AI in Insurance
Insurance Firms Ready to Adopt AI Despite Data Quality, Bias Challenges - Risk & Insurance
Despite challenges related to cost, data quality, and bias, 66% of insurers plan to adopt AI in their operations this year, according to an EAIC survey.
Most insurance companies are either already utilizing AI for business decisions or plan to do so within the year, despite facing significant challenges related to cost, data quality, and bias, according to a recent survey by the Ethical AI in Insurance Consortium (EAIC).
The survey results, which highlight an industry on the cusp of a technological revolution, found that 80% of insurers are already or plan to adopt AI. Of those, 14% of companies are currently leveraging AI in operational decisions, while the remaining two-thirds intend to implement the technology this year, the survey found.
EAIC is a collaborative effort dedicated to promoting responsible and ethical adoption of AI in the insurance industry. The group, which currently has 17 members, consists of insurers, insurtechs, influencers, and other stakeholders to establish industry-wide standards, foster transparency, and ensure fair and accountable use of AI technologies.
“The implementation of AI in our organization has transformed the way we approach claims,” said Douglas Benalan, CIO of CURE Insurance and an EAIC member. “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.”
The survey identified IT (69%), sales (57%), and marketing (51%) as the leading insurance departments in current AI adoption. It also reported significant improvements in operational efficiency (57%), accuracy (37%), and revenue (37%) due to AI usage.
However, 69% of respondents expressed dissatisfaction with current approaches to report and address AI model biases and inaccuracies.
Futureproofing for insurers: The power of AI and hyper-personalization
Experts with FICO say that with the assistance of AI, insurers can rapidly accelerate modernization efforts.
By leveraging AI-driven insights, insurers can customize policies to match customers' unique needs, fostering stronger loyalty and satisfaction through personalized coverage options and real-time adjustments. By leveraging AI-driven insights, insurers can
For insurance companies striving to stay ahead in an ever-evolving landscape, artificial intelligence and personalization are powerful tools that can reshape the industry’s approach to customer engagement, risk assessment and operational efficiency. However, the term generative AI is often loosely used, overshadowing the importance of operationalizing AI through a decisioning platform.
These platforms can reimagine current decisioning practices by converting them into systematic ones that leverage advanced analytics to drive and execute better decisions while improving customer journeys. The insurance industry has made progress on the road to modernizing legacy systems, but the journey can reach new heights with the help of AI.
AI’s analytical prowess, personalization
AI equips insurers with unparalleled analytical capabilities that can sift through vast datasets, enabling insurers to discern patterns, predict trends and identify potential risks with extraordinary accuracy. This analytical prowess not only enhances underwriting processes but also allows insurers to better manage claims and cross-sell throughout the business.
Andrew Chow leads FICO’s sales for the automotive industry Scott Horwitz has more than 30 years of experience in analytics and decision management at FICO
News
Giant US insurer admits second data hack
Tens of thousands affected
Prudential Insurance has announced that hackers stole the information of more than 36,000 people in a February breach.
In a regulatory filing in Maine, Prudential’s law firm, Debevoise & Plimpton, said the insurer detected unauthorized access to its network on Feb. 5, according to a report by The Record.
“Through the investigation, we learned that the unauthorized third party gained access to our network on February 4, 2024, and removed a small percentage of personal information from our system,” the filing said.
According to Prudential, the names, addresses, and driver’s license or ID card numbers of 36,545 people were accessed. The company has notified law enforcement of the breach and hired an outside cybersecurity firm to assist in its response.
Specialty insurer gives Trump his fraud bond
Billionaire boss is known for high interest-high risk auto loans
Thanks to a specialty insurer, Donald Trump has secured a $175 million bond in connection with his ongoing civil fraud case in New York, effectively pausing the collection efforts against him for the $454 million judgment awarded.
Knight Specialty Insurance, operating under the broader Knight Insurance Group, is the underwriter for Trump’s appellate bond.
Don Hankey, the billionaire chairman of the Knight Insurance Group, communicated to The Associated Press that a combination of cash and bonds served as collateral for the bond. Hankey is known for his ventures in high-risk, high-interest loans to auto buyers with less-than-perfect credit.
“This is what we do at Knight Insurance, and we’re happy to do this for anyone who needs a bond,” Hankey said, also explaining that he has had no personal interactions with Trump.
Established in 2013, Knight Specialty Insurance is a B++ (AM Best) rated primary insurer. Its parent group has $23.4 billion in assets worldwide and is part of the Hankey Group of Companies
State Farm® expands Ting fire safety program to 2 million homes
State Farm continues to innovate for homeowners as it expands its free offer of Ting sensor technology, helping to protect families and homes from electrical hazards that could cause a fire.
State Farm is pleased to announce the expansion of the Ting fire safety program as part of its longstanding commitment to fostering safer homes and communities, offering eligible customers more than 2 million smart sensors for free. With this program expansion, State Farm continues to lead the industry with the largest free distribution of smart home technology to help predict and prevent losses and ultimately save lives.
