News
Report: Technology is reshaping the insurance industry
Technology is making it easier for insurance companies to produce quotes, with artificial intelligence (AI) now capable of starting and completing its own estimates, a new study says.
Reuters Events’ Auto Claims 2023: Fine-Tuning The Moving Parts Of Total Loss lays out the ways in which technology is delivering solutions to make roads safer and improve internal processes for carriers.
As automakers install anti-collision tools on new models, insurance companies are investing digital tools to create efficiencies with 39% of respondents seeing a benefit from such investments, the study said.
“The process of getting an insurance quote used to be onerous,” said Frank Cesario, director of U.S. claims at LexisNexis Risk Solutions, which participated in the report. “But today it’s driven by data and the outcome is a much quicker, more seamless process for customers. Claims departments can leverage data to achieve this same end.”
Predictive analysis can determine whether a vehicle is repairable or a total loss based on factors such as year, model, type of impact, whether the vehicle is drivable, and if airbags were deployed, the report said.
And after a vehicle is transferred to a salvage yard, video streaming can be used to complete the estimate and finalize a decision, with AI-driven heat mapping technologies identifying areas of damage, the report said.
LexisNexis Insurance Demand Meter Registers as "Nuclear" for New Policy Growth and "Hot" for Shopping in Q4 2022
The latest edition of the LexisNexis® Risk Solutions Insurance Demand Meter reports the quarterly year-over-year U.S. auto insurance shopping growth rate rose 2.8% in Q4 2022, up from +1.2% growth in Q3 2022 as auto insurers continue to implement widespread rate increases. But the bigger story surrounded new policy growth, or the rate at which consumers either switched or purchased new coverage, which was up a staggering 10.2% for the quarter compared to Q4 2021, including record high volumes in November and December. This comes on the heels of the average premium in the market increasing over 9% in 2022, nearly twice as much as we have seen in recent calendar yearsi.
"The shopping activity we're seeing in the market continues to be extremely volatile as insurers take rate to combat profitability concerns due to rising inflation, loss costs and interest rates," said Adam Pichon, vice president and general manager of Auto and Home Insurance at LexisNexis Risk Solutions. "As consumers receive their renewals, sticker shock may be coming into play, and we're seeing switching rates rising to levels not seen in several years. While insurers are facing a number of obstacles, there is still significant opportunity for those carriers who can leverage data, analytics and artificial intelligence (AI) to help optimize their operations and invest in technology that helps allow them to provide better customer service at a lower cost for the benefit of consumers.
2023 U.S. Property Claims Satisfaction Study | J.D. Power
Erie Insurance Ranks Highest in Property Claims Satisfaction
A combination of severe catastrophic losses, supply chain-related delays and inflation conspired to make 2022 the worst year financially for homeowners insurance providers in the past decade. According to the J.D. Power 2023 U.S. Property Claims Satisfaction Study released today, the combination of more severe events, rising costs and longer cycle times has strained customer satisfaction and tested the limits of the digital tools that were designed to help the industry respond more quickly and efficiently.
Mark Garrett, director, insurance intelligence at J.D. Power
7 ways carriers can boost commercial underwriting capabilities
Imagine a streamlined commercial underwriting process free of persistent phone calls and extensive fact-finding. Imagine much less time spent searching for business and exposure details to develop an accurate quote. This can be a reality with the integration of cognitive technology, which incorporates AI tools and techniques to deliver robust data for classification and risk evaluation. Just as policyholders demand more accurate policy, coverage, and pricing information quickly and virtually, intelligent automation is helping to modernize outdated risk-assessment methods.
Increasingly, the rise of AI-empowered underwriting is a reality for broad-minded insurance organizations. By combining leading-edge technology and precise, transparent data sourcing with underwriters’ expertise, the process can become more efficient, policies can be quoted and issued faster, and the evaluation of routine risks can be further automated to boost productivity. Carriers that embrace the AI-driven transformation of underwriting are seeing significant growth.
How can insurers protect against deepfake fraud?
“Deepfakes” are — phony images or videos that look like the real thing, but aren’t — are everywhere these days. Some are perhaps easy to spot and, as a result, don’t really hurt anyone — but others, such as those used by insurance fraudsters, can be used to swindle insurers into paying for phony claims, or even worse, fool a buyer into believing a substandard vehicle is safe, risking their lives. In order to avoid losses and weed out phony claims, insurers are going to need advanced fraud detection systems.
