AI in Insurance
The future of artificial intelligence and insurance sales
Artificial intelligence has transformed the way that we interact with data and technology, revolutionizing how many industries leverage data to drive sales and growth.
Artificial intelligence has transformed the way that we interact with data and technology, revolutionizing how many industries leverage data to drive sales and growth.
The insurance industry relies heavily on data to market, underwrite and administer insurance products.
Today, insurance agencies and producers are looking to AI as a powerful tool for streamlining business operations and boosting sale productivity.
JillAllison Opell, a partner with Foley & Lardner in the firm's New York office, represents insurers and insurance-related entities in all lines of business, including accident, life and health, property and casualty (including pet), surplus lines, travel and reinsurance.
Margaret Brzakala is an associate in the Milwaukee office of the firm. She helps insurers, producers, and other insurance-related entities achieve their business goals while maintaining compliance with insurance regulatory laws.
The authors also wish to acknowledge assistance of summer associate, Deajah Scott, J.D. Candidate University of Chicago Law School, Class of 2026.
EXL, NVIDIA develop ‘most accurate’ AI insurance model
A US-based data solutions provider has begun rolling out a unique artificial intelligence model built specifically for the insurance industry’s needs — a welcome solution for carriers struggling to implement AI.
Data analytics company EXL has partnered with technology supergiant NVIDIA to develop an insurance large language model that aims to improve efficiency, accuracy and fraud detection.
It’s an industry-first that Anand “Andy” Logani, executive vice president and chief digital officer, EXL, believes will revolutionize the provision of fast and scalable AI in insurance and other complex enterprise production environments.
“By focusing exclusively on insurance-related tasks, EXL has incorporated its deep knowledge of the insurance industry and highly tailored proprietary data to create the industry’s most accurate LLM,” he said.
Insurance businesses that have begun incorporating AI into their operations have used LLMs to quickly process large amounts of data and speed up claims processing, underwriting and other tasks.
News
Homeowners Insurers Argue for a 42% Average Rate Hike in North Carolina
With many western North Carolina residents still lacking power and running water from Hurricane Helene, a hearing began last Monday on the insurance industry’s request to raise homeowner premium rates statewide by more than 42 percent on average.
A top lieutenant for Insurance Commissioner Mike Causey opened what’s expected to be multiple weeks of witnesses, evidence and arguments by attorneys for the state Insurance Department and the North Carolina Rate Bureau, which represents insurance companies seeking the increase.
In over 2,000 pages of data filed last January, the Rate Bureau sought proposed increases varying widely from just over 4 percent in parts of the mountains to 99 percent in some beach areas. Proposed increases in and around big cities like Raleigh, Charlotte and Greensboro are roughly 40 percent.
GARY D. ROBERTSON
Triple-I & Milliman reveals US P&C H1'24 are underwriting results better than expected - Reinsurance News
According to the latest forecasting report by the Insurance Information Institute (Triple-I) and collaborating partner, Milliman, the first-half economic and underwriting results for the US property and casualty (P&C) industry were better than expected.
The report, Insurance Economics and Underwriting Projections: A Forward View discloses that the net combined ratio (NCR) estimate of 99.4 improved by 2.3 points year-over-year, with commercial lines continuing to outperform personal lines.
Commercial lines 2024 NCR remained relatively flat at 97.1, this is despite improvement in commercial property, commercial multi-peril and workers’ compensation, commercial auto and general liability continued to deteriorate, explained the report.
Taking a look at personal auto NCR of 100 is 4.9 points better than 2023, while the 2024 NWP growth rate stands at 14.5% is the highest in over 15 years. Personal lines net written premium (NWP) growth is expected to continue to surpass commercial lines by nearly 9% points in 2024.
The report also highlights homeowners 2024 NCR of 104.9; a 6-point improvement over 2023, with profitability expected in 2026 and double-digit NWP growth of 10% expected in 2025.
Additionally, the Federal Reserve easing monetary policy by continuing to lower interest rates and the stability of geopolitical risks will be key to maintaining the performance growth trend.
Dale Porfilio, Chief Insurance Officer, Triple-I, commented: “The ongoing performance gap between personal and commercial lines remains, but that gap is closing. The significant rate increases necessary to offset inflationary pressures on losses are driving the improved results in personal auto and homeowners. With that said, the impact from natural catastrophes such as hurricanes Helene and Milton threaten the improved homeowners results and are a significant source of uncertainty.”
