AI in Insurance
The technology-insurance crossover – where generative AI fits in
Preventing the industry from falling foul of unintended AI consequences
With three decades of supporting the insurance market in a variety of leadership roles at high-profile businesses to his name, Mind Foundry’s Selim Cavanagh (pictured) is no stranger to the “assortment” of reactions that accompany any period of operational or strategic transition.
Generative AI and its implications for the insurance proposition are no exception – and Cavanagh’s role as head of insurance at the AI solutions business is a natural evolution of his years of using connected data and technological innovations to help transform insurance businesses. Having served in senior roles at several high-profile companies including AXA, Lexis Nexis and ingenie, he was drawn to his present role by the mission of its founders – to create a future where humans and AI work together to solve the world’s most important problems.
“I’d got to thinking about how best to take my skill set around the technology-insurance crossover into other areas when I was approached by Mind Foundry – an extremely successful AI business spun out from Oxford University by two founders, who are still professors of AI there,” he said. “They’ve been researching and talking about the fundamental shifts in how we’re going to work in the future, what kind of jobs we’ll have and what impact that will have on society for some 30 years.
News
10 Largest Auto Insurers Each Raised Rates by Double Digits in 2023
According to S&P Global Market Intelligence’s RateWatch, Farmers Insurance instituted double-digit rate increases in 43 states in 2023 for a weighted average rate increase of 17.6%—and its private-auto insurance peers in the U.S. did the same.
All 10 of the top auto insurers in the U.S. raised rates double digits in 2023, with all but two—GEICO and Allstate —ending the year with higher rate increases than the prior year. The duo were among insurers that raised auto rates the most in 2022.
American Family was very close behind Farmers when it came to rate increases in 2023, with 17.5%. USAA hiked auto rate 16.9%, with Nationwide, Liberty Mutual and State Farm also increasing rates at or above 16%, according to S&P GMI.
Research
Gen Z and Millennials want embedded insurance options
The 2024 Embedded Car Insurance Study by Polly indicates that Millennials and Gen Z consumers prefer embedded insurance options at the car dealership and highlights their preference for convenience.
According to respondents, 79% of Millennials and Gen Z think that auto insurance should be an integral part of the process when purchasing a vehicle and 81% would prefer to purchase their insurance while buying a car.
Polly conducted an online survey August 22 - 26, 2023 of over 1,000 American adults who had purchased a car within the last 12 months. The results show that 76% of Millennials and Gen Z think that buying auto insurance and their vehicle together would be easier and more convenient, compared to just 63% of all respondents who agreed.
"Our embedded auto insurance study reveals that Millennials and Gen Z aren't just looking for vehicles; they're seeking a holistic buying experience that includes insurance. The research is clear, consumer demand for integrated solutions is not a passing trend. It's a new norm," said chief marketing officer Mike Burgiss in a press release statement.
These generations, which are known to be tech-savvy and often referred to as "digital natives," are more willing to embrace digital insurance channels. The study reports that 82% of respondents prefer to shop and buy insurance coverage using their cell phones, and about 65% would be willing to buy a policy through an embedded app at a dealership.
InsurTech/M&A/Finance💰/Collaboration
Erie's VC arm announces three new investments
Erie Strategic Ventures, the venture capital arm of Erie Insurance, announced investments in three new portfolio companies – pet insurance startup Wagmo, insurance technology provider Roots Automation, and estate planning startup Trust & Will.
The Erie Strategic Ventures fund, launched in August 2022, focuses on investing in the personal and commercial insurance value chain, as well as adjacencies that offer potential to deliver value to Erie, its agents and policyholders. The insurer works with the corporate venture capital firm Touchdown Ventures to help manage Erie Strategic Ventures.
“We are excited to partner with Wagmo, Roots Automation and Trust & Will. Erie Insurance is a relationship company, and we believe that these three relationships create numerous opportunities for mutual benefit.” – Keith Kennedy, senior vice president for Next Level Innovation at Erie Insurance.
Insurance M&A activity dropped 16.8%, but was still above average in 2023
During 2023, insurance brokerage mergers and acquisitions declined by nearly 17%, according to Marsh, Berry & Co., LLC, which reported market movements are pointing to a positive year ahead for M&A activity.