With increasing reliance on electronics, devices, and the power grid at large, the occurrence of electrical fires has steadily risen, according to national data from FEMA, resulting in a fire in a U.S. home every ten minutes.
Since 2020, State Farm has collaborated with Whisker Labs to combat this risk with a simple, plug-in sensor that monitors a home for dangerous arcing, the precursor to most electrical fires. Beyond its ability to detect and therefore help prevent electrical fires, Ting also offers additional benefits like power outage and dangerous utility power notifications, frozen pipe prevention, and more.
Cloudflare using lava lamps for secure SSL/TLS encryption
Cybersecurity is only as strong as the random data sources creating encryption keys. True randomness is found in the chaotic physical world.
Secure encryptions require truly unpredictable numbers to prevent cybercriminals from figuring out the code and decrypting data. Even the most advanced computer system will still produce predictable, logical outputs because computers are designed to do so, but predictability equals liability in cybersecurity. Some companies are turning to the physical world to find chaotic data. Among them is Cloudflare, Inc., a global company providing internet hyperconnectivity for millions, which uses a wall of 100 lava lamps to produce stronger encryption keys.
“Computers are bad at being random,” said John Graham-Cumming, chief technology officer at Cloudflare. “To make the encryption we rely on to use the internet, we need random numbers. One way to get random numbers is to look at randomness in nature. One of the ways we do that is by taking pictures of the motion of the colored blobs in a wall of lava lamps. Their motion is not predictable. The pictures are then ‘hashed’ to produce a number that can be fed into our random number generators to give them a truly random starting point, called the ‘seed.’”
Wall of entropy
The movement of “lava” (or paraffin wax) inside lava lamps never forms the same shape twice, making these decorations an unpredictable data source for secure encryptions. At Cloudflare headquarters in San Francisco, a mounted camera is pointed at the lava lamp wall, named the “Wall of Entropy.” The camera captures images at timed intervals, which are saved as a series of numbers, with each pixel given a numerical value. This process creates a random string of numbers that Cloudflare’s services use to create secure encryption keys, but Cloudflare isn’t the first to use lava lamps — Silicon Graphics used a similar “Lavarand” system in 1996.
US traffic deaths fell 3.6% in 2023, the 2nd straight yearly drop. But nearly 41,000 people died
U.S. traffic deaths fell 3.6% last year, but still, almost 41,000 people were killed on the nation’s roadways, according to full-year estimates by safety regulators.
The National Highway Traffic Safety Administration said it was the second year in a row that fatalities decreased. The agency also released final numbers for 2022 on Monday, saying that 42,514 people died in crashes.
NHTSA Deputy Administrator Sophie Shulman said that traffic deaths declined in the fourth quarter of last year, marking the seventh straight quarterly drop that started with the second quarter of 2022.
The declines come even though people are driving more. Federal Highway Administration estimates show that Americans drove 67.5 billion more miles last year than the previous year, a 2.1% increase. The death rate per 100 million miles driven fell to 1.26 last year, down from 1.33 in 2022, NHTSA said.
Research
Road Alert: Is Every Driver Distracted?
Distracted driving isn't just a passenger car problem; commercial drivers also admit to being distracted on the road
New data reveals that drivers continue to be distracted behind the wheel. The latest driving behaviors survey from Nationwide polled standard drivers and commercial drivers and revealed additional risky behaviors that are impacting all drivers on the road.
One-third (34%) of commercial drivers admitted they sometimes or often feel distracted behind the wheel, and their peers are noticing, because 6 in 10 agree that other commercial drivers are looking at their phones more often and driving faster than they did a year ago.
By the numbers: The primary causes of distractions for commercial drivers:
55% using GPS/Nav systems
36% responding to work text messages
27% texting/talking on mobile phones
13% checking social media apps
Why it matters: Many commercial drivers report taking these actions for work purposes. This could suggest they are feeling pressured by their employer to make tight timelines, which are causing distractions while behind the wheel.
90% of consumers say that they feel it is dangerous to hold a phone in their hand while driving, whether to talk, text or navigate.
It's not me, it's you! Consumers say the problem is other drivers, with 8 in 10 (80%) rating their own driving as 'very good' or 'excellent,' compared to other passenger cars on the road (14%) or commercial vehicles (25%). Overwhelming majorities agree driving has become more dangerous, reporting other drivers are more often looking at their phones (92%).
What we're saying: "Nationwide's telematics driving data shows that drivers take their eyes off the road at least 12 times per day. The average distraction for a driver traveling at 45MPH would cover the length of three football fields! States with hands-free laws are helping to minimize distraction, but we need all 50 states to adopt hands-free laws to continue to reduce crashes and save lives," said Kelly Hernandez, AVP of Nationwide's personal telematics.
A potential solution: Many states are exploring Hands Free legislation as a way to curb distracted driving. Those laws still have strong public support.
