Research
Crash Course 2024 | Q1 | Auto Claims & Repair Industry Report | CCC Intelligent Solutions
The Latest P&C Industry Data and Insights [Ed. note: Crash Course, now published quarterly, is one of the most valued auto claims and collision repair industries source of information]
Crash Course is one of the industry’s most trusted reports. Published to help insurance, collision repair, and mobility leaders make the most informed decisions, this Q1 2024 edition of Crash Course contains recent data and insights on a wide range of topics. In it, you’ll find:
The impact of vehicle technology on total cost of repair
Repair shop productivity and labor trends
Challenges brought by electric vehicles becoming mainstream
State-minimum insurance levels and loss severity trends
Extreme weather and their long-term effect on auto claims
Medical billing trends and their impact on casualty claims
Consequences of experimental treatments for casualty claims
This Q1 edition of Crash Course 2024 focuses on a critical topic driving change across the industry: vehicle complexity and its ripple effect across key aspects of the claims and repair journey. From new state-of-the-art vehicle technology to the multifaceted nature of insurance claims, these dynamic variables have ushered in an era of unprecedented complexity, challenging the industry to evolve faster and smarter than ever before
AAA: Fear of Self-Driving Cars Persists as Industry Faces an Uncertain Future | AAA Newsroom
Recent incidents involving autonomous vehicles strike safety concerns among public
According to AAA’s latest survey on autonomous vehicles, most U.S. drivers either express fear (66%) or uncertainty (25%) about fully self-driving vehicles – a fear that has not decreased since spiking last year. However, interest in semi-autonomous technologies such as Reverse Automatic Emergency Braking (AEB) and Lane Keeping Assistance remains high. The results infer that to alleviate concerns, the industry should continue to advance vehicle technologies reasonably and with overall consistency in performance.
“There has been an increase in consumer fear over the past few years,” said Greg Brannon, the director of automotive engineering research for AAA. “Given the numerous and well–publicized incidents involving current vehicle technologies – it’s not surprising that people are apprehensive about their safety.”
Ready or Not, 80% of P/C Insurers Aim to Use AI for Biz Decisions This Year
Two-thirds of property/casualty insurers plan to start using AI in operational decisions this year, according to a survey, which also reveals that nearly all insurers already using AI have been tripped up by bias challenges.
The Ethical AI in Insurance Consortium, which commissioned the survey of 250 P/C insurance professionals involved in actuarial, data science, underwriting, claims and AI/transformation functions, highlighted the rapid jump from just 14 percent of carriers using AI today to the 66 percent planning to use AI for “inline business decisions” in 2024 in a media statement and survey report.
FULL ARTICLE, published in Carrier Management
Susanne Sclafane, Executive Editor, Wells Media Group
AI in Insurance
Press Release: 2024 Survey Reveals Crucial Ethical AI Adoption Challenges in Insurance Industry – Ethical AI In Insurance Consortium (EAIC)
80% of companies move towards AI adoption amid concerns over cost, data quality, and bias. Additional industry-wide collaboration is essential for effective and transparent use of AI in automated decision management.
In a groundbreaking exploration of AI in insurance, the 2024 Ethical AI in Insurance Consortium Survey has uncovered a critical juncture for insurers: while 80% of companies are either already using AI for business decisions or plan to do so within the year, they encounter substantial challenges pertaining to cost, data quality, and bias. The findings underscore an industry on the brink of a technological evolution, revealing that only 14% of the companies are currently leveraging AI in operational decisions. Yet, this figure is set to climb sharply, indicating a significant future impact on the insurance sector, particularly in claims and underwriting.
“The implementation of AI in our organization has transformed the way we approach claims,” says Douglas Benalan, CIO of CURE Insurance. “We’re already observing substantial gains in operational efficiency and accuracy. However, the journey is not without its ethical challenges, making the need for industry-wide collaboration and proper frameworks paramount.”
Some key findings of the EAIC survey include:
– Identification of the leading departments in current AI adoption: IT (69%), sales (57%), and marketing (51%). – Significant reported improvements in operational efficiency (57%), accuracy (37%), and revenue (37%) due to AI usage. – A call for more robust processes, as 69% of respondents are dissatisfied with current approaches to report and address AI model biases and inaccuracies.
