Commentary/Opinion
Embedded Insurance: Challenges and Opportunities | Insurance Thought Leadership
Embedded insurance can delight customers, but outdated systems and data privacy concerns pose hurdles to overcome.
For every business, customer satisfaction isn't just a goal—it's the foundation for building long-term relationships and ensuring success. Merchants are finding new ways to satisfy their customers, and embedded insurance is one of them. It can delight customers by offering insurance right alongside merchants' products.
But while businesses are excited over the growth potential of embedded insurance, there's one industry that's feeling the pressure: insurance. For insurers and insurtechs, the opportunities and challenges of embedded insurance are neck and neck.
To embrace the shift, they must face these hurdles head-on.
Abishek Bhat is the vice president of business development at Trigent Software.
How Blockchain Is Reshaping Insurance | Insurance Thought Leadership
Blockchain and mobility tech promise enhanced efficiency, security, and customer experience.
The insurance industry is being driven by technological advancements that promise to enhance efficiency, security, and transparency. At the forefront is blockchain technology, a decentralized and secure system that has the potential to reshape the way insurance processes are conducted.
Abhishek Peter is an assistant manager at Fecund Software Services.
What To Do When Someone Wants To “Keep Insurance out of It”
Maybe you’ve been here before: Somebody sideswiped your car in a parking lot, rear-ended you on your morning commute or crashed into you on your way to the grocery store. Now your car is sporting an ugly dent, and the at-fault driver is asking you to “keep insurance out of it.” They’ve promised to pay for the repairs if you do, and they might even know a guy who can do it for less than your regular mechanic.
Average car insurance rates are on the rise nearly everywhere, which may make it more tempting to go along with the other driver and avoid a potential rate increase — or conflict with the other driver — by contacting insurers. But bypassing insurance means relinquishing the financial protection you pay for when you sign up for a policy. Bankrate’s insurance editorial team talked to experts and real drivers who’ve navigated this situation from both sides to understand how best to deal with the problem of settling car accident costs without help from insurance.
Why people want to “leave insurance out of it” after an accident
When someone asks you to “keep insurance out of it,” they’re likely concerned about one of a few possible things:
They don’t actually have insurance: The most recent study by the Insurance Research Council (IRC) shows that 14 percent of U.S. drivers had no auto insurance coverage as of 2022. In some states, that number is as high as 25 percent — and if the driver you’re involved with is caught driving without insurance, they could face steep penalties.
They want to avoid a rate hike: Bankrate’s research shows that full coverage car insurance premiums go up by an average of 42 percent after an at-fault accident. The other driver may be worried about paying higher rates if their insurance company learns about the accident. They don’t understand how insurance works: New drivers may be particularly reluctant to involve insurance. They may not know how to file a claim or understand the purpose of their liability insurance. Drivers who don’t understand how insurance works may not trust an insurance company to handle their claims.
Research
Drivers Hate The Tech In Their Cars
It turns out that more technology in cars isn’t necessarily something customers want, and it’s not really improving their driving experience. We know my thoughts on the matter, but I’ll do my best to stay impartial on this latest survey from JD Power that shows most customers don’t appreciate technology in cars unless they can see a clear benefit to them.
JD Power’s 2024 U.S. Tech Experience Index Study evaluated over 81,000 drivers’ experience with “advanced vehicle technologies” in 2024 model year vehicles after 90 days of ownership, It turned out to be a pretty mixed bag when it came to what people liked using. There are a number of tech features that customers like using because they feels that it answers their needs, but at the same time there is a whole lot that don’t get used very often or are continually annoying, according to the survey.
Here’s a rundown of some of the findings of JD Power’s survey, according to Kathleen Rizk, senior director of user experience benchmarking and technology at the company:
Andy Kamlmowitz
InsurTech/M&A/Finance💰/Collaboration
Insurtech Market Set to Skyrocket to USD 378.08 Billion by 2032,
The Insurtech Market is experiencing explosive growth due to technological advancements and the escalating need for innovative insurance solutions.
