AI in Insurance
7 in 10 Actuaries and Underwriters Worry About Being Replaced by AI
With the vast majority (91 percent) of insurance companies already investing in AI or planning to in the next five years, it’s not surprising that nearly 7 in 10 actuaries and underwriters are worried about being replaced by artificial intelligence, according to a new study from pricing platform hyperexponential.
Its State of Pricing 2024 report also reveals fears about a technical skills gap and looming burnout, with 69 percent of actuaries and 79 percent of underwriters indicating they are worried about burning out in the next five years.
Both actuaries and underwriters are concerned about the future of their roles, with 69 percent of underwriters and 67 percent of actuaries saying they worry about being replaced by AI in the next five years.
Insurance agents interested skeptical of AI
Insurance agents are interested in artificial intelligence but skeptical, according to Liberty Mutual and Safeco, which released findings from a new report.
Benchmarking Agent Attitudes on AI: Key Takeaways from the 2024 Agent-Customer Connection Study surveyed 1,133 independent insurance agency leaders and team members and 1,110 insurance consumers to explore how agents view the use of AI.
Six percent of principals surveyed said they have implemented AI into their agency and 36% said they are likely to use AI in their business within the next five years, according to the study.
Only 17% of agents said they trust AI, 25% of those surveyed said they see AI as an opportunity, 27% said they view AI as a threat. About half, 49% of respondents said they were neutral about whether AI is more of a threat or an opportunity.
More findings to note:
- Fifty percent of agency principals said AI can make their business more efficient and 43% said AI will help customers and grow their business.
- Principals listed the following as top ways to leverage AI: identifying opportunities for cross selling, automating routine service tasks and assisting in marketing content creation.
- Many respondents said they are still learning AI. Forty-five percent of agents said they don't know enough about AI to make business decisions about the technology.
Are AI Innovation Platforms the Future for Insurers?
AI innovation platforms that can streamline the development and deployment of applications across various platforms and devices will deliver reduced complexity, better customer experience, and operational excellence.
In today’s rapidly evolving digital landscape, nearly every business increasingly operates within a multi-platform environment. Because of this, businesses must adopt processes, tools and frameworks that can streamline the development and deployment of applications across various platforms and devices.
An AI innovation platform emerges as a crucial solution in this context, offering a unified framework that simplifies the creation and management of AI applications that can drive faster, more accurate decision-making for the business.
Like many other businesses, insurance companies are navigating a rapidly evolving digital landscape. According to recent data, more than 70 percent of insurers plan to implement generative AI services within the next two years. This surge in AI adoption is driven by the need to enhance various aspects of the insurance business, including reducing biases in underwriting algorithms, making more data-driven decisions, increasing customer loyalty, and aligning existing algorithms with business objectives.
Erez Barak is CTO at Earnix
News
Florida home hurricane damage reports changed, whistleblowers say | 60 Minutes - CBS News
Florida family was shocked by their hurricane insurance payout. Then they learned the damage report was altered.
Jeff Rapkin admits that he prayed for the "untimely demise" of the adjuster who examined his home after it was devastated by 2022's Hurricane Ian.
Rapkin, a Florida resident and father, said the adjuster told him his house would likely need to be entirely rebuilt. So Rapkin was shocked when Heritage Property and Casualty Insurance, his insurance company, sent him just $15,000, minus their deductible.
As it turns out, the adjuster, Jordan Lee, was also shocked, as he wrote in his report that he believed the Rapkins were owed $231,368.57. Lee says he later learned dozens of his damage reports had been materially altered.
"It was basically all of them," Lee said.
Assessing homes after Ian
Intense winds and heavy rainfall caused an estimated $113 billion in damages when Hurricane Ian made landfall in September 2022. The Rapkins had weathered more than a half dozen hurricanes inside their home, but Ian was different, Rapkin said.
"It felt like the hurricane was inside the house," Rapkin said. "We couldn't keep the windows closed."
Video shows the steel roof being ripped from their home during the hurricane. Ian left trees on and around their house. The roof was shredded and everything inside the home was soaked.
