by fire and storms, lost rental income and personal liability.
Landlord insurance enables individuals owning fewer than five homes to now shop for, compare quotes, and purchase a policy through VIU. This type of policy offers protection for homes that do not qualify for homeowners insurance, such as secondary residences, rental properties or vacant homes undergoing repairs.
"About 70 percent of investment properties in the U.S. are owned by individuals – this represents a huge number of people who are in need of a different insurance solution to protect their rental homes," said Bryan Davis, EVP and Head of VIU. "By adding a landlord policy to our roster of products, we further cement VIU's role as a one-stop shop for all personal insurance needs for individuals and allow our partners, particularly those in the property management space, to better serve their customers."
While VIU is available to all consumers, the platform can be easily embedded within the systems of partner businesses and organizations, such as property management companies, enabling them to offer additional value-added services like landlord insurance. Property management companies can provide small-scale clients with the opportunity to protect their investments and receive unbiased advice through a licensed independent broker. This enables them to provide expanded services to their clients while simultaneously creating an alternative revenue opportunity for their business.
Real-Time Data and Mitigation: How Tokio Marine Is Changing Risky Behaviors
Executive Summary
Risk prevention has been a key pillar of Tokio Marine Group’s global strategy for years, with many of its local insurance entities around the world marrying real-time risk mitigation solutions and behavioral change programs to their insurance products. Just one example is TMNF’s Drive Agent service, providing in-vehicle alerts to over one million drivers who are distracted, sleepy or in danger of crashing and resulting in a 13 percent drop in claims frequency.
Here, TMNA EVP Robert Pick and CM Guest Editor Matteo Carbone also review the claims management benefits of Drive Agent, and other IoT-based services developed by Tokio Marine operations like Philadelphia Insurance and PURE in the U.S., targeting risk prevention for commercial and personal property policyholders in addition to drivers of individual cars and fleets.
Robert Pick is Executive Vice President and Chief Information Officer at Tokio Marine North America and Group Deputy Chief Information Technology Officer at Tokio Marine Group.
Matteo Carbone is Director of the IoT Insurance Observatory and chairman of Net Insurance’s innovation advisory board.
Judge refuses to dismiss class action lawsuit targeting Tesla insurance arm
A California judge on Monday refused to dismiss a lawsuit targeting Tesla and its insurance arm, setting the company up for a difficult legal battle involving plaintiffs from multiple states.
The class-action lawsuit, filed this April by plaintiff Ricky Stevens, alleged that the electric vehicle maker increased customer insurance premiums based on false data. According to the company, rates are determined based on a scoring system that uses information obtained from the vehicle to estimate how safely the owner is driving. One of the monitoring devices used to grade customers is the Forward Collision Warning, which alerts car occupants when they are at risk of crashing into an object. The more this alarm is triggered, the more likely the owner’s rate is to increase.
However, the lawsuit claims that the collision warning system frequently exhibited “sporadic and random” behavior, alerting owners of a threat that never existed and Tesla of poor driving that never happened. The plaintiff argues that these false alarms contributed to poorer safety scores, leading the company to hike the premiums of many customers without due cause. On its website, the EV brand notes that the scoring system ensures that rates are calculated based on “real-time driving behavior,” a claim that Stevens and his lawyer labeled as false advertising.
Commentary/Opinion
The Bottom Line: Why Property Insurers Need to Move Past IoT Exploration to Strategy Integration
Bottom-line impact from technology investments starts at the top for property insurers.
At HSB and the IoT Observatory, we believe that simply offering sensor technology through InsurTech marketplaces or discount programs across a book of property insurance policyholders—and hoping for significant adoption—is not a sustainable risk-mitigation approach that will produce long-term profitability or competitive advantage.
Some U.S. property insurers have started their IoT journeys, but the overall level of maturity is still nascent compared to other insurance business lines. While IoT is a part of these insurers’ suites of loss control tools, and the success stories are emerging, industrywide literacy about the IoT paradigm and its applications are still low. That said, some players are scaling significant books with a strategic mindset, including State Farm, and initiatives have emerged where coverage eligibility is dependent upon the use of approved IoT-based prevention solutions.
Regrettably, it remains all too common to witness insurers adopting IoT-based risk prevention as a supplemental activity, as opposed to truly integrating it into their core strategy. These insurers are prone to adopting approaches that do not result in any profound impact on their causes of loss. Equally concerning, book penetration is often very low for insurers that implement IoT in this fashion.
Matteo Carbone, Gordon Hui and Elizabeth DeVito
Matteo Carbone is Director of the IoT Insurance Observatory and chairman of Net Insurance’s innovation advisory board. Carbone was the Guest Editor of the Carrier Management Q32021 special report, ”Insurance Is Getting Connected,” and Q42023 special report, ”Making More Connections,” about IoT insurance applications. A frequent contributor, Carbone was also a guest editor for Carrier Management’s 2018 featured magazine section, “Startups Face Off Against Established Players” ; co-editor Adrian Jones)
Gordon Hui is Senior VP, Applied Technology Solutions, Product Management and Marketing, HSB.
Elizabeth DeVito is Vice President, IoT Solutions, HSB
Webinars/Podcasts/Interviews
[Ed. Note: Highly Recommended] Predict & Prevent™ Newsletter and Podcast presented by The Institutes
Welcome to the Predict & Prevent™ with Pete Miller, MS, MBA, CPCU presented by The Institutes
Predict & Prevent, presented by The Institutes, explores new ways to respond to some of the biggest risk challenges facing society today by working to better predict and prevent losses before they occur. The Predict & Prevent Newsletter is a weekly email that offers thought leadership, reports and news on how risk management and insurance leaders are harnessing technology and prioritizing resiliency to combat the biggest risk challenges facing society. The newsletter will share content from affiliates of The Institutes, as well as timely relevant information from around the web.
About The Newsletter
The Predict & Prevent Newsletter is a weekly email that offers thought leadership, reports and news on how risk management and insurance leaders are harnessing technology and prioritizing resiliency to combat the biggest risk challenges facing society. The newsletter will share content from affiliates of The Institutes, as well as timely relevant information from around the web. SIGN UP FOR THE NEWSLETTER
About the Podcast
This podcast explores how innovators are combating some of the biggest risk challenges facing society today by working to eliminate losses before they occur. Host Pete Miller, President and CEO of The Institutes, and his guests define what Predict & Prevent means, why it is urgently needed and how cutting-edge technology and resiliency techniques are making it a reality. In each episode, leading experts and business leaders will share the tools and strategies that are successfully transforming risk.