Commentary/Opinion
How InsurTechs and Real-Time Decisioning Breathed New Life into Life Insurance
Now empowered by real-time data and automated processes, the customer journey from quote to policy issuance has been significantly streamlined, with far more diverse offerings.
The Life insurance industry, once notorious for cumbersome processes, is in the midst of a transformation. Two accelerants—technology and the pandemic—helped push the sector towards many crucial changes. Now empowered by real-time data and automated processes, the customer journey from quote to policy issuance has been significantly streamlined, with far more diverse offerings.
Jason Kozlowski is Manager of New Business & Product Strategy, Sapiens International.
Can Governance Catch Up to Data Science?
Data science teams often don't understand the organization's risk frameworks, and insurance leaders have too little experience with analytics.
The rate at which data science techniques are developing and being adopted is increasing faster than insurers are able to develop their own understanding of the risk governance and ethics needed.
To make matters more challenging, two distinct groups operate within most insurers on the front line of data science, often in conflict rather than in harmony: data science teams using cutting-edge techniques without the necessary understanding of their organization’s risk frameworks, and insurance leaders who have limited experience with the latest advanced analytics. This internal disconnect leaves insurers and individuals that work for them exposed to risk.
Finding the right balance between governance and control, while still advancing the adoption of data science and the value that it creates, has become the magic middle ground upon which insurers have set their sights.
As increasingly complex models are used, a key risk for insurers to consider is bias -- an issue so far not fully understood and appreciated by many firms. When individuals or groups are differentiated from others based on particular characteristics, insurers need to understand why. Is the bias due to the data collected not representing the entire population? Is it caused by potentially flawed human decision-making that is represented in the data collected? Or was the bias introduced due to the artificial intelligence (AI) and machine learning models trained on the data? Is the inherent model form being used responsible for reinforcing the existing bias or even creating new biases?
The ability to detect hidden biases is essential to enabling appropriate strategies to measure, monitor and manage bias. Instead of thinking about bias at every stage of the model building process -- when an insurer first explores their data, when they build a model and when model outputs are used in a business decision – data scientists too often consider the risks as an afterthought.
Choosing the right algorithm that will help an insurer find the optimum balance among interpretability, transparency and predictive power is another essential capability. There are a number of custom algorithms being developed in the market. For example, layered gradient boosting machines (LGBM) capture the same predictive accuracy of a GBM, while providing a much greater level of transparency and interpretability.
Pardeep Bassi is global proposition leader in data science at Willis Towers Watson
AI in Insurance
AI agents may improve underwriting process, close talent gaps
Underwriters train AI agents to think like them, teaching the software to perform menial tasks, then larger projects. AI can streamline processes and close talent gaps.
“You need to think of it [AI] like how you would train an intern,” said Sathish Kumar Manimuthu, chief technology officer at NeuralMetrics. “Start small, teach it and then expand it into various complex workflows in the organization.” “You need to think of it [AI] like how you would train an intern,” said Sathish Kumar Manimuthu, chief technology officer at NeuralMetrics. “Start small, teach it and then expand it into various complex workflows in the organization.”
Many underwriters have large workloads that require long hours and limited access to the data they need to make a decision quickly. Autonomous AI agents are here to help ease the burden on underwriters by performing menial tasks the same way an underwriter would so they can focus on more complex assessments.
AI agents act as assistants for underwriters and other insurance professionals and are intelligent entities that learn to make decisions and execute actions without direct human involvement. The technology can complete various tasks that could revolutionize the underwriting workflow, from generating accurate responses for risk quality questions to analyzing a customer’s claims history and business information. These AI agents can monitor a client’s activities and ultimately make a calculated recommendation of whether to accept or decline an applicant.
“The time it takes from a request to come in, to a quote getting insured is massively reduced [with autonomous AI agents],” said Sathish Kumar Manimuthu, chief technology officer at NeuralMetrics, creators of an AI-powered data platform that offers actionable risk assessments for P&C carriers, brokers and agents.
Is the Insurance Sector Risking Over-Reliance on Artificial Intelligence? Part One
Today, we explore the role of artificial intelligence in insurance and the delicate balance between leveraging technology and preserving human expertise.
Is the insurance sector risking over-reliance on artificial intelligence, and what’s the balance between innovation and human expertise?
In part one of our spotlight on AI, let’s hear what our community says… (part two here).
