Commentary/Opinion
How NOT to Inspire Change | Insurance Thought Leadership
Apple's ability to excite customers about technological change is legendary... but the company erred badly with a recent ad for its new iPad Pro. And if Apple can totally misjudge how people will react to change, then so can you and I.
I worry, in particular, about how the insurance industry will manage all the changes that are becoming possible with generative AI and that will need to be rolled out throughout companies over the next many years. While executives sing its praises and talk about how much drudgery it can remove from jobs, how much more efficient it can make people and so on, I'm not sure they're fully factoring in the fears that many employees harbor and the organizational changes that will need to occur.
I have thoughts.
So we're all on the same page, here is a link to the Apple ad. And here is a link to an article about Apple's quick apology.
You can see what Apple was trying to do. It wanted to show that a whole array of creative tools--books, musical instruments, a record player, paint and much more--had been combined into a single, sleek iPad. Apple was even being its usual cheeky self by invoking a popular meme, in which people put cans of paint or fruit or just about anything into a metal crusher and then film and share what they look like when they explode.
What Apple somehow missed is that many of the items being crushed are totemic. People love their books, their pianos, their record players. People don't want to see those crushed, even in the name of sleek technological progress. You can't just sell the notion that a technology is cool and assume everyone will climb onboard.
Many people like their jobs, too--even the less efficient parts. They've done the job the same way for a long time, and they're in no hurry to change. Change takes effort and is disruptive mentally.
A rule of thumb among venture capitalists is that a new product needs to be 10 times better than what a startup is trying to replace, or don't bother. That number doesn't need to be as high with employees because, after all, the employer is paying their salaries. But there still needs to be a clear advantage, or the employee will resist the change, and the employee has to be wooed, not just ordered around.
Paul Carroll, Editor in Chief, Insurance Thought leadership
News
US P/C Industry 2023 Underwriting Performance Improved, but Personal Lines Continue to Drag, New Triple-I/Milliman Report Shows
The U.S. property/casualty industry saw its second consecutive year of underwriting losses, with a net combined ratio of 101.6 for 2023. While improved relative to 2022, personal lines remained the major driver of unprofitability in 2023.
Premium growth is expected to further improve underwriting results in 2024, with the 2024 P/C industry net combined ratio forecast at 100.2, according to the latest industry underwriting projections by actuaries at the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner. Insurance Economics and Underwriting Projections: A Forward View, was presented today at Triple-I’s exclusive members-only webinar.
Dale Porfilio, FCAS, MAAA, chief insurance officer at Triple-I, discussed the overall P&C industry underwriting projections and premium growth. “The overall picture from prior quarters remains the same with commercial lines performing better than personal, but to a lesser extent,” he said. “The 2023 commercial lines net combined ratio was 96.2, 1.4 points worse than the 2022 result. While still unprofitable, personal lines improved 3.2 points relative to 2022. For 2023, the personal lines expense ratio improved by almost 2 points over 2022, most dramatically in personal auto.
The net written premium growth rate for personal lines surpassed commercial lines by over seven points in 2023. Continued personal lines premium growth should lead to further convergence in underwriting performance in 2024.”
Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman – a premier global consulting and actuarial firm – said that for commercial auto, the 2023 net combined ratio of 109.2 is 3.8 points higher than 2022, and 10.3 points higher than 2021. “The improved underwriting results following the COVID-19 pandemic appear to have been short-lived, as the commercial auto underwriting results have once again deteriorated and adverse prior year development has returned to pre-COVID levels,” Kurtz said.
US P&C Q1'24 earnings recap – Allstate books another strong quarter | S&P Global Market Intelligence
The Allstate Corp. turned in another strong earnings report in the first quarter of 2024, booking a solid increase in net income as rate increases in personal auto started to earn in while its combined ratio also declined significantly year over year.
The Northbrook, Ill.-based insurer reported net income before taxes of $1.46 billion compared to a net loss of $410 million in the first quarter of 2023, according to an S&P Global Market Intelligence analysis of leading US property and casualty (P&C) and multiline insurers.
Earnings per share improved to $5.13 from a loss of $1.30, and the company's combined ratio improved to 93.0% from 108.6% as catastrophe losses decreased to $731 million from $1.69 billion.
After ratcheting up personal auto rates over the last two years, Allstate boosted rates by another 2.4% in the first quarter as it resumed writing new business in California.
