Modernization of Auto Titling and Registration, eStart Coalition Pushes Forward March 19th 2024

AI in Insurance

New Technique Helps AI Tell When Humans Are Lying

Researchers have developed a new training tool to help artificial intelligence (AI) programs better account for the fact that humans don’t always tell the truth when providing personal information. The new tool was developed for use in contexts when humans have an economic incentive to lie, such as applying for a mortgage or trying to lower their insurance premiums.

“AI programs are used in a wide variety of business contexts, such as helping to determine how large of a mortgage an individual can afford, or what an individual’s insurance premiums should be,” says Mehmet Caner, co-author of a paper on the work. “These AI programs generally use mathematical algorithms driven solely by statistics to do their forecasting. But the problem is that this approach creates incentives for people to lie, so that they can get a mortgage, lower their insurance premiums, and so on.

“We wanted to see if there was some way to adjust AI algorithms in order to account for these economic incentives to lie,” says Caner, who is the Thurman-Raytheon Distinguished Professor of Economics in North Carolina State University’s Poole College of Management.

To address this challenge, the researchers developed a new set of training parameters that can be used to inform how the AI teaches itself to make predictions. Specifically, the new training parameters focus on recognizing and accounting for a human user’s economic incentives. In other words, the AI trains itself to recognize circumstances in which a human user might lie to improve their outcomes.

Commentary/Opinion

The Year in Insurance – A Look Back, A Look Ahead

2023 was an unremarkable year for insurers. And that’s a good thing. Insurers and their shareholders prefer boring predictable results over unexpected volatile shocks. Property & casualty insurance company stocks performed relatively well. In 2023 the S&P Insurance Stock Index rose 6.4 percent. Although below the 24 percent return for the S&P 500, but without the magnificent seven, the broader stock market returned 8 percent growth.

The financial results of the property & casualty insurance industry were healthy. The industry lost money ($19.2 billion) on underwriting, with a combined ratio of 101.7 percent, but an estimated $75 billion of investment income contributed to $55 billion of pretax income (not including a surprise from Berkshire Hathaway described below), a 6.5 percent margin. After $10.9 billion of federal income tax, the margin was 5.2 percent.

There were two surprises in the reported 2023 numbers. The first was a decline in the expense ratio, which came in at 24.9 percent, significantly lower than 27.2 percent and 27.5 percent as recently as 2019 and 2020, respectively. For many decades the insurance industry has been struggling to bring down a stubbornly high expense ratio from the 30 percent neighborhood, so the 2023 number was a notable result. The lower expense ratio reflects insurers operating more efficiently and not allowing expenses to rise with premium growth. In 2023 net premiums earned grew by 8.9 percent, from $746 billion to $813 billion. .

R Street Institute in Washington, D.C. Jerry Theodorou is the director of the Finance, Insurance and Trade Policy Program

Why Take a Job in Insurance?

While the unemployment rate remains low, insurance job attrition is headed to new heights as we steadily climb toward a gaping deficit of 400,000 industry workers by 2026.

With this impending retirement of a significant portion of the workforce, the industry is ripe for innovation and growth. Such a gap will provide the next generation an opportunity to significantly affect the industry in the coming years. Currently, less than 25% of those employed in insurance are under the age of 35.

News

Carvana, NADA, ACERTUS, IAA & others launch coalition to ‘modernize’ titling & registration

Eighteen auto industry organizations, including the National Automobile Dealers Association along with Carvana, IAA, ACERTUS and others with ties to the used-car space, have launched a coalition designed to modernize the vehicle title and registration process.

The Electronic Secure Title and Registration Transformation Coalition (or, eSTART Coalition) aims to work with governments to “advocate for modern solutions to replace the paper-based processes that currently dominate state and local DMV operations,” the group said in a news release Wednesday.

More specifically, eSTART Coalition will focus on:

Efforts to allow electronic signatures on all title and registration documents
Adopting tools enabling electronic submission and processing of titles and registrations
Enabling vehicle records to be transferred electronically

“We have always been committed to making car buying and selling easier for customers and we are thrilled to partner with like-minded industry leaders to bring convenience and efficiency to a key step of any vehicle transaction: title and registration,” Carvana executive vice president of strategy Christina Keiser said in a news release.

“Replacing legacy paper-based processes with readily available, secure technology solutions will save consumers precious time while also being more efficient for state agencies, dealers, and all industry participants,” Keiser said.

The eSTART Coaltions’ founding members include

ACERTUS
ADESA
Cario, Inc.
Carvana
Champ Titles, Inc.
Decision Dynamics, LLC
Dealer Services Network
DLRdmv
DocuSign
Insurance Auto Auctions, Inc.
J.D. Power
MOBI
NADA
Private Auto
Proof (formerly Notarize)
SimpliGov
Unite Digital
Upstart
VITU
YASSI

More information is available at eSTARTon.org/)

What's up With Chubb and Trump? Insurer Got Cold Feet, Defense Says

Chubb's decision to pass on Trump's half-billion-dollar fraud bond comes days after blowback for underwriting his Carroll defamation bond.

