AI in Insurance
How AI Can Keep P&C Insurers Profitable
AI has emerged as a formidable tool, particularly advancements in computer vision models and large language models.
How can P&C insurers remain profitable in 2024?
Insurers ended 2023 with a combined ratio of 103.3%. Numerous challenges contributed, including inflation, climate change and rising reinsurance rates. While these challenges largely lie outside insurers' control, the times signal a need for strategic technological adoption to help them offset difficult seasons.
AI has emerged as a formidable tool in this battle, particularly advancements in computer vision models and large language models (LLMs).
When we delve into these specific AI use cases, their real-time impact becomes evident. Computer vision and machine learning models trained on aerial imagery and geospatial data can generate detailed attributes of property condition. LLMs tell underwriters anything they need to know about a property to reveal otherwise unknown insights.
How does leveraging these tools help insurers streamline operations, minimize losses and cut expenses? Let’s explore.
David Tobias serves as the general manager of insurance at Nearmap. Previously, he co-founded Betterview, a property intelligence platform for P&C insurers that Nearmap acquired in December 2023
Preparing insurers for future Generative AI advancements: MAPFRE
In a recent report conducted by Spanish insurer MAPFRE, a framework of actions is presented for insurers to consider in anticipation of potential advancements in Generative Artificial Intelligence (AI), aimed at mitigating risks and fostering a positive impact on society.
The report, titled, “Exploring tomorrow: the role of insurers in a society marked by Generative AI”, outlines four extreme yet plausible scenarios for how Generative AI could impact society by 2029, along with the role the insurance industry could play in each scenario.
José Antonio Arias, Chief Innovation Officer at MAPFRE, clarifies, “Our objective is to carry out a balanced, bold, and sincere reflection on the eventualities that could arise in every possible scenario for the evolution of Generative AI. By doing so, we’ll be able to work so that, no matter what the future may hold, the best possible scenario for everyone materialises.”
In each scenario, new risks emerge or preexisting ones are exacerbated, necessitating the insurance industry’s need to protect itself and its customers, as well as to adapt to meet new protection needs.
MAPFRE has created a framework for the insurance industry, detailing how companies can preemptively adopt preventive measures against evolving Generative AI for their benefit and that of their customers.
News
State Farm to pull out of 72,000 California home insurance policies
72,000 policy holders to be affected following effects of inflation, disasters
State Farm General Insurance Company has just announced that it is taking strategic steps to secure its future viability within California's insurance market. This involves a series of significant changes affecting a subset of their clientele across the golden state.
Specifically, the company plans to discontinue renewals for around 30,000 policies, including homeowners, rental dwellings, and other property insurance such as those for residential community associations and business owners. Last year the insurer halted new homeowners policies being issued in the state.
State Farm General has also decided to exit the commercial apartment policy sector, affecting an additional 42,000 policies. These measures, slated to begin on July 3, 2024, for the former group and August 20, 2024, for the latter, account for a little more than 2% of the company's total policy count in California.
Duck Creek Launches Payment Solution
The cloud-based SaaS solution provides flexibility to carriers and offers access to any global payment provider or technology for premium collections and claims disbursements.
Duck Creek Technologies, (Boston) a major provider of a core system/insurance platform and related solutions for the property/casualty industry, has introduced Duck Creek Payments to the North American market. This cloud-based Software as a Service (SaaS) offers access to any global payment provider or technology for premium collections and claims disbursements, according to a Duck Creek statement.
Serving as the singular entry point to the global payments ecosystem, Duck Creek Payments ensures insurers enjoy heightened cost efficiency, accelerated time-to-market, improved customer experiences, and future-proofed payment offerings, all while ensuring payment compliance, the vendor says.
Recognizing the increasingly important role of payments in meeting customer expectations, Duck Creek says it is catering to insurers’ unique needs, acknowledging the challenges of integrating payment solutions not inherently designed for the insurance industry.
How Pixel Tracking Influences Claims and Underwriting in the Digital Marketing Age
Pixel tracking stands at the forefront of digital marketing innovation and is a key tool for understanding user behavior and optimizing marketing strategies. Yet, this powerful technology demands responsible use, especially considering the liability and insurance implications it brings.
Understanding how pixel tracking influences insurance claims and continued underwriting of risks is crucial for businesses, claims professionals and insurers aiming to mitigate these risks.
Senate committee frustrated by Citizens Insurance dodging questions after Gov. DeSantis says company 'not solvent'
"Citizens has not adequately addressed the Committee’s questions and has ignored repeated attempts at follow up.""
The Chair of a U.S. Senate committee is putting Florida’s insurer of last resort on blast for not responding to its questions about its financial footing, amid concerns that the state may lean on the federal government to bail out the insurance market after a major hurricane.
In the wake of Gov. Ron DeSantis claiming Citizens Property Insurance is “not solvent,” U.S. Senate Budget Committee Chair Sheldon Whitehouse is “renewing all requests for information and documents set out in the Committee’s November letter related to the company’s plans to address increased underwriting losses from climate-related extreme weather events and other disasters.”
Last year, Whitehouse wrote the Governor, Insurance Commissioner Michael Yaworsky and Citizens CEO Tim Cerio with concerns about how climate risk could push Florida’s insurer of last resort into insolvency.
Climate/Resilience/Sustainability
`Realtor.com® Equips Consumers with More Data to Evaluate the Potential Impacts of Climate Risks on Their Home
[Ed. Note: We are following First Street. Allstate and American Family Insurance recently started using First Street climate risk solutions for Wind, Fire and Flood risk at the property level.]
