News
Global insured nat cat losses for H1 2024 well above average – Gallagher Re
Gallagher Re has reported that the first half of 2024 saw active global natural catastrophes resulting in nearly average financial costs for governments and the insurance industry. The economic loss from all natural perils reached a minimum of $128 billion, slightly lower than the most recent 10-year H1 average of $133 billion.
The private insurance market and public insurance entities covered at least $61 billion of this loss, which is 25% higher than the decadal average of $49 billion. The above-average insured losses were attributed to a higher frequency of small- to mid-sized severe convective storm (SCS) events with robust insurance coverage in the United States.
In its latest report, Gallagher Re notes that as claims filings and processing continue, H1 loss totals are expected to show further development throughout the year.
Excluding losses associated with earthquakes, volcanoes, and other non-atmospheric events, the economic cost of weather and climate-related disasters was at least $113 billion. This figure is close to the decadal average of $117 billion.
This marks the sixth consecutive H1 with weather and climate-related economic losses at or above $100 billion. Insurers covered at least $57 billion of these losses, which is 22% higher than the decadal average of $46 billion, according to Gallagher Re.
Research
Insurers Struggle to Extract Value from Technology - Risk & Insurance
Bain report finds insurers are wrestling with how to extract value from data and technology investments, but technology leadership can lead to significant business improvements.
Insurance companies can gain a competitive edge by leveraging data management and analytics, but only 5% to 10% of them are currently able to extract value from their data and technology investments, according to a Bain & Company analysis.
The report emphasizes the importance of technology leadership in achieving premium growth, reducing expense ratios, and enhancing customer loyalty. It also highlights the need for insurers to modernize their technology systems and make productive use of data to tap into emerging opportunities, such as providing policyholders with risk mitigation and prevention strategies in light of the growing perils like unprecedented climate events and cyber incidents.
“Making deft use of data—from information collected by flood sensors at a manufacturing plant to a driver’s photographs of a crumpled car panel—has become a prime source of competitive advantage for insurance carriers. Zettabytes of data, much of it unstructured and behavioral, now flows from connected cars, houses, factories, and human bodies,” the report’s authors state. “The challenge for insurers is not handling more data; rather, it’s figuring out how to tap and analyze new forms of data and having the right infrastructure and approach to extract useful insights.”
When comparing the scale of technology investment between carriers that are technology leaders in the property/casualty space versus carriers that are not, technology leaders stand out in several areas, per the report. On a scale from 0-1, technology leaders are at 0.6 when it comes to adopting advanced analytics and AI, compared to other carriers at 0.5. On a scale from 0-3, which measures adoption of modern software capabilities, technology leaders are reporting a 3.0, compared to a 2.2 reported metric for all other carriers, according to the report. Also, on a scale from 0-3, maturity of cloud migration is a 3.0 for technology leaders versus 1.9 for other carriers.
Technology leadership can lead to up to 3 percentage points higher premium growth and 5 percentage points lower expense ratios, according to Bain.
However, most insurers struggle to extract value from their technology systems and typically experience long, costly overhauls. The report suggests a playbook for improving technology throughout the enterprise and applying it to pressing business issues. This includes clarity on business priorities, leading with data, investing in the right tools and capabilities, and orchestrating initiatives.
AI in Insurance
New York Releases Guidance on Use of AI in Insurance
On July 11, 2024, the New York Department of Financial Services (DFS) issued Insurance Circular Letter No. 7 (2024) (Letter No. 7) adopting guidance regarding the use of artificial intelligence (AI) in underwriting and pricing decisions. The guidelines require insurers to develop and implement a governance framework to manage the risks of AI, which should include oversight by the board of directors, senior management, and qualified personnel. In a press release announcing Letter No. 7, DFS Superintendent Adrienne Harris described the goal of the letter as “ensuring that the implementation of AI in insurance does not perpetuate or amplify systemic biases that have resulted in unlawful or unfair discrimination while safeguarding the stability of the marketplace.”
Summary of Letter No. 7’s Guidance and Key Compliance Takeaways
Through Letter No. 7, DFS seeks to provide guidance to Insurers authorized to write insurance in New York State, Article 43 corporations, health maintenance organizations, licensed fraternal benefit societies, and the New York State Insurance Fund (collectively, “Insurers”) pertaining to the development and management of the use of external consumer data and information sources (ECDIS), artificial intelligence systems (AIS), and other AI predictive models deployed in underwriting and pricing insurance policies and annuity contracts. FULL SUMMARY
Ushur launches AI-powered automation solution to enhance onboarding for insurance carriers - FinTech Global
Ushur, the leader in AI-powered Customer Experience Automation™ (CXA), has announced the launch of its prebuilt AI-powered automation solution.
