AI in Insurance
Five takeaways from our panel on how claims professionals are using AI today
One major focus of ELM Amplify 2023 was to present programming that could help our clients in insurance claims departments return home with practical ways to improve operations. Toward this end, we hosted the panel discussion "Revolutionizing Claims and Litigation: AI's Role in Insurance Transformation", which shed light on the burgeoning relationship between AI and claims management.
Our Vincent Venturella moderated the conversation with guest speakers Kevin Schulte, HQ Claims at The Cincinnati Insurance Company, and Jonathan Weber, Vice President - Group Claims at ACE Group. Here are the top five takeaways from this informative conversation:
Litigation and AI are naturally aligned
Claims litigation management processes generate a huge amount of data within claims departments. AI, meanwhile, works best when it has a large amount of data to make use of. This makes AI a natural technology choice for contextualizing, analyzing, and summarizing data – all tasks that can be time-consuming or error-prone for humans.
When claims departments use AI tools to take more rote tasks off the plates of staff members, they declutter team members’ workdays and introduce efficiencies for claims handlers, who are then able to focus on the higher-value work for which their skills are best suited. The natural affinity between claims management and AI presents a promising avenue for insurance companies seeking to streamline processes and enhance efficiency.
How is Gen AI impacting jobs?
73% of insurance executives expect artificial intelligence to take their jobs, according to report
The FintechOS report, "Generative Artificial Intelligence: The Technology Polarising the Financial Services Industry" reveals the rising concerns and expectations of generative AI (GAI) on the insurance workforce, with responses from over 500 senior technology decision makers evenly distributed from the United States and United Kingdom.
Most of the executive respondents, nearly 46%, said they saw GAI as more a "friend" – whereas about 39% responded that they see the technology as more of a "foe."
Despite the overall more positive perception of GAI, the report reveals that 73% of insurance executives expect that GAI will eventually take their jobs. Of these respondents, 63% believe that GAI will result in job losses – most believe that the figure could go up to as much as 20% over the next three years.
"GAI is a terrain marked by both excitement and apprehension, and our study explores the polarized sentiment that surrounds this groundbreaking technology. While opinions within the insurance industry are deeply divided, there is one common consensus: the expectation that GAI will boost revenues but inevitably reshape the workforce and displace jobs," said Teodor Blidarus, co-Founder and CEO at FintechOS in a press release statement.
According to the survey, two-thirds of insurance executives anticipate GAI to boost revenues by 10% to 30% within the next three years.
AI at the Center of CL-AI-MS
One year ago, ChatGPT was officially introduced and sent the business world, pundits and laypersons alike into a frenzy.
AI in Insurance
Insurance is no exception, as technology providers are sprouting up, or, rather more commonly, solution providers are highlighting their existing AI capabilities. The AI vendor community to the P&C industry is rapidly expanding and may generally be grouped by use case; hyper-automation, insights, image and language.
AI for Claims
Conventional wisdom is that AI lacks human emotion and empathy. Claims might demand the most human emotion in insurance, so the AI use-cases talked about today tend to call for AI tools aiding claim adjusters rather than doing the whole job. However, all the discussion is still early and focused on the short term. ROI still dominates decision making and, given the highly competitive P&C insurance market, fraught with financial pressures, the balance between deployment of tools and automation of jobs will be put to new and more rigorous tests.
Here is a sort of use-case wish list for AI in insurance, focused on the most repetitive and demanding claim functions.
Alan Demers and Stephen Applebaum, as published in Insurance Thought Leadership
News
Best Practices for Utilizing AI/ML Tools as NAIC Adopts the Model Bulletin on Use of AI
What You Need To Know
In December 2023, the National Association of Insurance Commissioners (NAIC) adopted the Model Bulletin on the use of Artificial Intelligence Systems by Insurers.
The Model Bulletin urges insurers to mitigate AI-related risks, such as discrimination, data vulnerability and lack of transparency. This guidance aims to ensure responsible AI usage and prevent adverse consumer outcomes in the industry.
While its primary focus is on insurance companies, insurance intermediaries should also pay attention to potential regulations.
Insurance entities should develop internal policies and document AI use to mitigate legal exposure in an evolving regulatory landscape. Best practices for utilizing AI/ML tools in the insurance industry include disclosure, explanation, compliance and oversight and documentation.
At the recent 2023 national meeting of the National Association of Insurance Commissioners (NAIC) in Orlando (November 30 – December 4), the Innovation Cybersecurity and Technology Committee of NAIC (the “H Committee”) and the NAIC Executive Committee officially adopted the NAIC Model Bulletin: Use of Artificial Intelligence Systems by Insurers (“Model Bulletin”).