The surge in digital transformation across the insurance industry, combined with increased adoption of AI and blockchain technologies, is driving this rapid expansion.
“The Insurtech Market, valued at USD 8.24 billion in 2023, is projected to skyrocket to USD 378.08 billion by 2032, achieving an impressive CAGR of 53.03% from 2024 to 2032,"
Davies’ North American growth accelerates as it signs deal to acquire Michigan-based Minuteman Adjusters
Davies, the leading specialist professional services and technology company serving insurance and highly regulated markets today announced it has signed a deal to purchase the trade and assets of Minuteman Adjusters, a third-party administrator serving global insurance carriers and Lloyd’s syndicate insurers across the U.S.
Headquartered in Farmington Hills, Michigan, Minuteman provides both commercial and personal lines desk adjusting services for London Market clients, including regional expertise focused in the states of Michigan, Louisiana, Texas, and South California. Minuteman’s team of adjusting experts, led by Claims Director, Shannon Malbrough, will join Davies’ North American based Claims Solutions business unit, headed up by CEO, Don Lederer.
In July this year, following a period of significant growth, with revenue in North America now making up half of Davies’ global business, the firm announced a new go to market structure under CEO, Matt Button.
Waller Helms Advisors served as exclusive financial advisor to Minuteman Adjusters in connection with this transaction.
Climate/Change/Sustainability/ESG
This summer was the hottest in recorded history around the world
Amid an onslaught of lethal heat, surging disease and record-breaking storms, global temperatures this summer climbed to the highest levels on record, according to Europe’s top climate agency.
As floodwaters coursed through Texas and Taiwan, as mosquito-borne viruses spread across the Americas, as lethal heat struck down children on hikes and grandparents on pilgrimage, the world’s average temperature this summer soared to the highest level in record history, according to new data from Europe’s top climate agency.
Global temperatures between June and August were 1.5 degrees Celsius (2.7 degrees Fahrenheit) above the preindustrial average, the Copernicus Climate Change Service said Friday — just edging out the previous record set last summer. The sweltering season reached its apex in late July, when Copernicus’s sophisticated temperature analysis program detected the four hottest days ever recorded.
Financial Results
Chubb: A Profitable Global Insurer With An Overheated Bull Run, Awaiting Cooler Days | Seeking Alpha
In this week's series of articles, I am continuing on the theme of mega-insurers with an analysis of Chubb Limited (NYSE:CB).
To best summarize what this firm does, here is what the company said about itself on its official website:
With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.
Chubb has more than $225 billion in assets and reported $57.5 billion of gross premiums written in 2023. Chubb’s core operating insurance companies maintain financial strength ratings of AA from Standard & Poor’s and A++ from AM Best.
The last few times I covered Chubb, I gave it a buy rating both times. The outcome? Since my July 2023 buy rating the stock has gone up +49%, and since my followup buy rating in October 2023 the price is up 36% as of this article writing.
AI in Insurance
What part of the insurance industry will be impacted by AI next?
The role of AI-driven customer service is continuing to evolve, with use cases within the insurance industry going beyond just chatbots. Data from WorldMetrics found that, in 2024, AI is forecast to save the insurance industry $1.2 trillion in cumulative cost savings - and by 2025, AI is expected to handle 90% of routine insurance inquiries.
And, according to Yiana Stavrakis (pictured), president of Monarch E&S Insurance Services, claim payments will be the next thing to be transformed by generative AI.
How claims will be impacted by AI
“Claim payments, AI generative sales funnels, back-office support—all of these are areas where AI insurance-related use cases are taking place,” Stavrakis told IB. “The next hot thing will be claim payments, in which a loss occurs, it is reported, read by AI, compared to the policy by AI, sent out for a drone appraisal, and then the payment is issued immediately by wire.”
