Commentary/Opinion
Viewpoint: Insurers should embrace AI for a green makeover
The automotive and insurance sectors play a significant role in CO2 emissions, from manufacturing, fuel consumption, vehicle maintenance and claims processes – at almost every stage of a vehicle’s lifecycle, CO2 is emitted.
Clearly, change is vital and the entire industry needs to work together to bring about real change. While the adoption of electric vehicles has shown progress, it is not the sole sustainable option for drivers.
How can technology that is on everyone’s lips help in the green domain? Artificial intelligence (AI) brings benefits like automation and cost reduction to insurers, improving efficiency from claims processing to customer experience, yet AI’s potential to improve sustainability efforts is flying under the radar.
Bill Brower, MBA is Senior Vice-President of Global Industry Relations and Claims Sales at Solera
Home Buying (and Insurance) Just Got Smarter
Realtor.com will provide climate risk information on listings, projected years out. Plus, a bold new type of cyber theft; and GM backs down on sharing data on drivers.
This week, I'll quickly hit three themes, including an audacious new form of cyber attack and General Motors' decision to back down on sharing data with brokers from GM vehicles, in the face of a recent uproar.
But I'll start with a step for homeowners insurance toward a "Predict & Prevent" business model and away from the traditional repair-and-replace approach.
Realtor.com said it will provide projections on climate risk for each listing. Heat, wind and air quality scores will predict what an area will experience, going out 30 years, supplementing existing data on fire and flooding, so home buyers can know more about what perils -- and high insurance premiums -- they may face as the years go by, BEFORE they make the purchase.
Economists at Realtor.com say some $22 trillion of U.S. residential properties are at risk of ‘“severe or extreme damage” from flooding, high winds, wildfires, heat or poor air quality. And First Street Foundation, which provides the data that is the basis for Realtor.com's analysis, says nearly 36 million homes -- a quarter of all U.S. real estate — face rising insurance costs and reduced coverage options due to mounting climate risks, First Street Foundation, a nonprofit that studies climate risks, says 18% of U.S. homes will be at risk of damage from hurricane-strength winds over the next three decades.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Balancing Technology and Empathy in Claims
Even as technology drives efficiency and innovation in claims, the key is to find the right balance between it and the human touch.
As the first quarter of 2024 winds down, the insurance industry is embracing digitization and recognizing AI’s great promise for improving and simplifying what we do. It’s exciting to contemplate all the potential that technology affords. Yet we can’t lose sight of the fact that technology will never fully replace human connection.
Finding the best ways to use technology is understandably a focus for our industry, but the key to success lies in finding ways for technology, soft skills and empathy to work together. This is best done by investing in technologies that automate lower-level tasks and make employees’ jobs easier, which helps to clear the way for more high-quality interactions with clients and customers.
Equally important is finding ways technology can be used to cultivate a culture of empathy internally. A workplace empowered by empathy and efficiency allows employees to build strong relationships with both clients and policyholders. By combining human connection with technology-enabled solutions, claims professionals will have more time for fully engaged customer experiences. Think of this as human intelligence supported by artificial intelligence, not as artificial intelligence replacing human intelligence.
Pat Van Bakel is president of loss adjusting, North America, at Crawford & Co.
News
Bridge collapse losses could run into billions: Sources
The collapse of the Francis Scott Key Bridge in Baltimore early Tuesday after it was struck by a container ship could trigger a wide swath of insurance and reinsurance policies, and the loss is likely to run into billions of dollars, sources say.
Beyond marine hull, cargo and liability policies, the incident could trigger various coverages including auto, contingent business interruption, property, trade credit and workers compensation.
The Singapore-flagged Dali container ship, owned by Grace Ocean Pte Ltd., collided with one of the pillars of the bridge, at around 1:30 a.m. ET Tuesday while being piloted.
At least two people were rescued, and the search continues for at least six missing people in the water, according to news reports. Several vehicles, as well as contractors, were reported on the bridge when it collapsed.
The bridge, which provided access to the Port of Baltimore, opened in 1977. The port is the largest for shipments of cars and light trucks in the U.S.
London-based marine mutual insurer The Britannia P&I Club confirmed that the Dali is insured by the club for protection and indemnity liabilities. The vessel will also have hull and cargo coverage in place, sources said.
Two states enact limits on litigation funding
Indiana and West Virginia legislators have passed bills to put limits on litigation financing — a practice that insurers say encourages unnecessary lawsuits, and burdens the legal system.
Others argue that litigation financing provides consumers with legal recourse for cases such as personal injury.
Litigation funding companies (LFCs) act as third parties to finance consumer and commercial litigation through non-recourse loans or by accepting legal assets as collateral, according to the Swiss Re Institute.
Swiss Re has previously said LFCs back many types of commercial and consumer claims in relation to, among others, trucking accidents, bodily injury, product liability mass tort, and medical liability, with the focus on the consumer side being personal injury cases.
Climate/Resilience/Sustainability
Swiss Re reveals huge spike in insured losses is coming
Last year set a new high – and there's worse to come
Swiss Re reveals huge spike in insured losses is coming
Swiss Re Institute’s latest projections suggest that insured losses could double over the next decade, exacerbated by rising temperatures and more frequent and intense extreme weather events, underscoring the critical need for mitigation and adaptation efforts.
In 2023, natural catastrophes, including a major earthquake in Turkey and Syria, severe convective storms (SCS), and widespread urban flooding, pushed insured natural catastrophe losses to $108 billion. This escalation continues a 5-7% annual increase in global insured natural catastrophe losses observed since 1994.
Over the past three decades, global insured losses from natural disasters have also managed to outstripped global economic growth, with inflation-adjusted insured losses averaging 5.9% annually compared to a 2.7% global GDP growth. This disparity has led to a doubling of the relative loss burden compared to GDP from 1994 to 2023.