New research shows 32.5% of homes are at risk of extreme heat, 18.1% are at risk of wind (gusts exceeding 50 mph) and 9% are at risk of poor air quality
In the United States, 40.4% of homes, valued at $19.7 trillion, are at severe or extreme risk when it comes to heat, wind and air quality. To help consumers make more informed home buying and selling decisions, Realtor.com® announces the launch of three new climate risk factor scores on its website including Heat Factor™, Wind Factor™, and Air Factor™, with data from First Street, a leading climate technology company with expertise in climate change and the connection of climate risk to financial risk.
"Realtor.com® currently offers users an in-depth look at fire and flood risks. When you consider the percentage of American homes, and the value at risk, against factors like extreme heat, air quality and wind, it was imperative for us to deliver more robust and comprehensive climate risk information to our users," said Mausam Bhatt, Chief Product and Technology Officer, Realtor.com®.
"It's important for people to fully understand the climate risks that a home faces not only in the present, but in the future, so they can make the most informed decision for one of the biggest purchases and investments they will make in their life."
2024 severe convective storm season picking up where last year left off: CoreLogic
2024 severe convective storm season picking up where last year left off: CoreLogic
Analysis by CoreLogic estimates that 1-inch or greater hail fell on over 660,000 homes between March 13th and 14th in the central United States, causing material and destructive property damage.
Dozens of severe convective storms (SCS) formed across the central U.S. over March 13th and 14th, and according to CoreLogic, ensured that the 2024 SCS season has already broken single day records from 2023, which was a record year in terms of insured SCS losses.
According to the National Weather Service’s Storm Prediction Center daily storm reports, hail as large as softballs fell in select locations across the central U.S.
In total, there were 214 hail reports on Thursday, March 14th. By the next day, 78 of those hail reports indicated hail greater than or equal to 2 inches in diameter, setting a single-day record for all National Weather Service offices.
In fact, March 13th hail impacts in Kansas and Missouri and March 14th impacts in Missouri, Illinois, and Oklahoma were worse than any single day in 2023, reports CoreLogic.
Climate change is fuelling the US insurance problem
Extreme weather events are making it hard to insure homes in certain parts of the US. What happens when insurance companies simply stop insuring?
When Frances Acuña received her flood insurance quote for the coming year, she got a shock: it would be increasing from $450 to $1,893 (£355 to £1,490). "I couldn't pay it," she says. "And so now I don't have flood insurance. But I don't feel alone as most of my neighbours don't have flood insurance either."
Acuña, a single mother-of-three, lives in Dove Springs in south-east Austin, Texas, an area that had, until recently, escaped the mass gentrification seen in the rest of the city. That is changing, says Acuña. The astronomical rise in flood insurance, coupled with an affordable housing crisis, is pushing many historic Latino communities out of the area.
In March 2024, Acuña, who is an organiser at Go Austin, a coalition working to improve the health of local communities, will leave the neighbourhood she has lived in for decades. "I bought this house thinking I would die in it," she says, in tears over the decision she has been forced to make. "But I can't afford to live here anymore."
Acuña's insurance went up because of a change in floodplain mapping. In 2018, the National Weather Service updated its flood models to reflect 25 years' worth of flood data. Thousands of houses in Austin that were previously expected to flood only once in every 500 years were upgraded to a risk of one in every 100 years.
Commentary/Opinion
Why Millennials and Gen Z Just Aren’t Loving Insurance: How Organizations Can Win the Next Generations of Insurance Consumers
The insurance industry has been on a transformative journey, adapting to the evolving needs of the market and advancing technologies that drive business, commerce and everyday life.
However, according to the Department of Health and Human Services, 10,000 people turn 60-years-old every day. This segment of the population has likely met most of their insurance needs.
InsurTech/M&A/Finance💰/Collaboration
Tokio Marine planning international insurance buying spree
US$10 billion is relatively easy for us, claims international boss
Award winning Tokio Marine, the giant Japanese headquartered insurance company which already has a wide presence across the globe, has set its sights on expanding with a budget of up to US$10 billion for overseas acquisitions.
The insurer has already become a largely global operation - international business now constitutes over half of its overall profits, a significant increase from less than 3% two decades ago, with substantial investments already made in the US market. Chris Williams, who co-leads Tokio Marine’s international operations, revealed in a recent interview with Reuters that the firm is keenly observing public companies worldwide for potential acquisition targets.
“Something we could do relatively easily would be in the US$10 billion range,” he said in an interview on Monday. “North America is the biggest insurance market in the world, there are going to be opportunities there, there are opportunities in Asia and Europe, Canada and Australia,” Williams said. “We have aspirations to grow our business in all of those locations.”
People
Westfield creates new strategic role
Stuart Rosenberg (pictured) has been appointed as president of standard lines at Westfield.
In the newly created role, Rosenberg is tasked with spearheading the strategic initiatives for both the personal and commercial insurance segments, marking a significant step in the company’s growth aspirations.
Rosenberg’s journey with Westfield spans over 20 years, during which he has held several key positions, including enterprise leader for personal insurance, chief innovation and strategy officer, and interim commercial insurance head.
Notably, in 2018, Rosenberg was instrumental in founding 1848 Ventures, Westfield’s subsidiary focused on innovation. The venture aims to extend the company’s reach by developing solutions that go beyond traditional insurance products, specifically designed to mitigate a wide array of risks for small businesses.