Two years later, whistleblowers, who are all licensed adjusters, say that after Hurricane Ian, several insurance carriers used altered reports to deceive customers and lower payouts.
Moody's puts total property damage from hurricane Helene at $15-26bn
After Hurricane Helene, a Category 4 storm with 140 mph winds made landfall in Florida’s Big Bend on Thursday evening, reviving the quiet hurricane season, analysts at Moody’s have placed the total property damage at between $15 billion and $26 billion, with a total cost of $20 billion to $34 billion from the storm.
As noted by Moody’s, this estimate comes in higher than that of hurricane Idalia’s but below storms from earlier this decade like Ian and Ida, which hit more populated areas in Florida and Louisiana, respectively.
Although the storm’s impact was catastrophic in the Big Bend landfall area, there are less expensive houses and fewer homes in the area resulting in the price tag being capped, says Moody’s, who estimates that most of the cost will come from milder damage that spans a wide footprint covering four states and including some major population centres.
“In all likelihood, Helene’s scale and trajectory will mean that an outsize share of its cost comes from disruption rather than damage,” says Moody’s.
Research
Verisk highlights rising claims and roofing costs in Q2 2024 property report
Texas leads in wind and hail claims as labor and material costs surge in storm-hit regions
Verisk Property Estimating Solutions has released its quarterly property report for April through June 2024, providing an overview of market trends, claims data, and economic factors affecting the property insurance industry in the US and Canada.
The report compiles extensive data from various third-party sources, focusing on labor, materials, reconstruction costs, and claims activity. It also reviews Verisk's internal claims data to identify significant trends compared to prior years, with a particular emphasis on the Texas wind and hail claims environment.
In Q2 2024, overall claims assignment volume remained relatively stable compared to the same period in 2023. Non-catastrophe (non-cat) assignments increased by 1.3%, while catastrophe (cat) assignments decreased by 3.6%.
Although claim volume has leveled off compared to 2023, it remains significantly higher than 2020-2022 levels, driven by an increase in cat claims. This underscores the growing importance of disaster response preparedness for insurers, contractors, and independent adjusters.
LexisNexis survey reveals 76% of vehicle owners don’t see the benefit, value in connected services
Recently released findings from a 2023 survey of vehicle owners by LexisNexis Risk Solutions show that, of respondents who were offered a free connected services trial but didn’t enroll, 76% declined a trial due to a perceived lack of benefit or value
The results also show that nearly half of owners enrolled in connected services use OEM apps weekly.
In July 2023, LexisNexis surveyed nearly 2,300 U.S. vehicle owners who purchased or leased a used car model year 2013 or newer from a private party or independent dealership in the last three years. According to a whitepaper that sums up the survey results, the objective was to uncover and map potential opportunities to enhance the vehicle ownership experience by better understanding used vehicle owners’ expectations.
Financial Results
P&C Insurers Report Strong Returns, Cautious Optimism for Q2 2024
Despite potential headwinds, more stable rates and competition keep pricing favorable for commercial insurance buyers, Lockton reports.
Commercial property/casualty insurers continue to report strong returns in 2024, buoyed by rising investment income, a growing economy, and a relatively mild wind season, according to a market update from Lockton. This has kept conditions largely favorable for buyers across most lines of coverage, despite an underlying sense of fragility in the market and several potential headwinds on the horizon, the broker reported.
“We’re seeing generally favorable market conditions, some of the best we have seen in the last five years, and with insurers reporting strong profits, there’s reason for continued optimism,” said Mark Moitoso, Lockton’s Risk Practices Leader. “However, a large, unexpected event could end this stable and predictable market, so it’s critical to be mindful of the uncertainty ahead when evaluating your insurance program.”
Insurers are closely monitoring several potential challenges that could quickly alter the landscape. Social inflation continues to drive up loss rates across virtually all liability lines, raising questions about the adequacy of rates and reserves, Lockton stated. Recent high-profile technology outages and data breaches are a stark reminder of the accumulating dangers posed by cyber threats.