Revealed – insurers are spending big on AI
As it shifts towards innovation, the US financial sector has emerged as a powerhouse in research and development (R&D) investment, with a surge of 70.4% in spending. The latest data, compiled by R&D specialists at Source Advisors, reveals a trend in the sector for pioneering advancements.
According to the analysis, companies within the finance and insurance industry have ramped up their R&D expenditure, catapulting the total investment to $20.9 billion, a leap from the previous year’s $12.3 billion. This surge not only positions the sector as a frontrunner in innovation but also dwarfs the national average by nearly sevenfold, as per the latest available data from the National Center for Science and Engineering Statistics (NCSES).
The surge in R&D investment is attributed to an increase in spending on new technologies, such as AI.
Moises Romero, senior director of tax controversy at Source Advisors, highlighted the importance of R&D investment.
“Investment in R&D is no longer optional but a strategic necessity to stay ahead in the competitive landscape,” he said. “R&D spend can span a breadth of investment areas, such as design and development of new software components, developing data mining techniques, through to development of risk management systems. With specialist guidance, companies in the finance sector stand to realize substantial savings on their tax bills through R&D tax credits.”
News
U.S. Property/Casualty Industry Records $21.2B Underwriting Loss in 2023
Despite a 9.9% growth in net earned premiums, the US property/casualty industry reported a $21.2 billion underwriting loss in 2023, according to a report by AM Best.
The U.S. property/casualty (P&C) industry recorded a net underwriting loss of $21.2 billion in 2023, a slight improvement from the previous year’s $24.9 billion loss, according to AM Best’s First Look report.
The report, which offers early insights into the P&C industry’s financial state, is based on data from companies whose 2023 annual statutory statements were received by March 8. These companies represent an estimated 97% of total industry net premiums written and 96% of policyholder surplus.
Despite a 9.9% increase in net earned premiums, the 2023 underwriting loss was driven by a 4.5% increase in policyholder dividends and a 10% rise in incurred losses and loss adjustment expenses (LAE), coupled with a 6.4% increase in other underwriting expenses. The personal lines segment, particularly the homeowners line of insurance, was primarily responsible for the weak underwriting results.
The industry’s combined ratio improved slightly to 101.6, with catastrophe losses accounting for 8.7 points on the 2023 combined ratio, up from an estimated 7.3 points in the previous year. This increase was driven by record severe convective storm losses. Excluding $2.0 billion of favorable reserve development during 2023, the industry’s accident year combined ratio was 101.8.
'State Farm – I want to look at your finances' - California's insurance commissioner
California's insurance commissioner declares crisis as insurance woes worsen
Ricardo Lara (pictured), California’s insurance commissioner, is torn – on the one hand wanting to examine State Farm’s books after an announcement that the insurer is discontinuing coverage for 72,000 houses and apartments in the state, and on the other conceding that there’s a danger in overregulating.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” State Farm said last week.
“State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
As announced, the California-specific actions will occur on a rolling basis starting July 3.
On Friday, speaking with KABC, Insurance Commissioner Lara cited a “real crisis” in California.
He told the station: “Insurance companies are not like utility companies. By law, they don’t have to be here, and when we try to overregulate, we’ll see what happened after the Northridge earthquake, when the legislature ca
GEICO can be shopped through Amazon
GEICO’s insurance quoting process is integrated with Amazon, allowing customers to permit Amazon to share their personal information with GEICO to initiate a quote. This process begins on Amazon’s platform and concludes on GEICO’s website for the finalization of the quote.
Coverager
InsurTech/M&A/Finance💰/Collaboration
Kingstone Insurance Company Announces Innovative Partnership with Zojacks to Mitigate Water Damage Risks
Kingstone Insurance Company, a subsidiary of Kingstone Companies, Inc. (Nasdaq: KINS), a Northeast regional property and casualty insurance holding company, today announced that it has partnered with Zojacks, a pioneering technology company specializing in water leak detection solutions. The partnership aims to offer enhanced protection to Kingstone policyholders, providing a solution to assist them in protecting their homes and mitigating risks associated with burdensome water-related claims.
Zojacks offers innovative technology that can monitor temperature and provide water leak detection, which will shut off the main water supply in the house, giving policyholders peace of mind when they are not at home. Through this partnership, Kingstone policyholders can benefit from cost-saving product packages offered by Zojacks and can also qualify for insurance policy discounts when the Zojacks technology is installed in their homes.