Ten days ago, Chubb underwrote Trump's $92 million bond for his E. Jean Carroll defamation appeal.
But Chubb declined to handle the far higher appeal bond Trump now needs in his NY civil fraud case.
The insurance giant had faced blowback after agreeing to the Carroll bond.

Days after underwriting the $92 million bond for former President Donald Trump's E. Jean Carroll defamation appeal, insurance giant Chubb has now declined to underwrite the half-billion-dollar appeal bond that the GOP frontrunner needs in his New York civil fraud case, defense lawyers revealed in a court filing Monday.

Chubb's decision leaves Trump empty-handed just one week before his March 25 deadline to either secure a bond or pay New York the more than $456 million he now owes in fraud penalties.

Progressive Insurance releases latest results

Progressive has published its earnings report for the month of February 2024.

Of the total net premiums written in February, $4.7 billion came from personal lines; $752.6 million from commercial lines; and $234.6 million from property.

Meanwhile, Progressive noted: “In October 2023, we converted our monthly accounting closing calendar to align with the Gregorian calendar. We do not expect that this change will have a material impact on our reported quarterly and annual underwriting results, but it may impact our year-over-year comparisons on monthly results from October 2023 through September 2024. Therefore, during this time period, we have modified and limited the content of the earnings release, compared to our historical reporting.

“As previously discussed, the conversion of our monthly accounting closing calendar to align with a traditional Gregorian calendar could create potential discrepancies when comparing inconsistent monthly accounting periods on a year-over-year basis through September 2024. While we are not disclosing monthly premium growth comparison for the month, when comparing February 2024 to the prior year, it should be noted that in fiscal February 2023, our personal lines net premiums written included March 1, 2023, which is traditionally a large renewal volume day.

“In addition, in the prior year, our commercial lines net premiums written included transportation network company policies that were renewed on March 1, 2023, but were reported in fiscal February 2023 results. Policies in force, which are not significantly impacted by the change in the accounting calendar, may be a better measure of growth on a monthly basis.”

According to Progressive, its policies in force in February 2024 amounted to 30.3 million. Broken down, personal lines contributed 26 million; commercial lines, 1.1 million; and property, 3.2 million. All figures are higher compared to their counterparts in February 2023.

2024 Atlantic hurricane season and what La Niña means to Florida

La Niña is generally strongest in the fall and winter. The peak months for Atlantic hurricane season are August through October.

All signs continue to point to the formation of La Niña this summer.

That's not good news for Florida residents and the 2024 Atlantic hurricane season, especially when combined with record warm water temperatures.

While La Niña is a natural occurrence that happens in the Pacific Ocean its formation has a huge impact — including its counterpart, El Niño — on weather in the U.S., and those impacts include affecting the formation of hurricanes and tropical storms in the Atlantic basin.

Here's what La Niña is and why Florida residents should care, especially when preparing for the upcoming hurricane season.

Research

Insurance pros: Glass half-empty or half-full?

Roughly eight out of 10 of today’s insurance producers are “very satisfied” with their work, despite challenging carrier relations, depressed sales and renewals, and agency succession concerns, according to the results of the 2024 Independent Insurance Agent Survey.

Each year since 2017, PropertyCasualty360.com has teamed up with the National Association of Professional Insurance Agents (PIA National) to explore the business challenges of today’s insurance producers.

“Agents rely on each other,” PIA National CEO Mike Becker said on a recent episode of the Insurance Speak podcast in which he illuminated the value and distinction of this annual research project. Becker added that insurance pros especially value insights that sprout from opportunities “when they’re able to [communicate] peer-to-peer.”

This year’s survey was fielded between Feb. 1, 2024 and Feb. 23, 2024, and it generated about 550 responses. A sampling of survey questions also went out via LinkedIn.

The survey was organized into four sections: demographics, business challenges, finances and technology. The graphics above illustrate respondent demographics along with their attitudes toward the current insurance business environment.

When survey respondents were asked about the impact of hard-market conditions, nearly 70% of them said clients are now amending coverages to adjust to tighter capacity and higher prices. That response was more tempered when PropertyCasualty360.com readers were asked the same question via LinkedIn. When survey respondents were asked about the impact of hard-market conditions, nearly 70% of them said clients are now amending coverages to adjust to tighter capacity and higher prices.

InsurTech/M&A/Finance💰/Collaboration

Coterie Raises US$27 Million in Oversubscribed Funding Round with Hiscox Support

According to reports, the funding round was oversubscribed, indicating strong investor interest in the company’s offerings. Notably, insurance giant Hiscox has backed Coterie in this funding round, alongside continued support from existing investors such as Intact Ventures and Weatherford Capital.

