Research
CCC Releases 2023 Crash Course Report, Providing Market Data and Insights on the Trends Impacting the P&C Insurance Economy
[editor's comment: The 2024 Crash Course Report will be released on March 26th. We take a look back at the 2023 report in anticipation of the latest trends impacting the auto ecosystem this year. Stay tuned for the 2024 report soon]
Report identifies macro trends, business drivers, and technologies reshaping consumer driving, vehicle ownership, automotive claims, and collision repair
CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, announces today the availability of its annual Crash Course report, which identifies trends impacting the P&C insurance economy, a multifaceted industry advancing the future of personal mobility and safer roadways. The report delivers insights on the convergence of economic, social, and technological shifts that are reshaping driving behaviors, vehicle ownership, automotive insurance and claims handling, collision repair and more.
Crash Course 2023 is the 28th edition of CCC’s industry-leading report, which draws insights from the more than $100 billion in transactions processed annually through CCC’s solutions by its 30,000 customers, which include automakers, insurers, collision repairers, lenders, parts suppliers, and more. The report draws from the company’s decades of experience and information derived from more than 280 million claims-related transactions, 50 billion driving miles of driving data, and millions of bodily injury and personal injury protection (PIP) /medical payments (MedPay) casualty claims.
Key topics covered in Crash Course 2023 include: - Shifts in consumer driving behaviors and the changing nature of auto accidents, resulting in more severe vehicle damage and bodily injury. - The impact of labor shortages on vehicle repair and medical treatment costs, claim and repair resolution times, and consumers' experiences with the overall claims process. - Growing consumer interest in new vehicle technology – ADAS and EVs —and the benefits and subsequent increases in repair complexity. - Increasing proliferation of advanced technology - AI, mobile, cloud, and the Internet of Things –embedded in claims and repair processes to temper the effects of macro trends and user - A view into what’s next for the operational future of automakers, insurers, repairers, and other ecosystem providers.
Homeowners With Lower Credit Scores Pay More For Home Insurance
As an escalating homeowners insurance crisis continues to hurt housing markets across the U.S., new research published by Matic, a digital insurance agency, reveals homeowners with lower credit scores pay substantially more for homeowners insurance than those with higher scores.
In states without credit restriction laws, which is the majority of states, the economics for lower-credit-score homeowners worsen still. Homeowners with FICO scores below 580 pay 42% more for homeowners insurance than people with the same scores in credit-restricted states, the study found.
Even in states with credit use restrictions, homeowners with FICO credit scores below 580 paid approximately 15% or $174 more than homeowners with scores of 740-799. In states without restrictions, the disparity between lower-credit-score and higher-credit-score homeowners was significantly higher, at $496 or about 35%.
Over the past two to three years, a perfect storm of challenges has made risk-based pricing untenable for homeowners insurance carriers throughout the country, says Matic’s Chief Product Officer Lee Maliniak, who oversees all research and development for the company.
Not only have repair costs escalated on account of pandemic-era inflation and supply chain issues, but insurers have concentrated too much of their risk in high-risk areas. Additionally, carriers have been underestimating the frequency and severity of extreme weather leading to catastrophic losses. Complicating carriers’ ability to right-side their losses are state insurance regulators restricting the amount that carriers can increase rates.
Survey Shows One-Third of Americans Think AI is a Good Idea for Insurers
Roughly one-third of Americans think it is a good idea for insurance companies to use AI, a new survey shows.
The survey was conducted online in January with more than 1,000 adult participants across the U.S. Respondents were asked eight questions, ranging from multiple-choice to scale-based, to gauge their opinions on AI in property/casualty insurance.
Parks Associates: Smart Smoke Detectors to Reach Nearly $1 billion in US Market by 2027
Parks Associates' newly released Smart Smoke and CO Detectors: Market Assessment 2024 reveals smart smoke/CO detectors generated $771 million in revenue in the US in 2023, with growth projected to reach $976 million in the US by 2027. The Market Assessment tracks consumer adoption and purchase trends, including product preferences, the buyer journey, and purchase channels. It includes forecasts for unit sales and revenues and special analysis on specific use cases, including senior care and insurance.
Parks Associates: Smart Smoke Detectors to Reach Nearly $1 billion in US Market by 2027 Parks Associates: Smart Smoke Detectors to Reach Nearly $1 billion in US Market by 2027 "Like other smart home products, smart smoke/CO detectors experienced a new level of growth during the COVID-19 pandemic, when home renovations were on the rise and personal care and safety were top of mind," said Jennifer Kent, VP Research, Parks Associates. "While some of these drivers have subsided, moving and renovations remain prime factors to prompt these product purchases. Winning strategies will target consumers at these times, with messaging highlighting the benefits along with the ease of installation when improving your home or moving into a new one."
Smart Smoke and CO Detectors: Market Assessment 2024 identifies key and emerging players in the market for smart smoke and CO (carbon monoxide) detectors. It follows additional research Parks Associates completed on the insurance and smart home device market, Insurance Opportunities in the Smart Home. The consumer study of 8,000 internet households investigates consumer preferences for IoT devices that can impact insurance premiums or claims and evaluates the opportunity for IoT growth through the insurance chann
Commentary/Opinion
Time to Shine Light on Dark Third-Party Litigation Funding - R Street Institute
A pitched battle between proponents and opponents of third-party litigation financing (TPLF) has entered a new phase. Until now, the skirmish focused on the pros and cons of disclosure.