With both The Progressive Corp. and The Travelers Cos. Inc. also booking year-over-year gains in net income, Keefe Bruyette & Woods analyst Meyer Shields was generally upbeat on the sector.
"Some of the big nonpublic companies like State Farm Mutual Automobile Insurance Co., have a ways to go, but the bigger, better public companies are in OK to really good shape," Shields said in an interview. "The underwriting profit crisis in personal auto ... is mostly over."
During Allstate's first-quarter earnings call, Mario Rizzo, president of property-liability, said because of the "levers" it has in place, the insurer is "positioned to generate sustainable, profitable growth."
Rizzo said rolling back restrictions on new business is one of those "levers." As rate adequacy has been achieved in more states, the insurer has eased "restrictive underwriting policies ... representing more than 75% of Allstate brand auto premium, and planned Allstate-brand advertising is also expected to increase growth," he said.
Seeing an Improved Commercial Insurance Marketplace in California, Farmers® to Resume Offering Key Lines of Business Insurance
Farmers Insurance® today announced it will resume accepting new business Commercial Multi-Peril applications for Auto Service & Repair, Habitational, Manufacturing, Real Estate and Wholesale Distribution policies in California, as of August 1, 2024. This action follows the insurer group's recent decision to lift its temporary moratorium on writing new Commercial Automobile insurance policies in the state, effective July 1, 2024.
"As a leading insurer of small businesses, we are excited to be re-opening these key lines of our commercial insurance offerings to new customers in California and help provide business owners with more choices when shopping for coverage options," said Eric Coleman, president of Business Insurance for Farmers®. "Farmers has operated in California for nearly a century, and while challenges remain, we are encouraged by the positive changes taking place in the state's commercial insurance marketplace."
For the past several months, Farmers has been working with the California Department of Insurance (CDI) on plans to re-enter the business insurance market after a temporary pause in offering coverage for a subset of new business insurance policies. Farmers continues to be a leading writer of small business insurance policies, offering coverage for Artisan Contractors, various Retail, Office, Service Industries, and Workers' Compensation insurance in California, all of which remained open for new business applications through its temporary moratoriums.
"We have been consistent in our belief that a fundamental condition for offering coverage is that rates need to reflect the risk exposure we are insuring. Fortunately, through constructive discussions with the CDI, we are now ready to take this step back into the market," added Coleman.
May 18th Expo in Mobile Will Focus on Preparing for Catastrophic Events
Every year, hurricanes, tornadoes, and other catastrophic events leave millions of Americans struggling to recover and rebuild their lives. Unfortunately, these events also provide an opening for dishonest contractors looking to take advantage of homeowners. Last year was a historic year for billion-dollar weather and climate disasters in the U.S. with 28 separate events costing at least $1 billion and totaling more than $93 billion in catastrophe losses. Upwards of 10 percent or $9.3 billion is lost to post-disaster fraud, which not only impacts individuals, but also impacts insurance premiums throughout the industry.
Contractor Fraud Awareness Week 2024
To help combat this growing nationwide problem, the Alabama Department of Insurance is joining with the National Insurance Crime Bureau (NICB) to raise awareness with an event in the Mobile, Alabama metro area on Saturday, May 18, 2024 as part of Contractor Fraud Awareness Week (CFAW). The event will focus on preparing for a natural disaster and how homeowners and business owners can identify the signs of contractor fraud and how to avoid becoming a victim of deceptive contractors after a natural disaster.
InsurTech/M&A/Finance💰/Collaboration
Monitaur, Model Governance Platform for Highly-Regulated Industries, Raises $6M | Insurance Innovation Reporter
Serving both major carriers and insurance industry vendors, Monitaur will use the Series A funding to accelerate growth and staffing across functions.
Monitaur (Boston), a provider of model governance software company for highly regulated companies and their partners, has announced the closing of a $6 million Series A funding round led by Cultivation Capital, with participation from Rockmont Partners and others including Defy VC, Techstars, and Studio VC. This investment will enable Monitaur to accelerate its growth and add talent across functions.
Anthony Habayeb, Co-Founder and CEO, Monitaur.
“Awareness of AI risks and the importance of governance were not fully appreciated when we founded Monitaur in 2019,” comments Anthony Habayeb, CEO and co-founder of Monitaur. “Our vision has been realized into an emerging market over these five years and, thanks to our tremendous team and customers, we are uniquely positioned with proven capabilities and scale for this moment.”