"We are pleased to announce our partnership with Zojacks as part of our ongoing commitment to providing innovative solutions to our valued policyholders," said Meryl Golden, Chief Executive Officer of Kingstone Companies, Inc. "By leveraging Zojacks' advanced technology, we can significantly mitigate the risks of water damage, offering our customers greater peace of mind."
YASSI Named to Guidewire Insurtech Vanguards Program
Yotta Automated Software Solutions Inc. (YASSI), the platform of record for real-time vehicle lienholder, registration, and title data, announced that the company has joined Guidewire's Insurtech Vanguards program, a new 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.
"Joining Guidewire's Insurtech Vanguards program marks a big moment for YASSI, and we are thrilled to be a part of this innovative ecosystem," said Bob Rieger, CEO and Chairman of YASSI. "As pioneers in providing comprehensive, real-time vehicle data through a single API and web app, our mission aligns with the program's goal of transforming the insurance industry. This collaboration signifies a leap forward in our journey, enabling us to connect more closely with industry leaders and stakeholders who are just as passionate about leveraging technology to enhance insurance processes."
The challenges insurers face today are numerous and complex, ranging from improving claims processing speeds to enhancing fraud detection and streamlining underwriting. YASSI is at the forefront of addressing these issues by delivering instant, accurate, and reliable vehicle information, such as real time lienholder, registered owner, title, registration and driver data, which is crucial for making informed decisions and offering better services to policyholders. Being part of the Insurtech Vanguards program not only validates YASSI's efforts but also provides the company with unparalleled opportunities to refine its technology, expand its reach, and ultimately contribute to shaping the future of insurance.
Commentary/Opinion
Why auto insurance costs are rising at the fastest rate in 47 years
While car prices dip lower and gradually come back down to pre-pandemic levels, more Americans are still feeling the financial pinch from car ownership — because of insurance.
As car prices moderate from a pandemic-era surge, insurance has pushed the cost of car ownership to the brink for many Americans.
New data out this week showed auto insurance costs rose 20.6% from the prior year in February, matching January's increase as the most since December 1976, when costs rose 22.4% over the prior year.
On an annual basis, motor vehicle insurance costs rose 17.4% in 2023, the most since a 28.7% increase in 1976, according to data from the BLS.
The sticker shock hitting many American drivers is being driven by a rise in accidents, the severity of accidents, and geographical factors combining to create a perfect storm and push costs higher.
Pras Subramanian is a reporter for Yahoo Finance
Innovation
Lloyd’s Lab announces InsurTechs joining first ever Americas-focused Cohort
Lloyd’s, the world’s leading marketplace for insurance and reinsurance, has announced the 12 InsurTech firms joining the 12th Cohort of the award-winning and globally renowned Lloyd’s Lab Accelerator programme.
Receiving record number of applications from over 33 countries, the incoming cohort teams will have access to the Lloyd’s Lab’s extensive network and expertise across a ten-week fast-tracked incubator to develop products and solutions with the support of industry experts.
Recently recognised in the Top 25 start-up hubs across Europe by the Financial Times and Statista, the Lloyd’s Lab’s unique approach to fostering global innovation is helping to tackle some of the world’s biggest challenges.
Progressing the Lab’s mission of supporting innovative insurance solutions across the globe, Cohort 12 focuses on developing solutions to some of the biggest risks faced by businesses and communities in the Americas region such as challenges arising from natural hazard prediction to risks associated with cybersecurity.
Alongside the ‘Americas’ theme, applications were also accepted under two further themes: ‘Data, Models and Processes’ and ‘New Products’. ‘Data, Models and Processes’ aims to tackle challenges through innovative platforms for underwriting progress within the Lloyd's market. ‘New Products’ is dedicated to fostering insurance products that can address underinsurance issues and significantly enhance resilience.
“Each new team in Cohort 12 brings unique innovation and expertise to the table, supporting Lloyd’s continued commitment to redefining the future of insurance. “The Lab’s recent success with region-specific themes further validates the work the Lab is doing to deliver solutions for our global marketplace. We are thoroughly impressed with the teams who presented at Pitch Day and look forward to welcoming them through our doors.” Rosie Denée, Lloyd’s Lab Senior Manager