The overall decline in 2023 is dramatic on its face, but MarshBerry noted that 2021 and 2022 both saw record levels of M&A activity. There were 1,066 transactions announced in 2021, while 2022 saw 903 deals announced.
As it is, the 751 deals announced in 2023 will mark the third-highest number of transactions in the industry’s history.
During the past year, 10 companies accounted for 43% of the announced deal. The top four most active buyers accounted for more than 21% of the 751 total transactions announced, according to MarshBerry.
Although overall transaction volume tumbled from record highs, valuations continued an upward trajectory. During 2023, the total purchase price potential for all brokerages was 7.8% higher compared with the year-end 2022.
Will 2025 mirror record-setting years?
During the final quarter of 2023, economic conditions began flashing the potential for insurance M&A tailwinds, MarshBerry reported. Interest rate hikes successfully cooled inflation, and the Federal Reserve responded by halting its rate increases
Five Sigma and Odie Pet Insurance Partner to Drive Innovation and Efficiency in Claims Management - Insurtech Israel News
Five Sigma, a pioneer in cloud-native claims management solutions, is excited to announce a strategic partnership with Odie Pet Insurance, a full-service pet health insurance company on a mission to democratize pet insurance and remove the financial burden for pet owners by providing greater coverage flexibility and affordable premiums.
This collaboration marks a significant leap forward in reimagining pet insurance claims processes and enhancing operational excellence across the industry.
Five Sigma’s innovative Claims Management System is tailored specifically for property & casualty insurance companies and uniquely aligns with Odie Pet Insurance’s mission to redefine the pet insurance landscape. This partnership is built on the shared goal of leveraging technology to simplify and enhance claims operations while delivering unparalleled experiences to pet owners.
“We are thrilled to join forces with Odie Pet Insurance to bring a new era of efficiency and innovation to pet insurance claims management,” stated Oded Barak, CEO and Co-founder of Five Sigma. “Our vertical SaaS claims solution combined with Odie’s visionary approach will reshape how pet insurance claims are handled, offering streamlined processes, intelligent automation, and data-driven insights.”
Janover launches insurtech start-up
Janover Inc., an AI-enabled platform for commercial real estate transactions, has launched a new insurtech as a wholly owned subsidiary – Janover Insurance Group.
According to the announcement, this new venture is set to seamlessly integrate with Janover’s generative AI applications and directly plug into its marketing funnel.
In a statement, the company explained that Janover Insurance Group “aims to transform the landscape of commercial property insurance through the application of generative AI and its unique access to data on the commercial property market.”
The subsidiary will initially focus on multifamily and commercial property insurance, but there are plans for it to expand its services to include Small and Medium Business (SMB) clients as it expands further.
In addition, Janover confirmed that it has engaged Tyler Schapiro, CEO of Flagler Insurance, as a strategic advisor for its commercial insurance arm.
Insurtech Koop Insurance Launches Pioneering ERM Automation for Technology Risks
Koop Insurance ("Koop"), an insurance technology company protecting the world from a new generation of risks, released a groundbreaking ERM Automation tool for technology risks to improve security posture, simplify enterprise compliance, and save on insurance costs.
At a time when artificial intelligence and cybersecurity are penetrating all aspects of technology-based products, services, and operations, companies must have full visibility into their risks and have a tool to control those risks easily. The ERM Automation tool includes features like contractual requirements management, risk events reporting, controls implementation, and smart coverages - all focused on providing technology customers with a delightful risk management experience. Technology companies of all sizes can use the ERM Automation tool as a token of trust with their stakeholders while unlocking considerable savings on insurance.
swifter.io Joins Guidewire Insurtech Vanguards Program
swifter.io, an insurance experience platform, announced that the company has joined Guidewire’s Insurtech Vanguards program, an initiative led by property and casualty (P&C) cloud platform provider, Guidewire (NYSE: GWRE), to help insurers learn about the newest insurtechs and how to best leverage them.
"We're excited to join the Insurtech Vanguards program, where we can introduce insurers to our solution, which helps grow and accelerate the launch of new alternative distribution partnerships," said swifter.io’s Chief Operating Officer Itay Even-Chen. "swifter.io assists insurers in creating embedded and customized distribution journeys, providing a cost-effective solution, and reducing time to market complexities, all while helping them meet the evolving needs of policyholders."