Monitaur describes its platform as helping highly regulated enterprises build better AI and models that businesses, regulators, and consumers can trust. The company delivers solutions designed to help enterprises and their partners define, manage, and automate fundamental best practices throughout the modeling project lifecycle. With Monitaur, companies can accelerate innovation with clarity and confidence in the transparency, performance, fairness, safety, and compliance of their modeling systems, a vendor statement says.
Anthony R. O’Donnell, Executive Editor, Insurance Innovation Reporter
AI in Insurance
Responsible use of AI critical to consumer trust: Swiss Re’s Levy - Reinsurance News
As the insurance market and its customers realise the potential of artificial intelligence (AI), it is yet not very clear how to apply the technology in a way that delivers enhanced engagement, and in turn, sales, Swiss Re’s Daniel Levy has stated.
Principal Risk Consultant Levy has recently explored how insurers can get the best results from AI-powered tools, in terms of retaining customers and improving the quality of interactions.
He highlighted the importance for insurers to leverage multiple AI models to realise a greater return on investment. He also noted that the use of behavioural over demographic-based approaches can deliver superior results as well as the responsible use of AI, among other tools, can help insurers reach and retain customers.
Levy said: “Most insurers use AI primarily to identify the customers most likely to let their policies lapse. Single-purpose propensity models are highly effective when it comes to identifying a specific subset of customers at risk of being lost.
How to revolutionize insurance with generative AI | EY - US
Prioritizing the right use cases and establishing key capabilities will promote innovation and efficiency across the value chain. In brief
Usually viewed as slow adopters of technology, insurers across all lines of business are actively investing in GenAI and mobilizing dedicated teams.
Near- and long-term use cases of GenAI in insurance are focused on enhanced underwriting, predictive risk assessment and personalized product recommendations.
Dual-track approaches that balance grassroots experimentation and top-down strategies, with strong underlying governance, have emerged as a leading practice.
Global insurers contending with proliferating risks, such as climate change, natural catastrophe, cybersecurity, rising customer expectations, such as tailored coverages and personalized experiences, and profitability pressures are looking to the transformative potential of generative AI (GenAI). Though the technology is still in the early stages of development, many global insurers clearly see how it can unleash competitive disruption, create new revenue opportunities and promote operational excellence.
Some insurance carriers are moving ahead with first-generation use cases. Others are focused on building out enterprise strategies, robust governance models and delivery capabilities, before deploying too many applications. All insurers have questions about the optimal way forward, specifically how to leverage GenAI in a traditionally risk-averse industry.
Why insurance is the ‘backbone’ of innovation
To keep up with emerging risks, creating innovative insurance solutions is pivotal.
Senior vice president, head of innovation, Americas at AXA XL, Rose Hall (pictured) spoke with Insurance Business at the recent RISKWORLD conference in San Diego to explain how her firm is doing it.
Dedicated to exploring the next generation of technologies that could aid insurance companies and insureds in risk mitigation, Hall shared insights into emerging risk trends and emphasized the importance of the insurance industry in driving innovation forward.
Innovative ecosystems
As the co-founder of AXA XL Ecosystem, a list of preferred partners in the firm’s network that use technology to help clients reduce risk and grow their businesses, Hall is committed to discovering innovative approaches to integrate technology into insurance solutions.
Speaking on the initiative, Hall said: “We have a preferred partnership, we call our Ecosystem, where we vet hundreds of different technologies and partner with 35 at any given time that we think are best at helping clients manage their risk.”
Fraud
15 Californians Charged in Complex Auto Insurance Fraud Ring
More than a dozen Southern California residents are reported to have conspired to create fraudulent insurance claims to illegally collect more than $350,000.
They were arrested last week after an investigation reportedly discovered a large-scale organized auto insurance fraud ring engaged in multiple schemes, including holding vehicles hostage and collusive collisions.
Three additional people were charged for their alleged involvement in the organized ring. The charges involve 19 fraudulent claims resulting in a loss of $353,035.full article
Events
USA'S LEADING INSURTECH CONFERENCE Javits Center | New York | 5-6 June 2024
USA'S LEADING INSURTECH CONFERENCE Javits Center | New York | 5-6 June 2024 Insurtech Insights USA
The insurance industry, no stranger to gauging risk, is facing its most profound disruptions in decades. Artificial intelligence, machine learning, Internet of Things, blockchain, data analytics and other emerging technologies are rising to prominence. Are you ready to transform your business?
Special Discount to 'Connected' followers: Use discount code INSURTECHCON25and receive 25% off your conference pass Register here
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