A Caution on a Hot Trend: Insurance Thought Leadership  March 7th 2023

A Caution on a Hot Trend

The buzz about automatic notification of car crashes makes great sense… for insurers… but not always for customers. Some caution is in order.

Lots of experts see cars’ increasing ability to automatically notify insurers and public authorities about crashes as a breakthrough. And it is. Authorities will quickly be able to dispatch help, if it’s needed, and insurers will be able to take hold of the claims process so early that they’ll be able to knock out lots of cost while speeding the repair process. Automatic reporting can be a game-changer, for all the reasons our friends Stephen Applebaum and Alan Demers lay out here. They estimate that the technology, now possible because of smartphones, could save an average of $1,000 per claim on the 15 million auto claims filed just in the U.S. each year, for a whopping $15 billion in savings.

But what if customers don’t want to automatically notify insurers and public authorities about a crash?

Many will, of course, appreciate the peace of mind that comes with knowing that help will be sent even if they’re incapacitated in an accident. Many will feel coddled after they have even a minor accident and their insurance company calls or texts to ask if there’s anything the company can do to help. If customers get the sense that they’re being moved more quickly through the repair process, they’ll like that, too, and some PR and advertising could even sell customers on the idea that having costs taken out of the claims process allows for lower rates.

So, what’s not to like?

Paul Carroll, editor-in-chief, Insurance Thought Leadership

The value of automation for auto and property claims

The point at which a customer reaches out to their insurer to make a claim is a critical time. It is often a moment of heightened anxiety for the customer, who may have suffered a costly and inconvenient damage or loss.

For insurers however, this represents an opportunity. According to Ushur, an AI-powered customer experience automation platform, insurers can ease a customer’s anxiety at this time by delivering a digital-first, empathetic claims experience. Leveraging automation is key to enabling this.

Ushur pointed to a report from Accenture, which revealed up to $170bn of insurance premiums could be at risk in the next five years due to poor claims experiences. The report found that one-third (31%) of the policyholders were not fully satisfied with their home and auto insurance claims- handling experiences over the past two years.

Automation and AI can bring value across the entire claims value chain, from damage assessment and loss estimation, to processing optimisation and subrogation, and beyond.

Electric Cars Accelerate Cyber and Property Risks, Lower Crash Frequency and Distracted Driving

More electric vehicles on U.S. roadways are creating new concerns for insurers, including the threat of cyberattacks on public charging stations, costly vehicle repairs and homeowners’ property damage.

Artificial intelligence spurs 62% of carriers to cut staff – survey

Sixty two per cent (62%) of insurers have cut staff due to the implementation of artificial intelligence (AI) and machine learning (ML) technologies in the past 12 months, according to the results of a global survey.

Rackspace surveyed IT decision makers across a range of sectors in the Americas, Europe, Asia, and the Middle East and received 52 responses from individuals at insurance companies.

“When we look to computers or we look to technology to make an organisation more profitable and more efficient … some of these organisations have employed, in some cases, mountains of people to be able to do some of this work,” said Jeff DeVerter, chief technology evangelist, Rackspace Technology.

Q1 2023 Insurance Labor Market Study Indicates Continued Growth

The latest iteration of the Semi-Annual U.S. Insurance Labor Market Study, conducted by The Jacobson Group, the leading provider of talent to the insurance industry, and Aon plc, a leading global professional services firm providing a broad range of risk, retirement and health solutions, found 90% of respondents intend to maintain or increase staff in 2023.

"Overall, recruiting remains challenging and retention is a key focus for 2023," said Gregory P. Jacobson, co-chief executive officer of The Jacobson Group. "Carriers are adapting to meet evolving business needs, while staying competitive in terms of employee expectations and preferences. The vast majority of insurers plan to continue offering flexible work accommodations, with a quarter of companies sharing most employees remain fully remote."

"Although the insurance industry is still addressing financial challenges related to inflation, rising reinsurance costs and volatile equity markets, most companies have a positive outlook for revenue growth in 2023," said Jeff Rieder, partner at Aon and head of Ward Benchmarking. "Insurance companies are expected to continue hiring throughout 2023 to support their growth goals and meet customer service expectations."

Spying, AI and Hacking, Oh My… 7 Agent Technology Trends to Watch in 2023

Technology is a double-edged sword that can drive fear as much as excitement for the future. Game-changing tech, though, allows us to make our imaginations a reality. Let’s take a spin down Future Lane to see what tech might hold for independent agencies.