Artificial intelligence is already becoming a key area of competition, having a direct impact on the speed of deployment, efficiency, improved customer experience, targeted pricing and customisation,” says John Beal, senior vice president, data science, LexisNexis Risk Solutions. “However, it is not a panacea for all our data problems.”
He continues: “For insurance providers, machine learning cannot effectively manage, cleanse, analyse and deploy data without input from a highly experienced data scientist.
“Algorithms are incredibly helpful and intelligent but without manual intervention by a data scientist, algorithms are not able to accurately structure data or use them for the correct business acumen, especially within Insurance while keeping in mind the relevant regulatory requirements as they model to a loss curve. Understanding the problems, how a solution will work, and how it should be implemented still requires human expertise.
“With human involvement playing such a fundamental role in data and analytics for insurance, ‘applied intelligence’ or ‘machine augmented intelligence’ are better descriptions rather than full artificial intelligence. This is the application of automation within the insurance workflow, alongside the essential human intelligence and business acumen, rather than a fully machine run operational process.
News
Baltimore bridge collapse to trigger one of the biggest insurance losses in history
The Baltimore bridge collapse will trigger one of the largest insurance losses in history, Lloyd’s of London has warned.
The market, founded in 1688 to offer shipping insurance, predicted that the disaster would likely trigger a multibillion-pound loss once all claims are settled.
Lloyd’s said that it could more than withstand the financial hit after a benign period for catastrophes.
Chief executive John Neal said: “This has all the hallmarks of being one of the biggest marine losses in history.”
The Singapore-registered container cargo ship Dali crashed into the Francis Scott Key Bridge in Baltimore on Tuesday, causing the structure to collapse.
Barclays has predicted that the insurance loss could land between $1bn (£800m) and $3bn.
The ship was insured through Britannia, one of 12 protection and indemnity clubs that insure 90pc of the world’s shipping. Britannia is still assessing the situation as the investigation continues.
Britannia itself is thought to have purchased reinsurance from some of the specialist reinsurers operating in Lloyd’s, which means the losses may feed through to the market.
Mr Neal said Lloyd’s expects to be able to more than withstand the incident due to the low level of natural catastrophes in 2023.
Lloyd’s sets aside about 10pc of the premiums collected to pay for large losses or natural catastrophes each year, equivalent to about £6bn.
Large losses for 2023 cost only 3.5pc, leaving the insurance market with a big surplus which can help cover the Baltimore claims.
Mr Neal said: “This is not an unusual loss in itself. Sometimes we get a hurricane in the US and only half of it is insured because people haven’t bought insurance.
“The good news with the Baltimore losses is the vessel is insured, the bridge is insured, the Port Authority is insured.
“So from a financial perspective, there is legitimate insurance cover in force.”
Baltimore bridge an opportunity for us to show the value of insurance: Lloyd's CEO - Reinsurance News
John Neal, Chief Executive Officer (CEO) of the specialist Lloyd’s insurance and reinsurance marketplace, said this afternoon that the Baltimore bridge event provides an opportunity for the industry to show the value of insurance.
“I’ve been saying in different conversations this morning that actually the good news there is we are talking about an insured loss,” said Neal in response to a question on how concerning the Baltimore bridge catastrophe insured loss is.
The Lloyd’s CEO emphasised that the vessel, bridge, and Port Authority are all insured.
Research
Tech Trend Radar 2024 – The Future of Insurance | Munich Re
Our expert assessment of the insurance technology trends 2024.
What innovations will transform insurance in 2024? Our Tech Trend Radar 2024 guides you through the innovations that really matter.
Experts from Munich Re and ERGO joined forces to collect and assess the most relevant insurance technology trends for 2024. Made by insurers for insurers, the Tech Trend Radar 2024 aims to sharpen awareness, provoke discussion and initiate new business opportunities that appeal to all insurance clients.
The interactive radar may be filtered by line of business to quickly find what is most relevant for you. Each trend comes with a short description, opportunities and risks as well as selected use cases. Most importantly, the report provides an assessment of a trend’s maturity.
Curious about all digital trends and solutions in insurance industry? Get the Tech Trend Radar 2024 here after providing your contact information. Please note that we will contact you once to ask for your consent for further communication according to our privacy policy.
More Than Half of Homeowners Fear Climate Change, Most Worry About Rising Home Insurance Costs
Homeowners are increasingly worried about hazards and rising insurance costs as temperatures rise in the U.S.