Disclosure supporters characterize litigation funding as a “dark money lending practice” and argue for mandatory courtroom disclosure of the presence of third-party funding to shed light on an intransparent practice. The fiercest opponents of disclosure are the funders themselves, who maintain that “materials, typically, are subject to the work product protection, because they were created for and provided to the potential financer as a consequence of litigation.” The newly expanded front goes beyond just a battle for disclosure. It features arguments that TPLF could compromise national security and shows cases of funders’ shares of financial returns from victorious litigation unfairly dwarfing what plaintiffs receive.
TPLF needs to come out of the shadows. The existence of funding, when providing financial backing for court cases, should be recognized for the role it plays and the influence it can wield in civil disputes. Some states are moving in this direction by introducing laws requiring disclosure. Indiana and West Virginia are the most recent states to see these bills introduced. Others should follow.
Jerry Theodorou, Policy Director, Finance, Insurance and Trade, R Street
News
Record Year for Delegates at Insurtech Insights Europe, 2024
The two-day event, which took place at the InterContinental London – The O2 on March 20-21st, played host to 400+ speakers who gave presentations, fireside chats and took part in panel debates across the two-day conference.
According to stats from Brella, the official event app, more than 20,000 meetings also took take place.
The event opened with a keynote address by Ericson Chan, Group Chief Information & Digital Officer at Zurich Insurance. He delivered the speech, entitled: The neXt for Insurance, in the Age of Hyperinnovation, to a standing room only audience on the conference main stage.
Speaking about the change AI will drive in the insurance industry over the coming months, he said: “It’s a real pleasure to share the Zurich journey with a room filled with 6,000 fellow insuretech enthusiasts. This is both a fascinating and fast moving industry so it’s crucial we share insights and most importantly learnings across our sector. This will be a huge catalyst for progress, which in turn enables us to provide the best service for all of our customers.
This was followed just an hour later by Zurich’s Group Head of AI, Dr. Christian Westermann, who took to the Blue stage to explore the latest opportunities for the insurance industry in a session entitled: Unlocking the Power of (Gen.) AI: How The Insurance Industry Can Stay Ahead of the Curve
Known for his charismatic approach, Westerman is a technology enthusiast and physicist who worked on technologies for space missions for the ESA and NASA during the 90s. His expertise includes building satellite-based instruments, signal detection, and exploring the origins of our solar system through physics, data, and modelling.
Commenting on the AI revolution – and why the industry must stay abreast of change. He said: “Ai is for the greater good of the industry and our customers. This journey is filled with trial and error, what’s important is that we all learn from this. We don’t all want to make the same mistakes, it will slow us down.”
Allstate's February 2024 cat losses below $150m reporting threshold
US primary insurer Allstate has announced that its estimated catastrophe losses for February 2024 were under the $150 million reporting threshold, which is down on the $241 million of cat losses seen in February of last year.
Last month, Allstate announced estimated catastrophe losses of $325 million for January 2024, which the insurer noted was mostly driven by two events that comprised approximately 80% of the losses.
Full year 2023 catastrophe losses were $5.6 billion for the firm, up from $3.1 billion in 2022.
Looking back at their results for the fourth quarter of 2023, Allstate posted net income applicable to common shareholders of $1.5 billion, a substantial increase compared to a loss of $303 million in the same quarter of 2022.
According to today’s announcement, Allstate brand auto insurance policies experienced a rate increase that had a premium impact of 0.1% for February, with a year-to-date change of 1.5%.
At the same time, homeowners insurance under the Allstate brand saw a more noteworthy rate increase, resulting in a premium impact of 2.4% for February and 2.7% for the year so far.
AI in Insurance
Clearcover Launches Generative AI Insurance Tool to Expedite Claims Processing and Improve Customer Experience
Clearcover, a next-generation car insurance company, announces the launch of its revolutionary generative AI solution that further digitizes statement collection, significantly streamlining the insurance claims process and customer experience.
The AI-driven solution utilizes large language models (LLMs) to guide a conversational experience immediately following First Notice of Loss (FNOL). The claims intake tool collects the required information about the incident, which is typically collected in adjuster follow-up calls, to process and pay a claim.
"Our underlying foundation was built with best-in-class technology for digitally native customers, which has enabled us to get ahead of the curve," said Clearcover CEO and Co-founder Kyle Nakatsuji. "I am incredibly proud of our Product, Claims and CX departments for leaning into this industry challenge and raising the bar for AI insurance solutions."
As one of the first-to-market insurtechs to include this capability, Clearcover is rolling out a series of AI products to enhance its end-to-end insurance experience. Earlier this year, Clearcover's custom-built claims assistant began supporting claims adjusters in analyzing files and drafting communications to claimants and their representatives. The company also plans to integrate conversational AI into its mobile app to answer customer questions 24/7 in real-time. The feature will later be included within the company's agent portal and website.