Internet 1-2-3

A great battle for the ownership of the internet is coming. Internet 1.0 was read-only content. Internet 2.0 was a read-write tool that introduced blogs and social media in a flourishing content creator economy. Internet 3.0 is a read-write-execute tool, which attempts to claw back ownership and control of content now firmly in the hands of a half-dozen digital robber barons.

At moments, Web 3.0 feels like the internet did in 1995: a Wild West full of fringe ideology, flawed business models and charlatans. But if this next layer of the internet can mature and do for value what the current version has done for information, 2030 will look nothing like today.

Matt Shannahan, systems engineer, Polley Insurance and Risk Management

Homeowners are making renovations without updating insurance policies

During the coming year, 61% of U.S. home insurance policyholders are planning renovations, but 34% of those undertaking projects said they don’t plan to or didn’t think they needed to tell their home insurance company about the projects, according to a survey by The Hanover.

This past year fewer homeowners (26%) said they didn’t know they should contact their insurance agent when making home renovations. The Hanover noted independent agents should regularly inform policyholders of when they should contact them to update a policy.

“Proactive outreach throughout the year also results in powerful conversations that give customers peace of mind that their agents are continuously looking for ways to protect investments and add value to the relationship,” The Hanover noted in its report.

Social Inflation Contributed to $30B Increase in Commercial Auto Costs, Paper Finds

U.S. commercial auto insurance liability claim payouts increased $30 billion more than would otherwise have been expected between 2012 and 2021 due in part to social inflation, according to an updated paper published today by the Insurance Information Institute (Triple-I), in partnership with the Casualty Actuarial Society (CAS)

"This update shows that the dynamism in the tort landscape continues and is likely more sizable than previously estimated."

The Triple-I/CAS paper, Social Inflation and Loss Development – An Update, revisited previous work that examined changes in loss development from one calendar year to the next. These changes point to an upward movement in the cost of commercial auto liability insurance. The authors consider how phenomena besides general inflation could be meaningful underlying contributors to the upward movement in this cost. Separately, Triple-I has found that legal system abuse and third-party litigation funding are two significant causes of increases in claim costs above general inflation (i.e., social inflation).

Global Insurance Report 2023: Expanding commercial P&C’s market relevance -

The nature of risk is evolving faster than ever, and commercial carriers must step up to fulfill the societal desire for resilience in a volatile world by closing protection gaps—or risk losing relevance: McKinsey → Read the whole McKinsey report

Global commercial property and casualty (P&C) lines have delivered strong financial performance in recent years following the soft market of 2013 to 2018, despite widespread disruption in the wake of the COVID-19 pandemic, the war in Ukraine, and the resulting supply chain disruptions. Premiums have been propelled by extensive year-on-year risk-adjusted rate hardening: the annual premium growth rate for commercial P&C lines has hovered at 6 to 8 percent since 2018, and combined ratios have been improving.

However, commercial carriers find themselves at an inflection point as they face a continuing cycle of economic uncertainties, including inflation, geopolitical headwinds, environmental challenges, and capital constraints. This gradual acceleration of macroeconomic trends across multiple events that are pressuring the insurance industry is different from previous shocks. In combination with the structural changes in the nature of risks, commercial carriers today need to address four critical challenges.

Proposed Florida laws good news for insurers—as plaintiff lawyers push back

As the larger tort reform bill, HB 837, is making its way through the legislature in Tallahassee, South Florida plaintiff attorneys and clients are up in arms over not only about the proposed law, but another bill introduced this week, Senate Bill 1274.

This bill, introduced by state Sen. Colleen Burton, is anticipated to be up in the Senate Tuesday afternoon, and then again in the House on Wednesday afternoon, said Miami lawyer Stephen Forst Cain of Stewart Tilghman Fox Bianchi & Cain.

Cain is in the state capitol fighting the bill and a slew of proposed amendments surrounding the controversial piece of legislation aimed at what Gov. Ron DeSantis says is “comprehensive reforms to decrease frivolous lawsuits and prevent predatory practices of trial attorneys that prey on hardworking Floridians.”

“I think this is Big Insurance companies convincing legislators that we need to be a business-friendly state. The problem is that in the meantime, they’re trampling on the rights of everyday Floridians and making our safe state unsafe,” Cain said. ”That bill, frankly, makes our state unsafe. It disincentivizes business owners and apartment complexes from taking appropriate security measures, and I think will result in more crime not less—all to get big insurance more money.”