Insurtech Vanguards is a community of select startups and technology providers that are bringing novel solutions to the P&C industry. As part of the program, Guidewire provides strategic guidance to and advocates for the participating insurtechs, while connecting them with Guidewire’s P&C customers.
"We extend a warm welcome to swifter.io as they join our Insurtech Vanguards program. With their innovative solution, swifter.io is set to transform insurers' approach to exploring and partnering with new distribution channels, providing valuable contributions to insurers and the industry as a whole," said Laura Drabik, Chief Evangelist at Guidewire.
Arch among backers of insurtech MGA Rainbow
Rainbow, the digitally-enabled managing general underwriter, has raised $12 million in seed funding with participation from Arch Capital Group Ltd., Caffeinated Capital, Altai Ventures, Zigg Capital, 8VC, Buckley Ventures, and Habitat Partners.
The company’s flagship program, an admitted business owner’s policy (BOP) product specifically tailored to the restaurant industry, is currently live in eight states and is expected to be available in over 25 states in 2024. These states include Texas, Michigan, Arizona, Indiana, Utah, Pennsylvania, Ohio, and Tennessee.
Bobby Touran, Chief Executive Officer and Co-founder, Rainbow, commented, “Coming out of the pandemic, we saw a gap in the process of other underwriting companies and carriers focused on small commercial, and this was super clear with restaurants and their ever-evolving nature.
Awards
InsurTech Hartford Opens Nominations for Prestigious 'Making Waves' Award
InsurTech Hartford, a leading InsurTech ecosystem renowned for fostering innovation and collaboration in the insurance industry, is thrilled to announce the opening of nominations for its annual 'Making Waves' award. This prestigious accolade is part of InsurTech Hartford's industry influencer awards program, which recognizes and honors insurance industry pioneers for their significant contributions to advancing innovation.
Eligible nominees include insurance professionals from across the industry including, carriers, startups, and solution providers who have made notable accomplishments, shown dedication to innovation, and proactively engaged in its advancement. Nominations are now open and can be submitted by any member of the insurance community by February 9, 2024 here
Winners of the 'Making Waves' award will be honored at the annual InsurTech Hartford Symposium, a high-impact event drawing an executive-level audience from all lines of the (re)insurance business held on April 17 & 18 at the Mohegan Sun Resort in Uncasville, CT.
"With our annual 'Making Waves' award, we aim to spotlight and celebrate the innovators and changemakers in the insurance industry," said Stacey Brown, Founder & President at InsurTech Hartford. "We encourage the community to nominate individuals who have been instrumental in driving innovation and making a significant impact on the industry."
2024 PREDICTIONS
Forrester: Global Tech Spend To Grow 5.3% In 2024, Reaching $4.7 Trillion
Forrester’s (Nasdaq: FORR) Global Tech Market Forecast, 2023 To 2027, reveals that as economic conditions continue to improve, technology spend will grow 5.3% in 2024 — up from 3.5% in 2023.
Two factors will primarily contribute to this growth: Increased spending on software and IT services, including generative AI (genAI), cloud, security, and digital, and economic growth in Asia Pacific. By 2027, software and IT services will capture 69% of global tech spend, with investments in genAI software predicted to reach $227 billion by 2030 at a 36% compound annual growth rate. Asian countries, especially India, the Philippines, Vietnam, Indonesia, Malaysia, and China, will see the fastest tech spend growth in 2024.
“Technology companies faced significant economic headwinds this past year, but 2024 promises a better outlook”
Global tech spend is expected to reach $4.7 trillion in 2024, with growth occurring across all regions:
- Asia Pacific will grow 5.7%. India is one of the largest exporters of technology services: IT exports will reach $194 billion in 2023, and total technology and service industry revenues could reach $350 billion by 2025.
- North America will grow 5.4%. Software and IT services will capture 60% of US tech spend in 2027, up from 53% in 2018. Financial services and healthcare will see the fastest tech spend growth in 2024, with more modest growth in retail, manufacturing, transportation, and logistics.
- Europe will grow 5.1%. After a challenging 2023, the European economy will recover in 2024 to grow almost double the rate compared to the previous year. Longer term, European tech spend will see 5.1% to 5.7% growth from 2024 to 2027, driven by higher enterprise digital maturity and more advanced cybersecurity adoption.