“Global natural catastrophe losses in 2023 were severe, even in the absence of a historic storm like the previous year’s Hurricane Ian,” group chief economist Jérôme Jean Haegeli said. “This trend over the last 30 years, fueled by asset accumulation in areas prone to natural catastrophes, is now compounded by climate change, leading to more severe storms and floods. The urgency for action is highlighted by rising post-disaster costs due to structurally higher inflation.”
AI in Insurance
Insurity and OIP Robotics partner to transform data processing through AI
Insurity, a provider of cloud software for insurance carriers, brokers, and MGAs, has partnered with OIP Robotics (OIPR), an Insurtech data and software solutions lab, to transform data processing within P&C insurance through artificial intelligence (AI).
According to the announcement, this partnership is set to bring unparalleled automation efficiency to policy lifecycle management and transform traditional data processing methods, bringing increased operational efficiencies and reduced costs to insurance organisations.
It integrates enterprise-ready AI with Insurity’s advanced software as a service (SaaS) solutions, allowing for seamless data flow and automation, enhanced operational processes efficiency, which significantly lowers the risk of claims related to data entry errors.
“This partnership units OIPR’s unique AI approach with Insurity’s comprehensive cloud-native offerings,” said Sylvester Mathis, Chief Insurance Officer at Insurity. “The collaboration is expected to bring increased automation levels to our shared market and combine ideas, technology, and perspectives of both organisations, fostering innovation and setting new industry benchmarks.”
HSB Introduces Cyber Insurance for Autos | Business Wire
HSB Introduces Cyber Insurance for Autos
Cyber for Auto covers the owners of personal vehicles
Designed for cyber threats on the road
Covers cyber-attacks, ransomware, and identity theft
Safeguards data stored in cars and connected apps
Smart Cars, New Exposures
With millions of connected vehicles on U.S. roads, personal cars and trucks will likely be the next big target for hackers and cyber thieves. Specialty insurer HSB is helping consumers respond with Cyber for Auto, a new coverage that will be available for cyber-attacks, the company announced today.
“Automakers continue to integrate new technologies into today’s vehicles”
HSB’s unique proposed coverage helps safeguard private information that is stored in personal vehicles and connected to cloud-based and wireless communication networks.
“Automakers continue to integrate new technologies into today’s vehicles,” said James Hajjar, chief product and risk officer for the Treaty Division of HSB, part of Munich Re. “With each added system or connection, there are new vulnerabilities that hackers and other cyber criminals can exploit. Cyber for Auto helps insurers and their customers stay ahead of these new cyber exposures.”
InsurTech/M&A/Finance💰/Collaboration
Optimistic outlook for US insurance M&A market in 2024, says Sidley
Sidley Austin, a global law firm, has released its Global Insurance Review, offering an optimistic outlook for the US insurance mergers and acquisitions (M&A) market in 2024 following a challenging year in 2023.
According to Sidley’s report, the difficulties of 2023 were primarily attributed to slow M&A activity in the P&C market. In the US, total deal value plummeted to $5.9 billion, a significant decrease of 59% compared to $14.4 billion in 2022.
However, despite this decline, 2023 witnessed several strategic transactions, often aimed at bolstering scale and consolidation within the industry.
One notable P&C deal in 2023 was the successful acquisition by RenaissanceRe Holdings Ltd. (RenRe) of Validus Re and its subsidiaries from American International Group (AIG), valued at $2.985 billion. This single transaction represented roughly half of the total deal value for the year.
Sidley’s commentary suggests that despite the challenges faced in 2023, the US insurance M&A market has shown resilience, fostering a sense of optimism as the industry moves forward into 2024.
Claims
The ecosystem future of insurance claims
Claims transformation is one future we all need to see prosper. Afterall, the claim is the moment of truth. The point at which the policy fulfills its promise.
However, it’s also the primary reason insurance scores low on trust, and why it’s often described as a ‘grudge purchase,’ even outside of mandatory products.
There’s a myriad of reasons for this. Not least because insurers still impose their claims process on customers. With complex systems, a lack of digitized supply chain integrations, and little in the way of true multi-channel capability, it’s often archaic and frustrating. To the customer, it feels like it’s designed to “not pay out” or resolve the claim fairly.
Presenting on this topic recently to an audience of insurers and insurtechs, it was clear even those of us who work in the industry aren’t immune. We’ve all wondered why our insurer doesn’t have our car details, or why the repair network doesn’t know what our claim is for, let alone provide proactive updates.
It’s all the more frustrating when we also know the technology is available to transform claims for the better. Whereas in the past, technology had to catch up with innovative thinking, it’s the insurance industry that’s now playing catchup.
We have the open systems to deliver the data-fluidity needed to build a holistic profile of each customer and the policies they hold. We have the tooling to enable seamless experiences; the power of artificial intelligence to provide everything from fraud detection to repair network management; and smart documentation. The capacity for straight-through processing and dramatically faster settlement times is extraordinary.
Rory Yates is global strategic lead at EIS
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J.D. Power Podcasts: The Insurance Intelligence Podcast: "Industry Forecast: Who Will Win and Lose in 2024?"
The Insurance Intelligence Podcast: "Industry Forecast: Who Will Win and Lose in 2024?"
We're excited to announce the premiere of our new podcast series, The Insurance Intelligence Podcast, with our first episode, "Industry Forecast: Who Will Win and Lose in 2024?" Dive into the trends shaping the future of the insurance industry with our expert panel.
This Episode Covers:
- The resurgence of insurance shopping and its impact.
- The critical role of trust in customer relationships.
- How catastrophic events are reshaping service delivery.
- Plus, more insights into the industry's evolving landscape.
Listen on Apple Podcasts