AI in Insurance
Ethical AI - The Six Pillars For Insurance - CHARLEE.AI
Artificial intelligence (AI) is mentioned daily in the news media. The popularity of AI is exponentially increasing every month as new ideas and products are introduced in the marketplace. These new products are exciting and innovative, but will they stand up to scrutiny and authorization by regulatory agencies overseeing technology in their specific business domain? In the insurance business, regulators have tackled the task of drafting model bulletins and regulations governing the use of AI in the underwriting and claims processes. The regulators are viewing the concern of biased AI and the consequences that will harm consumers.
Ethical AI is a popular topic in the InsureTech Community, and it must stay at the forefront of innovation and deployment of solutions for insurance carriers and stakeholders. The NAIC H Committee has drafted a model bulletin for insurance carriers to follow using AI with specific points on how the carriers can be held accountable.
In 2019, the Health Ethics and Policy Lab[1] defined ethical AI from a global convergence of moral principles: 1. Transparency; 2. Justice; 3. Fairness; 4. Non-maleficence; 5. Responsibility; and 6. Privacy. These principles are on point and very important in developing and deploying AI solutions in our society.
Written by: Dr. Charmaine Kenita, Technology and Business Writer and John Standish, Co-founder & CIO
Research
[Ed. Note: Highly Recommended] Loyalty Indicator & Shopping Trends (LIST) | J.D. Power
Key Insight
Our 2023 Q4 report spoke to the continual decrease in shopping through Q4 after a drop in Q3 relative to first-half results. It looked like consumers responded to continual premium increases by shopping in the first-half of the year and relented to higher premiums in the second-half of the year when better deals were harder to find. Insurers have continued to take rate in the background of this change in consumer behavior, and we are now seeing a new change in trend –consumers are again shopping for auto insurance,at a record rate.
Loyalty Indicator & Shopping Trends (LIST) | J.D. Power
Inflation may affect interest rate cuts due to high auto insurance and gas prices
At the beginning of the year, the markets expected that the Fed, known for being accommodative, would drop interest rates six or seven times starting in March
A government report released on April 10 revealed that consumer inflation remained high last month due to increased expenses such as gas prices, rent, and auto insurance premiums. This data may cause the Federal Reserve to rethink its decision to lower interest rates this year.
Since the beginning of 2021, persistent pricing pressures have caught investors, customers, policymakers, and economists off guard. As a result, on April 12, the Dow Jones Industrial Average fell by about 500 points, resulting in a 2.4% weekly decline and the loss of almost all the year’s stock gains.
The White House was disappointed with the figures released. Biden’s Republican opponents are using the high prices as a political weapon to undermine his re-election chances. Despite a strong job market, a nearly record-high stock market, and a decline in inflation from its peak, many Americans attribute the high prices to Biden.
At the beginning of the year, the markets expected that the Fed, known for being accommodative, would drop interest rates six or seven times starting in March. However, after each month’s unaccommodating data, investors had to reassess their expectations. As a result, they are now predicting only two cuts, based on a non-zero possibility (about 9%) that there won’t be any this year.
Last month, the cost of owning a car was one of the significant contributors to the price surge. Auto insurance premiums surged by 2.6% in March and have increased by 22% from the previous year. This steep increase is partly due to the two-year rise in new car prices, placing a heavy financial burden on car owners.
The average auto repair cost rose 1.7% in March compared to February, which has grown by 8.2% from last year. Additionally, last month saw a 1.7% increase in the cost of gas for most cars. However, the cost of both new and secondhand vehicles decreased somewhat.
Jaelyn Campbell is a staff writer/reporter for CBT News
Motorized scooters, e-bikes and no-fault insurance coverage | PropertyCasualty360
The convenience and affordability of motorized scooters, mopeds and e-bikes also comes with a price in the form of injuries, sometimes fatal.
E-bikes, motorized scooters and mopeds are gaining nationwide popularity as folks seek out affordable, environmentally friendly transportation alternatives.