Commentary/Opinion
The Key Bridge Collapse and its Impact on the Auto Industry | CCCIS | CCC Intelligent Solutions
The recent collapse of the Francis Scott Key Bridge in Baltimore sent shockwaves through the local community. The incident not only resulted in tragic loss of life, but also created significant disruptions in the transportation and shipping channels, particularly impacting the Port of Baltimore, a vital hub for auto imports and exports.
As we navigate through the aftermath of this incident, it's essential for stakeholders in the auto industry to understand the implications and brace for potential challenges ahead.
Quick Facts
- The Key Bridge is used by roughly 35,000 people daily.
- About $28 billion in goods are transported via the Key Bridge annually.
- The Port of Baltimore is the 17th largest port in the U.S and accounts for ~3% of all East Coast and Gulf Coast imports.
- Vehicles and parts accounted for $27 billion of the $59 billion in imports that come through the Port of Baltimore.
- Vehicles and parts accounted for $8 billion of the $22 billion in exports through the port in 2023.
Elephant in the Room - AI in Insurance Regulation | LinkedIn Blog
I have no idea how insurance regulators are going to effectively regulate AI in insurance product building.
I read the NAIC's model bulletin, "Use of Artificial Intelligence Systems by Insurers," adopted at their December meeting. It's actually quite good, focusing on governance, good data practices, and compliance with existing law for market conduct exams.
But market conduct exams are every 3-5 years... Insurance product changes need to move a whole lot faster than that (yearly or twice a year per state).
I'm afraid things will get really slow.
I've worked directly with ~20 states on product filings. Most regulators: * truly want to protect customers
have too few resources
deal with increasingly complex products
are conservative with new product features (it feels worse to them to get it wrong than to slow down what comes to market)
We need to figure this out, both how to build products with AI that are interpretable and how they should be regulated, or we'll get AI everywhere on the fringes of insurance product building, but not where it can create better, fairer, safer products.
Kate Terry, CEO Surround Insurance
InsurTech/M&A/Finance💰/Collaboration
Talem AI and Snapsheet Announce Strategic Partnership to Transform Auto Insurance Claims Management — Talem AI
Talem AI, a leading innovator in predictive analytics for auto injury claims, and Snapsheet, an industry-leader in claims management technology, are pleased to announce a strategic partnership aimed at revolutionizing the auto insurance claims management process.
The partnership capitalizes on the strengths of both Talem AI and Snapsheet, combining Talem's cutting-edge AI-driven Delta-V and injury analysis capabilities with Snapsheet's revolutionary claims platform. By integrating Talem's predictive insights directly into Snapsheet's claims platform, insurers will benefit from comprehensive claim severity insights from the onset of a claim, optimizing claim triage and adjudication processes.
"Our collaboration with Snapsheet represents a significant step forward in enhancing the efficiency and accuracy of auto insurance claims management," said Matthew Kay, COO at Talem AI. "By integrating Talem's AI-driven predictions within Snapsheet's modern claims platform, insurers will gain valuable insights into claim severity, enabling more effective claim routing and decision-making."
CrashBay, the First Collision Repair Marketplace, Secures Funding to Transform How Consumers, Insurance Companies and Repairers Connect
CrashBay, the premier digital marketplace revolutionizing collision repair solutions for fleets and carriers, today announced the successful completion of a $1.25 million funding round led by venture capital firm Markd, with participation from other collision and insurance industry veterans. The funding marks a pivotal milestone in CrashBay's commitment to transforming the collision repair industry and reshaping direct repair programs.
"This partnership with Markd signifies a major milestone for our company, giving us the fuel we need to achieve our mission of empowering car owners and carriers to connect with trusted repair shops anywhere in the world!" said Founder & CEO John Harvey. "Being backed by such a prolific Insurtech fund like Markd, with their expertise and leadership, uniquely equips CrashBay as we embark on the next stage of our transformation journey."
Parker Beauchamp, Managing Partner at Markd, added: "I'm sick of waiting 6+ months for my car repairs, and I figured everyone else is, too. These guys grew up in body shops and insurance company claims departments. Surely, there are improvements to be made. I'm excited for the CrashBay team and their opportunity."
CrashBay has quickly emerged as a leader in providing end-to-end collision repair solutions tailored to the needs of fleets and carriers across North America. Car owners and carriers can seamlessly book appointments with trusted repair shops through its innovative platform. In contrast, repair shops gain access to a suite of programs designed to streamline their operations and enhance services.
CrashBay is redefining the automotive industry landscape by transforming how car owners, insurer fleets, and repair shops connect and collaborate. Its platform offers customized SaaS solutions, digital payments, and claims services developed to address the unique needs of its partners.
Co-Founder & President Andrew Daniels on the CrashBay model: "Our traction highlights the importance of creating a unified marketplace that simplifies the complexities associated with collision repair, fostering an environment where trust, transparency, and efficiency thrive. Our focus as a facilitator helps all stakeholders benefit from process digitization."