This new offering aims to slash turnaround times and improve onboarding communications for insurance carriers, health plans, and financial services companies.
The introduction of this new product addresses significant inefficiencies in the onboarding processes within group benefits and worksite benefits sectors. According to Ushur, the current methods are riddled with friction, being overly manual and inefficient.
The newly launched product is designed to digitise and automate the onboarding journey for employer groups. It utilises Ushur’s proprietary channels and pre-built digital experience templates to ensure continuous clarity and alignment throughout the process.
This AI-powered solution engages with brokers and group customers, providing proactive outreach, coordination, and management.
Ushur’s solution features include proactive outreach to collect necessary onboarding data and regularly check progress, coordination to assist with broker and employer group communications, and automated document processing and data upload to core carrier systems.
InsurTech/M&A/Finance💰/Collaboration
SymphonyAI targets second half 2025 IPO with $500 million in revenue run rate
SymphonyAI, a U.S. artificial intelligence company whose products help the likes of Pepsi predict demand and financial companies spot fraud, is preparing to go public in the second half of next year, its chief executive said in an interview.
Sanjay Dhawan, CEO at SymphonyAI, said the firm is in talks with banks but declined to disclose details or stages of preparations.
The plan to list publicly came as SymphonyAI reached $500 million in revenue run rate last year and achieved profitability, after growing revenue at a rate of about 25%, according to Dhawan.
Safe-Guard Products International Announces Strategic Investment from Hellman & Friedman
Hellman & Friedman is now the majority owner of Safe-Guard Products International, an Atlanta-based company that provides insurance products for RVs, cars and powersports. equipment. New investment poised to accelerate growth; Continued partnership with Stone Point Capital
New investment poised to accelerate growth; Continued partnership with Stone Point Capital
Safe-Guard Products International, LLC, a leading provider of third-party private label finance and insurance protection products for the automotive, RV, marine, and powersports industries, today announced that it has closed on a majority investment from Hellman & Friedman, one of the world's largest private equity firms.
Waller Helms advised Safe-Guard
Insurtech funding in LatAm falls to historic low at $26m in H124 - Reinsurance News
Insurtech funding in Latin America (LatAm) fell to a historic low of $26 million during the first half of 2024, marking a 78% decline from the same period in 2023.
Looking at the period between July 2023 – June 2024, inclusively, the total rose to $43 million, marking the lowest figure on record.
Looking past this downturn in venture capital investment, the insurtech ecosystem across the region expanded by 6%, now boasting a total of 498 startups. Considering a 10% mortality rate, organic growth managed to reach over 16% in the past 12 months, with 77 new insurtech ventures.
These insights stem from a recent report, compiled by Digital Insurance LATAM and sponsored by MAPFRE, which analyses the state of the insurtech industry across the LatAm region.
It’s important to note, that despite the lack of investment, the ecosystem across the region is continuing to grow.
Legal System Abuse/Social Inflation
AI and Social Inflation: Carrier Management
[ED. NOTE: SEE ALSO OUR RELATED WHITEPAPER SOCIAL INFLATION: DECADES OF LITIGATION ABUSE
Defendants, Insurers Risk Falling Behind on AI for Litigation
Executive Summary
With different incentives driving their investments, plaintiffs' lawyers will likely be quicker than defense attorneys to adopt technology, including generative AI tools, to assess case potential, speed up legal research, write demand packages and more. While neither side has tapped the full potential yet, examples of tech companies giving AI-driven support to personal injury lawyers are already popping up. In addition, litigation finance firms are playing "Moneyball" with predictive analytics and machine learning to value cases, defense experts warn.
Rising Homeowners Insurance Costs Since Pandemic Driven by Persistent Inflation, Replacement Cost Increases, Prolonged Supply Chain Issues, and Legal System Abuse
[ED. NOTE: SEE ALSO OUR RELATED WHITEPAPER SOCIAL INFLATION: DECADES OF LITIGATION ABUSE
Rising home insurance costs are being driven by escalating catastrophe losses, rising replacement costs and legal system abuse, Triple-I says.