Advanced AI algorithms can improve claims accuracy by up to 90%, with analytics reducing claim errors by up to 25%. However, the excitement around automation is tempered by the recognition that complete automation might not always be the best approach.
“There isn’t a one-size-fits-all customer service model,” Stavrakis added. “For complex claims or when a client just wants to talk to someone live, there needs to be a human element. I don’t believe, in years to come, customer service will be completely automated. We will continue to need some form of human interaction for complex claims, or simply just as an option.”
Using AI to Provide a More Human Claims Experience
The robots are coming—and in some cases, they’re here.
Advancements in generative artificial intelligence are enhancing claims processes in many ways, from improving First Notices of Loss (FNOLs) to analyzing videos and images to assessing damage quickly.
With all of these changes, some may ask: How long until GenAI replaces adjustors and other claims professionals?
The short answer is: It won’t be anytime soon.
Marc Rothchild is senior vice president, head of Claims at Xceedance. He leads the claims business at Xceedance, and has 20 years of operations and technology leadership experience across the insurance, software and supply chain distribution industries.
Legal System Abuse/Social Inflation
Social inflation drives US liability claims to reach annual peak of 7% in 2023: Swiss Re
Social inflation has become the main growth driver of US liability claims, with a rising number of large court verdicts pushing claims in the US to increase by 57% in the past decade, ultimately causing them to peak at 7% in 2023, the first time seen in two decades, according to Swiss Re Institute.
With social inflation emerging as the main driver behind rising US liability claims, this has led to notable underwriting losses, heightened uncertainty, and reduced insurance capacity for organisations across the globe.
Social inflation is mostly driven by a variety of socioeconomic, legislative and litigation trends, including an increased tendency to settle compensation claims in court and is most pronounced in the US, where tort law is based on precedent and court cases are adjudicated by juries.
Webinars/Podcasts/Interviews
Interview: Matt Ebert, Crash Champions and Mary Mahoney, Enterprise Mobility
In August, Crash Champions announced that the Collision Engineering Program will be the primary beneficiary of its 2024 Charity Golf Outing taking place December 5 at Monarch Beach Golf Links in Dana Point, Calif.
In our video interview embedded below, Matt Ebert, Founder and CEO of Crash Champions, and Mary Mahoney, VP at Enterprise Mobility, discuss the industry’s technician shortage and how the innovative Collision Engineering Program is helping people start off their careers with the skills they need to succeed.
CollisionWeek Exclusive Interview
Commenting on the decision to use the proceeds from its charity golf outing to support the Collision Engineering Program, Ebert said, “The easy answer is it’s a cause we believe in. Ultimately, it was a bit of a tough decision because in the past the golf outing had benefited Make-A-Wish, and we’ve been able to do some really good things for kids in need there, and we’ll continue to support the Make-A-Wish. But ultimately we thought it was very appropriate to align the golf outing and the beneficiary of it with the overwhelming need we see in the industry, and our desire to try to help to do something about it.”
“It’s a huge gap in the number of technicians that we have today compared to what the industry needs today, and especially tomorrow as baby boomers start to get to retirement age,” continued Ebert. “So we felt that, here it is our own industry, it’s a huge need that needs to be met, and we have this function where we can help monetarily contribute to do something about it, so we thought that was the best path.”
Mahoney explained how the Collision Engineering Program is designed to prepare students for a career in the industry.
“The Collision Engineering Program is innovative and it’s a rotation-based apprenticeship training model, and it focuses on preparing the student in the classroom for multiple weeks, and then we move them over to the shop to practice those skills in a real-world environment, and then back again into the classroom for two years,” said Mahoney. “At the end of that two years, they have an associate’s degree, it’s backed by the Department of Labor, they’ve been a part of an apprenticeship, and the focus there was retention and increasing the skill level.”
“Our first couple of years in the pilot we had 162 students at 87.5% retention with 100% job placement, so it’s working,” said Mahoney.
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