The first draft of the Model Bulletin was published in July 2023. After four months of in-depth discussion and collaborations among state insurance regulators, industry leaders and interested parties, the Model Bulletin went through two rounds of revisions and the final draft was adopted by NAIC on December 4, 2023.
The Model Bulletin, as adopted, is substantively similar to the preceding drafts, however changes were made within the Model Bulletin’s defined terms including changes to the definitions of Big Data, and Generative AI and the inclusion of a definition for Adverse Consumer Outcome.
Indeed the Model Bulletin now requires “[Insurers] to develop, implement and maintain a written program (an “AIS Program”) for the responsible use of AI Systems that make or support decisions related to regulated insurance practices [and] the AIS Program should be designed to mitigate the risk of Adverse Consumer Outcomes, including, at a minimum, the statutory provisions set forth in Section 1 of [the Model] [B]ulletin.”
Commentary/Opinion
Top 10 insurtech incubators
At a time when funding, mentorship and access to venture capitalists is highly sought after, we ask who the Top 10 insurtech incubators & accelerators are.
It’s a challenging time for many insurtech entrepreneurs. Though the sector has expanded exponentially in recent years, indicating that it is possible to scale a neat idea into a successful insurtech business, access to funding and mentorship has never been harder to come by. That’s why incubator programmes prove so useful to those who can get accepted, providing connections to investors and helping founders to hone their idea and their pitch.
With this in mind, we count down the Top 10 insurtech incubator and accelerator programmes out there right now.
Alex Clere, Editor of FinTech & InsurTech Digital Magazines
InsurTech/M&A/Finance💰/Collaboration
AI-Driven Embedded Insurance Platform Mulberri Announces $6.75 Million Series A Led By Eos Venture Partners
Mulberri, an AI-driven embedded business insurance platform for small and medium enterprises, announced its $6.75 million Series A led by Eos Venture Partners, with participation from existing investors Hanover Technology Management, MS&AD Ventures, and Altamont Capital Partners (via insurance enterprises in its portfolio). Zach Powell, General Partner of Eos Venture Partners, will join Mulberri as a board member.
“The insurance industry has always been challenged to adequately serve the small enterprise customer. We believe with Mulberri's highly unique distribution channel, trusted partnerships in the payroll / HR benefits sector, and evolving product portfolio puts the company at the forefront of change in the SME sector”
Founded in 2021, Mulberri provides custom-fit solutions for small and medium enterprises through deep partnerships in the HR, benefits, and payroll sectors and other affinity SME channels. Mulberri’s platform offers an array of insurance solutions, including brokerage, risk transfer, certificate of insurance, and risk engines. Its ecosystem and partnerships enable access to more than 250 PEOs/ Payroll Providers/ Brokers covering about 100,000 small & medium enterprises.
“Our mission is to help small enterprises make data-driven risk management decisions and fulfill these needs simply, efficiently, and transparently,” said Hamesh Chawla, Co-Founder, and CEO at Mulberri. “Our partnerships in the HR and Payroll sector connect us with SMEs at critical points in their business lifecycle, allowing us to provide the right risk solutions at the right time. We’re thrilled to partner with Eos on the next phase of our growth.”
Innovation
Innovation & Technology at Zurich Insurance
The future of insurance is closer than we think.
At Zurich, we are already working on many ways to embed our products and service and be closer to where our customers are. With transformative technology evolving every day, the possibilities are exciting and endless. Have a look at the future of insurance.
‘Innovation’ is one of Zurich’s three strategic pillars next to ‘Customer’ and ‘Simplification’. To accelerate internal and external innovation, Zurich has launched two strategic innovation programs: the Zurich Innovation Championship and *Make the Difference.
Canada
Claims insights – an era of adaptation
Coming out of the pandemic, the insurance industry has continued to face claims challenges while supporting Canadians in tough times
Industry experts
- Valérie Lavoie, Desjardins General Insurance Group
- Brynn Tucker, CNA Canada
- Matt Woodall, Royal Claims Services
SUPPLY-CHAIN challenges and natural catastrophes continued to pile on the pressure for insurers and insureds into 2023, but some pandemic-driven pressures have been easing, and digital transformation has seen insurers and claims groups up their game.
Insurance Business hosted a roundtable with a panel of senior industry experts from CNA Canada, Desjardins General Insurance Group, and Royal Claims Services to discuss today’s claims landscape and how the insurance industry is looking at its caregiver role in supporting claimants.
EMEA
Intact and RSA sell UK direct Personal Lines operations to Admiral
Intact Financial Corporation and its subsidiary RSA have reached an agreement to sell RSA’s UK direct Personal Lines operations, representing approximately £165 million of annual premiums, to Admiral Group.