As compared to four-wheeled motor vehicles and even full-size motorcycles on the one hand, and standard foot scooters and foot pedal bicycles on the other, scooters, mopeds and e-bikes provide the best of both worlds. Like a foot scooter or standard bicycle, they are small, easy to park and easy maneuver around, yet like a full-size motorcycle or car, they are powered and can get around at speeds topping 20 to 40 miles per hour, which is more than sufficient to navigate crowded city streets. They are particularly popular among delivery workers who can zip past traffic and pull up right to their delivery destinations without the concern of finding available street parking.
Recognizing the popularity and the advantages of electric bikes and scooters, in June 2020, the City Council of New York City passed several pieces of legislation allowing or expanding the use of lower speed e-bikes and E-scooters (Local Laws 72, 73 and 74.)
David M. Barshay is a member of Barshay Rizzo & Lopez in Melville. Steven J. Neuwirth is a member of Sanders Grossman Aronova in Garden City.
Insurance Carriers Advance Mobile Accident Detection and Claims Support Along with Facilitated Access to Mobile Services
Keynova Group Releases Semi-Annual Mobile Insurance Scorecard Results
Keynova Group, the principal competitive intelligence source for digital financial services firms, today announced the results of the Q1 2024 edition of its semi-annual Mobile Insurance Scorecard. GEICO won first overall for its mobile user experience in Keynova Group's competitive evaluation of the mobile apps and mobile websites of the top 12 U.S. auto and property insurance carriers. In addition, State Farm placed first for its mobile app, and Progressive secured the lead for its mobile web experience.
The latest Scorecard findings show that carriers are enhancing their mobile modes by advancing claims capabilities with accident detection, feature-rich roadside assistance, and improved claims tools such as GPS mapping. Carriers are also improving the usability of their mobile channels by enabling pre-login app access to key services such as quoting or customer support and by offering quick login to policy services via mobile web.
"Insurance carriers' efficient and effective claims handling continues to be a central component of policyholder satisfaction and retention," said Beth Robertson, managing director of Keynova Group. "Mobile devices are ideal for supporting a superior, in-the-moment claims experience encompassing useful digital tools that can generate rapid and accurate event resolution."full report
Commentary/Opinion
What's on the horizon for US P&C earnings in 2024?
Fitch delivers verdict amid an improved market
The year 2024 will deliver a significant improvement in property and casualty (P&C) insurance statutory earnings driven by a recovery in personal lines and only a slight decline in commercial lines underwriting, as per a new report from Fitch Ratings
The report also highlights an anticipated narrowing of personal lines underwriting losses, especially in auto insurance, as natural catastrophe losses are expected to return closer to historical norms.
According to Fitch, revenue growth in the P&C insurance sector is expected to decelerate in 2024, with a projected 7% increase in both direct and net written premiums, a decline from the 10% increase seen in 2023.
This previous growth was fueled by strong commercial lines performance and significant price increases in personal lines. The report credits the favorable performance in commercial lines to an unusually prolonged hardening phase in market pricing, which is expected to continue through 2024.
Kenneth Araullo is a senior news writer for Insurance Business,
Insured losses in Q1 expected to be lighter-than-average: JP Morgan
JP Morgan has estimated that global insured losses will be less than $10 billion in Q1 of 2024, much below the average of $15 billion over the last 10 years.
The largest natural catastrophe during Q1 was the magnitude 7.5 earthquake that struck Japan on New Year’s Day.
Catastrophe risk modeller Moody’s RMS has estimated that the total insurance industry loss from this event will fall between $3 billion and $6 billion.
The range reportedly reflects property damage, contents, and business interruption across residential, commercial, and industrial lines, and also includes both private and mutual markets.
Meanwhile, the insured losses from the Baltimore Bridge collapse, which occurred on March 26th, could land between $2 billion and $4 billion, depending on how long the Port of Baltimore is blocked, according to analysts at Morningstar DBRS.
7 Common Mistakes on Innovation | Insurance Thought Leadership
As generative AI throws many innovation efforts into high gear, here are seven ways that such initiatives have failed in the past.
Why make the same mistakes that others have been making for years? Why not learn from those mistakes and avoid them?
That may seem like an obvious point, but the vast majority of business literature focuses on success stories. It seems people like reading about successes more than they like reading about failures. People certainly like talking about their successes more than they like focusing on their failures.