In 2021, the insurtech announced the completion of a $50 million Series B financing round led by Weatherford Capital alongside existing investors RPM Ventures, Intact Ventures, Group 1001, and Alpha Edison.

The recent, significant investment is poised to fuel Coterie’s growth and innovation in the insurtech sector, further enhancing its ability to serve small businesses with tailored insurance solutions.

The news follows on from the announcement earlier this month, that Coterie Insurance, won the title of 2024 Best Insurtech Company at the Fintech Breakthrough Awards. The Awards, presented by an independent market intelligence organisation, FinTech Breakthrough, recognise outstanding companies, technologies, and products in the global FinTech landscape.

Speaking at the award ceremony, David McFarland, CEO of Coterie Insurance said: “Having our innovative, game-changing approach acknowledged and endorsed by the broader industry is a clear demonstration that Coterie is bringing real value to ongoing industry challenges with novel and exciting solutions.”

Climate/Resilience/Sustainability

CFC launches groundbreaking carbon delivery insurance policy

CFC, the specialist insurance provider, pioneer in emerging risk and market leader in cyber, has today announced its entry in the carbon insurance market with the launch of a groundbreaking new product.

CFC's innovative new Carbon Delivery Insurance is the first to cover both the physical and political risks faced by businesses purchasing voluntary carbon credits on a forward basis. Carbon Delivery Insurance covers 100% of the purchaser's investment for non-delivery of carbon credits.

And in another first, CFC has built a sophisticated underwriting model that rates the carbon project itself rather than the policyholder. This makes the product easy to buy, and negates the need for lengthy, complex application forms and protracted discussions that take weeks to result in a quote. Rather, CFC can deliver same day quoting and binding for a buyer purchasing from one of over 300 carbon projects and counting.

To understand the increasing demand among leading market participants for carbon insurance to help mitigate the risks of the voluntary carbon market (VCM), CFC surveyed over 500 companies actively involved in the market.

People

NAIC Announces Gary Anderson as CEO

The National Association of Insurance Commissioners (NAIC) today announced the appointment of insurance veteran and current Massachusetts..

The National Association of Insurance Commissioners (NAIC) today announced the appointment of insurance veteran and current Massachusetts Insurance Commissioner Gary D. Anderson as the organization's Chief Executive Officer. Anderson will begin leading the 153-year-old insurance standard-setting organization governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories by May 1, after completing his service as the Massachusetts Insurance Commissioner.

"Selecting the next NAIC CEO has been arduous but rewarding," said NAIC President and Connecticut Insurance Commissioner Andrew Mais. "We were looking for the best fit, and we found it in Gary Anderson. Gary's dedication to our state-based system of insurance regulation and his insurance expertise are top notch. We look forward to his leadership as we navigate the complexities of regulating the insurance sector and deliver on our mission to protect consumers."

"I have been fortunate to serve the Massachusetts insurance-buying public under three governors: Gov. Deval Patrick, Gov. Charlie Baker, and now Gov. Maura Healey," said Anderson. "Throughout my career in public service, I have been rewarded with valuable experiences, new and lasting connections, and opportunities to contribute to a greater good. I am excited to embark on the next adventure as CEO of the NAIC, supporting the state-based system of insurance regulation. Thank you to the NAIC Members for the trust and faith you have placed in me."

In 2017, Anderson was appointed Commissioner of Insurance by Massachusetts Gov. Baker. Anderson's insurance experience began in 1999 with a regional carrier in the Northwestern U.S. He served as a policy adviser and senior counsel in the Massachusetts State Senate President's office, where he was involved in several policy areas, from the state's broad efforts to control health care costs to all matters affecting the financial services sector. Anderson joined the Massachusetts Division of Insurance as First Deputy Commissioner in February 2014. His responsibilities included strategic planning and policy development for all aspects of the agency.

Gallagher Re taps new CEO for North America

Current chief to transition to chairman

Global reinsurance broker Gallagher Re has announced the appointment of Brian Flasinski (pictured above left) as CEO for its North America region.

Flasinski will succeed Jim Bradshaw (pictured above right), who will transition to the role of chairman for Gallagher Re North America. The appointments will become effective following a transition period later this year.

Flasinski joined the company in 2015. He most recently served as executive vice president and North American sales leader. Prior to his tenure at Gallagher Re, Flasinski served for nine years as a vice president at Guy Carpenter.

“Brian has been an outstanding leader and an integral part of the North American success story,” Bradshaw said. “As sales leader, he has energized our new sales initiative while also continuing to deliver value to our clients. His passion for our business and culture, his dedication to provide best-in-class solutions, and his commitment to collaborating across regions and the Gallagher network have been exemplary and will prove invaluable as we continue to drive our business forward.”