"By leveraging the power of generative AI, we're ushering in a transformational way for our customers to share information and self-serve throughout their insurance journeys," said Clearcover's Chief Product and Innovation Officer Adam Fischer
AI will shift liability rather than create new risks
Lines between product and professional liability likely to blur
Artificial intelligence raises challenging questions for liability as the technology continues to outpace regulatory and legal developments, experts have told Commercial Risk.
The release of generative AI like ChatGPT has accelerated the use of the technology by business, from aiding medical and scientific research to product design and manufacturing. AI is increasingly being incorporated into products and services, for example to power autonomous vehicles, provide advice through chatbots, and create media content and art.
AI brings a raft of opportunities but also potential risks, including financial and reputational issues, according to Chris Williams, partner at UK law firm Clyde & Co. “AI simply cannot be ignored. It will play an increasingly important role for businesses, that’s inevitable. AI is the future and all companies will use it one way or another. The legal issues surrounding AI are varied, complex and rapidly evolving – these considerations are here to stay,” he said.
Yet insured companies using this new technology do not always fully understand these risks, he added.
“AI systems can be something of a black box, using large amounts of third-party data. But where does that data come from and how is the AI trained? This could give rise to a range of liability, such as breach of data privacy or copyright rules. There is also increasing scrutiny in terms of transparency and explainability, and the need for the business to able to explain ‘what’s in the black box’. This will only increase” he said.
Companies are also incorporating AI into their operations and products despite nascent and diverging regulation around AI safety and liability. The EU is developing a comprehensive package of AI regulations, while the UK is taking a pro-innovation wait-and-see approach. In October last year, President Biden issued an executive order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which introduces new reporting requirements for AI developers in the US.
Are P&C Insurers Ready for Generative AI? | Insurance Thought Leadership
The potential for advanced technology in claims management is there, but first you need a solid foundation. Here's how do build one.
Generative AI will have profound implications for P&C, but right now, the industry, like many others, is doing the hard work of evaluating where to apply the technology and how to do so safely. The promise of generative AI’s abilities to improve claims management is enormous, and its impact will eventually be transformative and live up to today’s hype. But this will take time.
It’s easy to see the potential of the technology. Looking at business processes, one could say, “We could really use some summarization here,” or “a chatbot could totally handle this.” But actually incorporating generative AI responsibly into workflows that, for example, treat injured employees and assist motorists who have been injured in auto accidents is challenging given some of the inherent aspects of the technology. Addressing these characteristics requires thorough experimentation and care.
In the short term, the P&C industry will spend more time preparing for this technology than it will implementing it. There’s no doubt, though, that generative AI is making its presence known in the industry. So as P&C companies evaluate and investigate how they can use this technology, they would also do well to begin laying the groundwork for success.
Mike Bishop is executive vice president, product and technology, at Enlyte, where he is responsible for technical product strategy, direction and execution
AI in Property Insurance: Two Letters, One Massive Impact | CoreLogic®
Employing artificial intelligence in the real estate industry begins with good property data With the rise of Chat GPT – the sophisticated chatbot developed by OpenAI – artificial intelligence (AI) has exploded into public consciousness over the last year. It has also changed the way people live and work across all industries, including the property insurance industry.
As we learned at INTRCONNECT 2024, AI is poised to transform processes across the industry over the coming years. But just because technological change is coming doesn’t mean people should fear AI. The technology won’t replace professionals across the property insurance ecosphere.
Instead, AI will enhance jobs and allow people to concentrate more on the human component of their work. It will allow them to focus on the lives behind the buildings they are insuring, protecting, and restoring.
Many processes that are integral to the property insurance ecosystem, such as bulk processing claims to look for anomalies or filling out forms in the field, can now be expedited thanks to AI. This not only helps insurance and reconstruction professionals efficiently make accurate, objective, data-driven decisions, but it reapportions time commitments so that professionals can spend their days on uniquely human tasks like empathizing with policyholders that have suffered a loss event or combing through cases that merit additional scrutiny. full article
Insureds with AI experience more likely to embrace it, report says
An AI in Insurance Report published by Insurity reveals how insureds feel about P&C carriers using the technology, with some saying it’s a deterrent and others sharing they would recommend an AI-integrated insurer to friends and family.
P&C insurers have embraced AI, incorporating the system into claims processing, fraud detection, personalized risk assessment and AI chatbots to answer common questions. Insurity’s report found that respondents with experience using AI were more likely to view it in a favorable light.
More than 1,000 respondents answered the eight-question survey, released in January 2024, to evaluate the attitudes of today’s insureds about the use of AI in P&C insurance. Overall, consumer opinions took a positive turn if they had direct exposure to services enabled with AI.
First-hand AI experience
Insurity’s report discovered consumers were less skeptical and more trusting of AI if they had first-hand experience using the technology through their P&C carrier, with 63% giving positive feedback after interacting with the AI system.
While 42% of respondents said they were less likely to purchase an insurance policy from an insurer that admitted to using AI publicly, these consumers largely had minimal interaction with AI. These findings suggest the negative connotations associated with using AI in insurance come from a lack of understanding and inexperience.