But, being a contrary sort, I've focused on lessons to be learned from failures for going on 20 years now, in conjunction with Chunka Mui. He and I have written one book, "Billion Dollar Lessons," based on voluminous research into corporate failures and have published two others that build on those lessons.
Drawing from those books and his consulting work, Chunka recently wrote a piece on seven key lessons to be learned from others' failures on innovation efforts. I'll share those here, along with some commentary from me to tailor those lessons to what's happening in insurance.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Streamlining Title Acquisition: The Rise of E-Titling
In this article, we took a closer look at the recent evolution of e-titling and how this innovation is driving success in the dealership.
In the fast–paced world of automotive sales, time equals money. Every minute spent on paperwork and administrative tasks is a minute taken away from serving customers and closing deals. And when you can’t get an acquired vehicle title in your name in order to resell it, we’re looking at days, weeks, or even months.
For too long, the process of acquiring vehicle titles has been a notorious bottleneck, hindering efficiency and frustrating dealerships across the nation — no more. The winds of change are blowing, and they’ve brought about a new solution to revolutionize title acquisition: E–Titling.
Utilizing NMVTIS and Motor Vehicle Records in lieu of a physical title, E–Titling identifies the true and current status of that acquired vehicle.
Dave Spencer, National Sales Director, Vitu
Climate/Resilience/Sustainability
Farmers Group chief on what insurers need
Farmers Group chief executive Raul Vargas (pictured above) has expressed support for the proposed expansion of catastrophe modeling in California.
Speaking at the recent Global Sustainable Insurance Summit in Los Angeles, Vargas said: “Insurers need the confidence to price correctly for the risk.”
The CEO was responding to a question by California Insurance Commissioner Ricardo Lara on how to get other insurers back to the state. Vargas, whose camp has remained in the California market through constructive engagement with the CA Department of Insurance, believes the use of catastrophe modeling in rates-setting would be key.
At present, the use of catastrophe models in the state is allowed for earthquake losses and post-quake fire. Under Lara’s proposed regulation, the allowable use will be broadened to include wildfire, terrorism, and flood lines for homeowners’ and commercial insurance.
Announcements
2024 Making Waves Honorees Announced at InsurTech Hartford Symposium
Congratulations to the 2024 Making Waves honorees at today's InsurTech Hartford Symposium. A truly impressive group of industry thought leaders and influencers. Special shoutout to my colleague and co-curator of the 'Connected' newsletter, Alan Demers, CPCU, AIC, President, InsurTech Consulting.
2024 Making Waves Honorees
Marissa Buckley. Tony Cañas, Alan Demers, Laura Dinan Haber, Christopher Frankland, Margeaux Giles, Curtis Goldsborough, Bobbie Shrivastav
The Making Waves Award acknowledges thought leaders for their roles in advancing innovation within the insurance sector. Recipients are chosen based on their notable industry accomplishments, dedication to promoting innovation, and proactive engagement in its advancement. This accolade recognizes the considerable impact each influencer has had on propelling innovation within the industry, fostering a meaningful and constructive influence on its evolution
InsurTech Hartford Symposium is a highly immersive conference experience that brings together great minds & world-class leaders in one of the nation's most prestigious venues, the Mohegan Sun.
Fraud
Ex-chiropractor sentenced to 54 years, fined $23M in comp fraud
A former California chiropractor was sentenced Friday to 54 years in state prison and ordered to pay more than $23 million in fines for his role in a $150 million workers compensation fraud scheme, authorities announced Monday.
Peyman Heidary, who was convicted during a January jury trial of 68 counts of insurance fraud, conspiracy, money laundering and other charges, had exaggerated claimant injuries and ordered employees to provide unnecessary medical treatments, which resulted in inflated billings to insurers, according to the Riverside County District Attorney’s Office.
Mr. Heidary controlled several sham law firms and a network of sham health clinics between 2009 and 2014, prosecutors said. He used the sham law firm to recruit injured workers and then referred the individuals to his clinics for treatment resulting in fraudulent billing.
Prosecutors said Mr. Heidary was initially charged with $98 million in fraud but calculated damages rose to $150 million after additional evidence was presented at trial.