Research
Top P&C insurers for customer satisfaction in 2024
Despite "an increasingly volatile risk environment" and a financial landscape that's largely dictated premium increases, the property and casualty (P&C) insurance sector maintained the same overall customer satisfaction rating in 2024 as it had in 2023, according to new research from the American Customer Satisfaction Index (ACSI).
Each year, the ACSI interviews thousands of consumers to rank financial services companies on a 100-point satisfaction scale. This year's survey acknowledges that carriers have been stressed by such factors as interest rate and financial uncertainly, social inflation and litigation, and climate change-related disasters. Regardless of those challenges, P&C insurers as a whole maintained a customer satisfaction rating of 77 out of 100, which was the same score the sector received in 2023.
The slideshow above illustrates top P&C insurance carriers for customer satisfaction in 2024, according to the ACSI.
New IBM study: Insurance leaders agree that rapid adoption of generative AI is necessary to compete, but insurance customers express reservations
New research by IBM's (NYSE: IBM) Institute for Business Value identifies a disconnect between how insurers and their customers prioritize the use of generative AI, with industry executives focusing on experience while their clients are seeking personalized risk products and insights.
Findings from a survey of 1,000 insurance c-suite executives in 23 countries and 4,700 insurance customers in nine countries are outlined in Generative AI in the Insurance Industry: You Can't Win if You Don't Play.
"The insurance industry has made headway in generative AI with customer experience and chatbot enhancements, but insurers must focus on adopting comprehensive governance frameworks that ensure transparency, privacy, and explainability to ensure they are building trusted AI assistants and reliable processes," said Mark McLaughlin, Director of Global Insurance with IBM Technology. "There are also significant opportunities in connecting customers to the right products. Leveraging AI across the enterprise will be critical to improve both customer risk experiences and to implement the underlying IT tools that power those experiences."
InsurTech/M&A/Finance💰/Collaboration
Two Sides of One Coin: The Synergy of Insurtech and Fintech | InsurTech Digital
In the heart of the digital age, the insurance sector is undergoing a significant transformation, fuelled by the innovative spirits of fintech and insurtech.
Technologies such as machine learning, AI and embedded insurance are not just buzzwords but tools reshaping how insurance functions—making it smarter, faster, and more attuned to customer needs.
Predictive modelling is at the forefront, revolutionising risk assessment and enabling insurers to offer policies that are both accurate and fairly priced. The magic lies in the ability to sift through vast amounts of data, extracting insights that were previously buried.
On another front, automation coupled with AI is streamlining claim processes, slashing both time and costs while simultaneously amplifying fraud detection and the personal touch in customer interactions.
James Darley, InsurTech Digital, a BizClik brand.
Mitchell Technology to Power New Virtual Estimating Service from Collective
The program's U.S. market introduction follows a successful, multi-year pilot program
Mitchell, an Enlyte company and leading technology and information provider for the Property & Casualty (P&C) claims and Collision Repair industries, today announced that its software solutions are powering a new virtual estimating service from Collective Sourcing, LLC.
Created for U.S. auto insurers, the service is designed to reduce claims processing time by combining Mitchell's damage appraisal technology with auto technical specialists at Collective. From vehicle photos, these specialists produce estimates on demand—assisting carriers in their delivery of a more streamlined, digital claims experience.
Prior to introducing Collective's virtual appraisal service, the two companies completed a multi-year pilot program in the insurance industry, generating more than 300,000 estimates nationally.
"The estimating process is the most important driver of a policyholder's digital satisfaction. However, insurers are meeting customer expectations just 35% of the time, according to a recent J.D. Power study," said Collective's Managing Director, Jeff Waack. "The use of our on-demand estimating service with Mitchell's technology can help carriers exceed consumers' digital delivery expectations for far less expense than traditional appraisal methods."
Commentary/Opinion
Hurricane Milton manageable for reinsurers, but a major event for Florida insurers: Milliman
According to Milliman, a global consulting and actuarial firm, hurricane Milton is likely to be a manageable event for the reinsurance industry, but a major one for insurance carriers in the State of Florida and could even put some companies under surplus pressure.
The storm is likely to result in an insurance industry loss of more than $20 billion, and based on a review of past events, the storm’s physical characteristics, as well as industry information, Milliman has provided an initial post-event range of $20 billion to $40 billion of insured loss.
Nevertheless, the fifth US landfalling hurricane of the 2024 Atlantic hurricane season is, according to Milliman, expected to be a major event for Floridian insurers, especially for some of the new companies that entered the market this year.
“For these newer carriers, and for any Florida insurer with significant exposure in Hillsborough, Manatee, Pinellas, and Sarasota counties, Milton might represent the largest event in their company’s history,” says Milliman.