Advanced communication technology, it turns out, is a double-edged sword for insurers. By providing customers with the opportunity to upload images and data, companies can save themselves — and customers — a great deal of time, effort, hassle and money. It’s a trend that flowered during the pandemic and continues to grow.
EY expert talks embedded insurance pros & cons for carriers
The wave of embedded insurance is steadily gaining strength. Somewhere between 2027 and 2030 we expect that around 30% of insurance transactions will be embedded; hosted by companies outside of the insurance industry. The end consumer will be the ultimate winner. With embedded insurance comes a new era of insurance products that are designed and priced with the customer in mind, versus what insurance companies want to sell them. Accordingly, many of the protection gaps that exist today should be addressed and herald a new age of insurance solutions.
States with the most disaster-displaced residents
The United States is no stranger to climate-related destruction, with the NOAA estimating there have been 341 weather events that caused damages of over $1 billion since 1980 for a total cost of around $2.475 trillion.
In 2022, there were 18 billion-dollar-plus loss weather events, which totaled around $165 billion in damage and caused 474 deaths. These disasters included:
Drought and heat wave in the western and central U.S. Winter storms and a cold wave in the central and eastern U.S. Wildfires in the western U.S. Hurricanes Fiona, Ian and Nicole Flooding in Kentucky and Missouri Tornado outbreaks in the southeast, Midwestern and central areas of the U.S.
InsurTech/M&A/Finance💰/Collaboration
Amazon closes its acquisition of One Medical, but scrutiny of the deal is not over
Amazon closed its acquisition of health care provider One Medical and its parent in a $3.9 billion deal on Wednesday, hours after the Federal Trade Commission said it would not challenge the purchase but that regulators were still investigating potential competitive and consumer harms of the transaction.
The landmark deal will turn the e-commerce giant into a provider of primary medical care with access to more than 200 brick-and-mortar doctors' offices, along with roughly 815,000 One Medical members, according to that company's latest financial statement.
The One Medical deal would also allow Amazon to expand its telehealth services and acquire valuable relationships with hospital systems, industry analysts have said.
Specialty M&A deals set new record in 2022
Specialty distributors consolidated over four times more than retail brokers did last year, according to MarshBerry’s Q4 2022 Specialty Distribution Market Update. In fact, specialty firms recorded 157 transactions in 2022, which set a new record for the number of specialty M&A deals.
This number has steadily ticked upward over the last few years from 123 deals in 2020 to 153 in 2021. Combined with the transactions in 2022, the report shows a 2% increase in specialty deals year-over-year with a five-year CAGR of 17%.
The main driver of transactions in 2022 continued to be private capital-backed organizations. Since 2018 – when privately backed buyers completed only 27 transactions – these deals have increased 285%, with 104 completed in 2022. Independent broker deals, however, dipped 38% from 2021 to 2022, which MarshBerry attributes to “historically high valuations outpricing brokers who do not have sufficient capital.”
With Rate Increases Still Pending, Lemonade Is Slowing Growth in ’23
Executives of insurtech Lemonade say they’re slowing down growth in 2023, as the company waits for regulators to approve rate hikes needed to keep up with inflation.
“So long as these mismatched pockets persist, our growth will be more muted, as we skirt mispriced enclaves,” company leaders said in the annual report to shareholders published last night, referring to places where regulatory rate approvals are lagging.
While growth metrics continued to soar last year, the company is still betting that “peak losses” were reached in 2022 and that loss ratio improvement will continue.
On the growth front, gross earned premiums jumped 68% to just under $500 million, while net earned premiums rose 124%, and revenues (net premiums plus ceding commissions and investment income) doubled.
Root Books Another Net Loss; Stays Positive on Embedded Insurance Results
Calling embedded insurance the “next secular trend in distribution,” Root Inc. CEO Alex Timm in a letter to shareholders said the company has an advantage to scale access in the channel and become profitable.
Root reported a net loss of $58.3 million for fourth quarter 2022, an improvement over a net loss of about $110 million during the same period in 2021. For all of 2022, Root recorded a net loss of about $298 million compared with a net loss of about $521 million in 2021.
Betterview partners with True Flood Risk on digital flood risk tool
Betterview, an insurtech and property analytics platform, recently announced its partnership with True Flood Risk, an AI-powered technology company offering global climate risk data and solutions related to flood risk. Betterview will use data from True Flood Risk's machine learning First Floor Height (FFH), or Lowest Floor Elevation (LFE) technology in its underwriting and claims processes.
Armin Monajemi, vice president of strategic partnerships at Betterview, says that True Flood Risk's technology is unique when compared to other flood scores in the industry due to its accuracy and reliability.