A survey of nearly 2,000 U.S consumers shows 51% of homeowners are worried climate change-related hazards will affect their homes, while others polled worry about property values and insurance prices as the climate starts to change at a rapid pace.
Claims Journal
New Report Analyzes Impact of Hands-Free Laws on Distracted Driving
The Governors Highway Safety Association (GHSA) and Cambridge Mobile Telematics (CMT) today released a new report addressing the growing concern over smartphone-induced distracted driving. The report proposes states implement a multi-faceted approach to improve road safety that includes the adoption of strong and clear laws, which CMT research confirms have a positive impact on distraction rates.
As part of a recent Advanced Notice of Proposed Rulemaking for advanced impaired driving prevention technologies, the National Highway Traffic Safety Administration (NHTSA) estimates that distracted driving caused 12,405 fatalities in 2021 and a societal cost of approximately $158 billion.
The report details how distracted driving has fallen in states like Ohio, Alabama, Michigan, and Missouri after they implemented hands-free laws. These results underscore the effectiveness of legal frameworks in enhancing road safety. The report also discusses how incentive-based programs such as “Safest Driver,” powered by CMT technology, are motivating drivers to refrain from engaging in risky driving behaviors leading to a reduction in crashes.
InsurTech/M&A/Finance💰/Collaboration
Emerald Bay Risk Solutions Launches with Strategic Investment from Bain Capital Insurance
Emerald Bay Risk Solutions (“Emerald Bay” or the “Company”), a collaborative underwriting carrier, today announced its formal launch with a significant strategic investment from Bain Capital Insurance, the dedicated insurance investing unit of Bain Capital. Emerald Bay is an innovative program specialist that seeks to create an alignment of interests across the entire risk value chain through integrated solutions and disciplined underwriting enhanced by a proprietary data-driven technology platform.
Emerald Bay uses a unique blend of established competencies to deliver tailored insurance solutions, consistent underwriting results, and long-term, mutually valuable partnerships with a select group of high-performing managing general agents (MGAs) and market-leading reinsurance partners. Emerald Bay begins operations with a strong financial foundation, having secured a rating of “A-“ Stable, Financial Size category VIII, from AM Best. The Company will initially focus on executing its actionable pipeline of highly reputable, established MGA programs within the Excess & Surplus (E&S) markets, but will be positioned to write both admitted and non-admitted business on a nationwide basis. Emerald Bay is led by Chief Executive Officer Dave Ingrey and Chief Risk Officer Miles Allkins, who have deep insurance expertise and demonstrated track records of successfully partnering with and driving long-term results for blue-chip reinsurers and high-performing MGAs.
“In a rapidly evolving program insurance market, we’re excited to have the opportunity, with the support of Bain Capital Insurance, to pave the way for a progressive underwriting organization,” said Ingrey. “We are built on the principle of mutual accountability and transparency, aimed at aligning interests across the entire value chain through a collaborative engagement model and access to real-time risk exposure data.”
People
New York Life names Todd Taylor Head of Life Insurance Solutions
Matt Wion succeeds Taylor as Head of Retail Annuities; both will continue to report to Dylan Huang, SVP and Head of Product Solutions.
New York Life (New York), the largest mutual life insurer in the United States, has announced that Todd Taylor has been named Head of Life Insurance Solutions, a key area of the company’s Foundational Business. In his new role Taylor leads product development and management, strategy, third-party distribution and operations, and optimization of the inforce block of individual life policies. He will also oversee the company’s Business Solutions organization, which provides group and individual solutions to small businesses. He will continue to report to SVP and Head of Product Solutions Dylan Huang
“As we cultivate leadership talent at New York Life, we are focused on opportunities for our team to experience different areas across the company,” comments Huang. “This variety is critical to understanding the holistic needs of our clients and delivering best-in-class solutions and service experiences that help them protect what matters most and prosper in the future.”
Canada
Insurer’s Top 5 insurance fraud claims of 2023 (Canada)
An intoxicated driver who reported her car stolen to avoid the consequences of impaired driving and fake invoices for high-end jewellery reportedly stolen from a vehicle were among Saskatchewan Government Insurance’s (SGI) Top 5 insurance fraud claims of 2023.
The public insurer highlighted some of the more notable claims examined by its Special Investigations Unit (SIU) for Fraud Prevention Month. In 2023, SIU investigated 481 claims; of those, 263 turned out to be fraudulent, with an approximate total value of $5.9 million.
Here’s a look at SGI’s Top 5 insurance fraud claims for 2023.