The firm expects a number of Florida carriers to incur a full retention of losses up to the attachment point of their reinsurance coverage, as well as additional losses for any slices of the reinsurance layers they chose to retain.
“Milton might put some companies under surplus pressure, although this pressure would have been significantly greater with a worst-case Milton path or if another similar event were to hit Florida later in this hurricane season,” continues Milliman.
But while hurricane Milton is expected to hit several of the lowest layers of Florida reinsurance towers, which typically carry a higher price and are expected to be hit with some frequency, Milliman feels the impacts of Milton will be manageable for the reinsurance sector.READ ON
Can We Insure Against Heat?
While the devastation from Hurricanes Helene and Milton has given all of us a lot to think about these past few weeks, I'd like to focus for a minute on a far less obvious but intriguing issue that the insurance industry could address as it helps the world adapt to climate change: What if we can insure against heat?
A construction company can purchase insurance covering, for instance, flooding that would raise costs and delay the completion of a project. What if that company could buy insurance covering delays and cost increases because heat made it too dangerous for people to work outside for days or at least required that they be given lengthy water breaks inside? What if property owners could buy coverage for the direct damage that heat might do to a roof?
The idea of insuring against the direct effects of heat came up at an interesting gathering last month of a group called CIRCAD that is combining academic research capabilities with insurance expertise to advance the industry's ability to mitigate the effects of climate change.
The two-day, inaugural meeting offered a number of provocative ideas, including the possibility of using nature-based solutions to limit damage from storms and of having communities tackle prevention and purchase insurance, in some sort of combination with the property insurance that individuals and organizations buy now. MORE
Paul Carroll, Editor-in-Chief, Insurance Thought Leadership
Telematics, Driving & Insurance
Motive Launches First-Of-Its-Kind First Responder Service for Commercial Vehicle Drivers To Get Life-Saving Assistance Faster
New Motive data reveals roads are more dangerous during the holiday season, with Christmas showing 32% more accidents compared to the rest of December and the highest crash rate across all other holidays
Motive, the AI-powered Integrated Operations Platform, today announced a first-of-its-kind first responder service for drivers of commercial vehicles that expedites emergency response in the event of a severe collision. The new First Responder feature was developed in partnership with RapidSOS and ensures drivers receive immediate help when a collision is detected by quickly dispatching emergency services, helping reduce fatalities and severe injuries, and setting a new standard for driver safety.
“Roadway safety has been a priority for RapidSOS since its inception, and the partnership with Motive significantly strengthens how we improve safety”
When a severe collision occurs, getting emergency help can often be a matter of life or death. Survival rates increase by 13% for every minute that first responders arrive faster at the scene of a collision. First Responder ensures drivers receive the urgent care they need even faster, reducing the amount of time it takes for 911 to verify incidents and helping dispatchers deploy appropriate resources faster.
“First Responder transforms the way we support drivers in a collision and will save lives,” says Shoaib Makani, co-founder and CEO of Motive. “By reducing the time it takes for 911 to verify incidents and dispatch help, we are taking a critical step toward achieving zero harm and zero preventable accidents, keeping everyone on the road safer.”
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Awards
Expert.ai Named Among the Top 100 Leading Innovators in the Insurance Market
Expert.ai, the industry leader in providing AI-powered solutions to enterprises, has been named in the seventh annual FinTech Global InsurTech100, highlighting the leading innovators developing solutions to the critical challenges facing the insurance sector over the coming years.
The InsurTech 100 ranking is the result of a competitive review of seasoned analysts and industry veterans who reviewed more than 2,100 nominations, and this is the second consecutive year that expert.ai has been included in the list.
Despite challenging macroeconomic and funding environment recently, the InsurTech industry continues to show resilience, recording strong year-on-year growth. According to the research firm FinTech Global, the sector's market size has grown from $18.7bn in 2023 to $25.9bn in 2024. The long-term growth potential of the sector is also providing hopeful reading for investors and industry stakeholders as it is set to grow to a size of $496.5bn by 2033 (a whopping 38.8% CAGR growth rate.)
"While advances around Generative AI and Large Language Models have captured headlines, it's also clear they work best in combination with other AI approaches on vertical solutions, making them more cost-effective and efficient at the same time, especially in regulated industries like insurance where out-of-the-box accuracy and algorithms' explainability are essential attributes for any AI project success," said Umberto Pardi, SVP EMEA, expert.ai. "Expert.ai's inclusion in the InsurTech100 list validates the effectiveness of our Hybrid AI approach and the value that our solutions bring to our insurance customers around the world."