The recent rise in U.S. homeowners insurance costs have been driven by a combination of increasing natural catastrophe losses and extraordinary inflation coming out of COVID, according to the Insurance Information Institute’s (Triple-I) latest Issues Brief. Even more, Triple-I noted that legal system abuse is also proliferating the cost increases.
Trends and Insights: Drivers of Homeowners Insurance Rate Increase examines the dynamics underlying these price shifts and why insurers must be forward-looking in their approach to pricing these policies.
“Much like Americans are experiencing higher prices for virtually all material goods, a key driver for homeowners insurance has been around the likes of construction materials, which are an important element used when insurers help customers rebuild after catastrophe strikes,” said Sean Kevelighan, CEO of Triple-I.
“According to Triple-I’s own economic analysis, cumulative replacement costs related to homeowners insurance soared 55% between 2020 and 2022.”
Claims
Clive: AI Transformation in Claims Management - Insurtech Israel News
In a groundbreaking move, Five Sigma, an AI-Native claims management software company, unveiled “Clive” ™, the insurance industry’s first AI-powered Insurance Adjustment Agent, designed to transform the claims processing landscape.
Clive’s revolutionary capabilities leverage the power of artificial intelligence and automation to redefine how claims are handled by insurers, MGAs, and TPAs, setting new benchmarks in efficiency, accuracy, and cost reduction.
Introducing Clive, an AI Claims Adjuster and a Team Player
As an AI-powered insurance adjustment agent, Clive excels in orchestrating and automating tasks, traditionally done manually by human adjusters, across lines of business and tailored to specifics of the organizational Standard Operating Procedure (SOP). His capabilities span the entire claim lifecycle from initial loss notification (FNOL) through to settlement. Clive streamlines claims operations through automated document handling, exposure setting, personalized communications with policyholders, and even real-time decision making that allow Straight-Through Processing or recommendations for human adjusters or claims managers.
Clive operates by collecting and analyzing claim-related data, creating and executing tasks tailored to each stage of a claim’s lifecycle, and dynamically adjusting actions based on new information, communication, and claim-related events. Additionally, it ensures seamless interaction with policyholders, keeping them informed every step of the way.
Navigating the key trends and challenges in the insurance claims landscape
The insurance sector is a dynamic market that continuously evolves due to technology, policyholder demands, and legislation. To stay competitive and provide optimal service, insurers must adapt to these changes. Comarch, a global IT business products provider, explores several trends shaping the insurance claims landscape.
Digital transformation is far from over in the insurance industry. Insurers are increasingly leveraging digital technologies to enhance operations and improve the policyholder experience.
Many insurers now offer user-friendly web and mobile platforms for requesting quotes, purchasing policies, filing claims, and checking claim status.
Embedded insurance, which allows customers to buy insurance at the point of sale for another product, is also gaining traction. These digital advancements streamline operations, improve efficiency, and enhance the customer experience.
Digital platforms are crucial as digital policyholders prefer managing policies and interacting with insurers online. Companies like Comarch Insurance provide InsurTech software that helps insurers modernise and simplify the claims process.
The impact of AI
Artificial Intelligence (AI) and machine learning have revolutionised the insurance sector’s risk assessment capabilities.
Recent advancements in AI enable insurers to use these technologies for claims processing and underwriting. AI can analyse large data sets to identify patterns and gain valuable insights, helping insurers predict risks and offer personalised premiums.
AI-driven claims systems also simplify and speed up claims processing, making it more efficient than traditional manual methods. Additionally, AI allows insurers to provide customised insurance offerings, catering to the growing demand for tailored insurance solutions.
Events
ITC Vegas 2024 - The world’s largest gathering of insurance innovation | Tuesday, October 15 – Thursday, October 17, 2024 | Mandalay Bay Convention Center
InsurTech Consulting and our 'Connected" newsletter are proud media partners of ITC Vegas 2024
Event Date: Tuesday, October 15 – Thursday, October 17, 2024
Event Location: Mandalay Bay Convention Center 3950 Las Vegas Blvd S Las Vegas, NV 89119
ITC Vegas combines unbeatable networking with what’s new and next, ensuring your time will be spent meeting more people, sourcing more solutions, and creating valuable partnerships.
Discover solutions to your biggest challenges, gain access to unique and meaningful education, and meet the insurance industry’s best and brightest. Join the insurance event that doesn’t just bring the industry together – it moves the entire industry forward.
The future of insurance is here – at ITC Vegas. If you aren’t here, you are missing out on the conversations that are propelling the industry forward