The transaction will result in the transfer of renewal rights, brands and employees, and has been approved by the Boards of Directors of both Intact and Admiral.
The deal is expected to close at the end of Q1 2024, with RSA set to retain the claims reserves, which Intact said will be run off over time.
“RSA will also exit its UK Home and Pet partner and broker contracts representing annual premiums of approximately £515 million,” Intact explained.
2024 PREDICTIONS
A disjointed world: Themes for 2024
The global environment has still not settled onto a clear pathway toward a new stability as we enter 2024. In this disjointed world, we confront risks posed by potential volatility across the economic and political spheres. We also see potential opportunities arising from the new reality of greatly segmented global relationships.
We have identified five overlapping themes that will drive global political and economic relationships in 2024: geopolitical reordering, economic fault lines, resource security, supply chain resilience and logistics rewired.
S&P Global
[Ed. Note: Recommended Webinar] Top 10 Trends in Property & Casualty, 2024: Generative AI Emerges as Insurers Adapt to Changing Markets in a Changing World
Datos Insights (formerly Aite-Novarica)
The insurance sector has survived past crises, but the current combination of financial uncertainty and operational stresses poses a severe test for carriers. Maintaining profitability and relevance will challenge insurers to rethink their business models, harness technology, and focus relentlessly on delivery and cost efficiency. The multiple headwinds buffeting the industry could separate the nimble, forward-looking companies from the stagnant and outdated.
Join Datos Insights P&C insurance experts for this webinar, in which they will review the top 10 trends they see making a significant impact in 2024, including the AI revolution, the unaffordability crisis, the hardening reinsurance market, and growing talent gaps in the workforce.
Unable to attend the live webinar? Please go ahead and register and we will send you the recording. REGISTER HERE
AM Best Maintains Stable Outlook for U.S. Property/Casualty Commercial Lines
AM Best Maintains Stable Outlook for U.S. Property/Casualty Commercial Lines
Persistently strong underwriting performance during and after the global pandemic – despite substantial economic and capital markets volatility – has prompted AM Best to maintain its “stable” outlook for the US property/casualty commercial lines segment.
Premium rates for most of the major commercial lines of business continued to rise in 2022, following a multi-year peak in late 2020 and early 2021. Rate-on-rate pricing gains fueled commercial insurers’ underwriting performance into 2023.
“Pricing momentum remains positive for most classes of business, with the notable exception of workers’ compensation and certain management liability classes,” said Alan Murray, associate director of AM Best. Workers’ compensation has the strongest multi-year underwriting performance and tightly regulated premium rates, resulting in ongoing premium rate decreases in 2022 and 2023.
Commercial lines insurers reported robust underwriting results through the third quarter of 2023. The trend is expected to continue, driven by strong net premiums earned on the heels of prior year rate increases for most of the major commercial lines of business, as well as growth in net premiums written, thanks in part to the continued economic expansion in the US.
Admitted carriers have prioritized more disciplined risk selection, terms and conditions and capacity deployment, evidenced by the continuation of strong submission flow and growth in the non-admitted/excess and surplus lines (E&S) market. A more direct focus on loss control and claims management is resulting in lower claims frequency and severity.
Insurance predictions for 2024 – auto theft, natural disasters, repair claims
In 2023, Canada’s insurance landscape had been characterized by the impact of industry challenges such as natural catastrophes and a growing auto theft crisis.
An examination of these trends offers insights into what both industry professionals and consumers can expect from the year ahead, according to experts at Ratehub.ca.
Auto theft and fraud
The rise in auto theft claims is poised to create challenges for both insurance companies and policyholders, according to Matt Hands, Ratehub.ca’s VP of insurance.
Hands additionally noted that the cost pressures brought on by auto theft and fraud can make it “overall difficult for consumers to have choices and options for the best rates.”
“It goes without saying that fraud in the auto insurance industry hurts insurers, first and foremost, as they’re the ones footing the bill. But eventually, this trickles right down to customers in the form of a rate hike,” he said.
Natural disasters
The growing intensity and frequency of natural disasters emerged as one of the significant challenges faced by the insurance industry this year, with Canada seeing record-breaking wildfires and flooding caused by storms.
Hands highlighted the possibility of the “domino effect” coming into the new year, warning consumers to be prepared for the inflation of home insurance premiums due to the large volume of claims brought on by recent catastrophes.
Auto and home repair claims
Meanwhile, RH Insurance director Morgan Roberts noted how vehicles have become more expensive to repair due to advanced technology.
Still, Roberts pointed to a bright side: that cars are being fixed quicker now and that inventory is “no longer as big of a concern.”
As for repair claims in home insurance, Roberts said fluctuating costs underscore why policyholders must review their coverage regularly.