Commentary/Opinion
Personal Auto Insurance Could Be Obsolete in 20 Years: Morningstar
Self-driving cars could make personal auto insurance largely obsolete within 20 years, according to a worst-case scenario modeled by Morningstar. A more likely, moderate scenario forecasts the line could remain necessary for a few more decades, until 2060.
The firm’s new report, “Insuring Autonomy: Analyzing the Implications of Self-Driving Cars for the Auto Insurance Industry,” finds that by 2044, in the most aggressive adoption scenario, most cars on the road could be automated to a level where liability shifts from driver to manufacturer. COMPLETE ARTICLE
InsurTech/M&A/Finance💰/Collaboration
Diamonds Direct Announces New Collaboration with Jewelers Mutual®
Prominent jewelry retailer chooses top-tier jewelry insurer to provide an elite customer experience at each of its 30+ locations nationwide.
Diamonds Direct recently announced its new collaboration with Jewelers Mutual® Group to enhance the shopping experience for its customers using personalized, cutting-edge solutions.
Diamonds Direct, a prominent U.S. jewelry retailer, recently announced its new collaboration with Jewelers Mutual® Group to enhance the shopping experience for its customers using personalized, cutting-edge solutions. The joint effort aims to leverage both companies’ customer-focused heritage to innovate customer interactions and service touchpoints.
The newly formed collaboration offers Diamonds Direct customers access to premier jewelry insurance directly through Luxsurance® powered by Jewelers Mutual, transforming how insurance is integrated into the jewelry shopping experience by providing specialized concierge service and support.
Customers will initially be made aware of Jewelers Mutual jewelry protection through in-store brochures and dedicated website content. Plans also include integration with Diamond Direct’s point-of-sale solution and a more digitally immersive experience that meets customers where they are with tech-forward capabilities for storing, managing and viewing jewelry collections. Enhanced technology will streamline store-level processes and boost operational efficiency.
Climate/Resilience/Sustainability
Insurance Czar Has ‘Harsh’ Message About Climate: You May Just Have to Move
The soaring cost and difficulty of insuring against climate risks may force people to relocate, the head of Canada’s main financial regulator warned.
Rising damages from extreme weather don’t seem to be a regulatory problem, but rather a cost problem, Peter Routledge, the country’s superintendent of financial institutions, told an audience in Vancouver.
“Part of it may be recognizing that some areas are higher cost, and businesses or homes that are there in those areas may have to endure higher costs, or they may have to move,” he said on stage at the National Insurance Conference of Canada on Monday. “That’s a harsh thing to say, but that is the reality of climate change.” FULL ARTICLE
Awards
Mitchell's Debbie Day Wins 2024 Top Tech Executive of the Year Award
Mitchell, an Enlyte company and leading technology and information provider for the Property & Casualty (P&C) claims and Collision Repair industries, today announced that Debbie Day, executive vice president and general manager of the organization's Auto Physical Damage (APD) division, has received the Top Tech Executive of the Year Award.
Day was recognized as a technology innovator who inspires and effects change at the 17th annual Top Tech Awards presented by Cox Business.
Day joined Mitchell in 2016 with more than 19 years of experience in technology strategy and operations. At the time, the company had just surpassed 70 years in business, having successfully transitioned from the sale of printed parts manuals in 1946 to the creation of advanced software solutions decades later. Like many organizations, it faced increasing pressure to meet customer expectations for ongoing innovation and quality. Day's passion for strategy development, change management and exceptional service has helped Mitchell achieve its operational and financial goals as well as align employees with a new organizational vision focused on four foundational pillars: cloud-based solutions, claims automation, proper and safe vehicle repairs, and partnering well.
Under Day's leadership, the APD division has introduced many technology firsts for the automotive insurance industry, including the:
First diagnostic system created specifically for the claims and collision repair sectors
First cloud-based estimating system for writing passenger, commercial and specialty vehicle damage appraisals
First claims automation solution built on an open platform and powered by artificial intelligence (AI), cloud technology and comprehensive data