AI in Insurance
AI and a new golden age for insurance
Our new report explores how AI can humanize insurance across the value chain—prioritizing empathy, dignity, and meaningful human experience.
With AI advancing at an accelerated pace, the insurance industry stands at a critical crossroads. Rising customer expectations and demand for seamless digital experiences mean insurers must rethink their approach to technology. How can the industry avoid past tech missteps and harness AI to create more intuitive, compassionate, and genuinely humane experiences?
Cake & Arrow
Real AI, Real Impact In The P&C Insurance Landscape
Companies adopting AI should focus on training their teams effectively and tracking metrics like cycle time and customer satisfaction to measure impact.
The "Magnificent Seven" of artificial intelligence (AI)—Microsoft, Amazon, Apple, Nvidia, Meta, Tesla and Alphabet—are often the focal points of AI discussions due to their transformative innovations. While these tech giants are advancing AI in ways that touch every corner of society, the true value of AI extends far beyond their enterprises.
One industry that is quietly experiencing a revolution driven by AI is the multitrillion-dollar auto claims and collision repair sector. By applying AI to streamline processes, reduce costs and improve outcomes for customers and companies alike, auto insurers and repairers are discovering AI’s potential in ways that go beyond the headline-grabbing advancements of Silicon Valley.
John Goodson, Chief Technology Officer, CCC Intelligent Solutions
What's Holding Insurers Back on AI? | Insurance Thought Leadership
Carriers struggle to scale AI initiatives despite projected $19.9 trillion economic impact by 2030. Here are three key areas to focus on.
According to a recent analysis by IDC Financial Insights, AI is expected to generate a cumulative economic impact of $19.9 trillion by 2030, reflecting a compound annual growth rate of 3.5%. Notably, 50% of this impact will be concentrated in North America, while 25% will come from the EMEA region, with the remaining 25% from Asia-Pacific. This distribution largely favors areas that had robust foundational infrastructure at the beginning of the AI revolution.
A crucial takeaway from the IDC report is that AI's economic influence extends beyond direct investments in AI services and solutions. Its disruptive potential is significantly driven by ripple effects throughout the economy. AI affects various sectors along the supply chain, affecting both backward providers of AI solutions (like network infrastructure, hardware, and data storage companies) and forward buyers of AI technology (businesses that integrate AI into their operations to enhance performance).
Additionally, the report highlights "induced effects," where AI influences consumer households, resulting in higher salaries for AI professionals and the emergence of new roles such as AI ethicists, algorithm auditors, and prompt engineers. This rapid adoption of AI technologies is poised to have far-reaching economic consequences, reshaping industries, creating markets, and transforming the competitive landscape.
The 2025 edition of IDC's Worldwide Insurance FutureScape is designed to help insurance decision-makers develop a strategic plan for AI adoption. It highlights the critical steps insurers must take over the next five years to move beyond the current "GenAI scramble" and successfully navigate AI-driven business transformation. To learn more about IDC's Worldwide Insurance FutureScape, please click here .
Davide Palanza
News
Progressive sued over collision coverage denial
Progressive Direct Insurance Co. is facing a class-action lawsuit in Massachusetts for allegedly refusing to provide collision coverage to drivers, in violation of state law.
The lawsuit, filed in Suffolk County Superior Court, claims that Progressive rejected requests for collision insurance based on a “binding restriction,” without specifying the legal grounds for this refusal or explaining how it could override Massachusetts requirements.
Under Massachusetts law, insurance carriers offering auto liability policies are generally required to make physical damage coverage available. This includes collision, limited collision, fire, theft, and comprehensive insurance. State statute outlines only six specific reasons insurers can legally deny collision coverage.
These justifiable refusals are largely limited to cases involving individuals convicted of insurance fraud, theft, and certain driving violations, as well as vehicles with salvage titles or high-theft risk vehicles lacking sufficient anti-theft protections. According to the complaint, none of these exceptions apply to members of the proposed class, which could include hundreds of drivers.
The case centers around Massachusetts Progressive Direct customers allegedly denied the option to purchase collision coverage because of the “binding restriction” from Nov. 4, 2020, to the present.
Commentary/Opinion
Reinsurance stalwart Julian Enoizi on the 'challenging dynamic' facing the sector
The old idiom that ‘when America sneezes, Europe catches a cold’ remains of relevance to the reinsurance market. However, while what happens in America does tend to influence the industry as a whole, the last year has seen the European reinsurance market navigate headwinds and tailwinds alike to firmly establish itself as an entity with its own distinctive risk profile.
Offering his perspective on developments that may influence discussions in the run-up to the reinsurance renewals, Julian Enoizi (pictured), CEO for Guy Carpenter Europe, noted that the US hurricanes Helene and Milton are on the agenda. While the full extent of the losses is still not fully baked, and reinsurers continue, therefore, to apply rate pressure, Guy Carpenter is championing its clients’ interests, highlighting that most of the impact is still retained by insurers.
“This is a challenging dynamic. Over the last few years, while reinsurers have continued to manage capital and solvency issues, they have increasingly pulled back from addressing volatility,” he said. “If you look at a client from our perspective, they are heavily focused on capital management and solvency, but volatility is also still a big issue for them, their results and how they grow. And that’s somewhere we are advocating strongly on behalf of our clients.”
Financial Results
Best’s Special Report: U.S. Property/Casualty Industry Reverses Losses, Posts $4.1 Billion Underwriting Gain in First Nine Months of 2024
The U.S. property/casualty (P/C) industry recorded a $4.1 billion net underwriting gain in the first nine months of 2024, a significant improvement from the $32.1 billion loss recorded in the same prior-year period, according to a new AM Best report.
These preliminary results are detailed in a new Best’s Special Report, titled, “First Look: Nine-Month 2024 US Property/Casualty Financial Results,” and the data is derived from companies whose nine-month interim period statutory statements were received as of Nov. 25, 2024, representing an estimated 98% of total industry net premiums written.
According to the report, the underwriting gain, coupled with a 22.1% increase in earned net investment income, drove pre-tax operating income up 261.7% to $65.9 billion. A combined $21.2 billion change in net realized capital gains at three Berkshire Hathaway Insurance Group companies aided in the industry’s net income doubling from the first nine months of 2023 to $130 billion.
The industry’s combined ratio improved to 97.9 through the first nine months of 2024, a 5.8-percentage-point improvement from the same prior-year period. Catastrophe losses accounted for an estimated 8.8 percentage points on the nine-month 2024 combined ratio, down from 10.0 points in the prior year.
Telematics, Driving & Insurance
Commercial auto insurers rev up telematics in 2024
SambaSafety: One hundred percent of commercial insurers say telematics is critical to improving profitability.
Leveraging telematics to compile detailed driving data and better assess risk is fast becoming an industry standard.
Eight-two percent of commercial auto insurers in 2024 use telematics in their organizations, according to a report by SambaSafety, after just 65% utilized the technology in 2023.
Also in 2024, 60% of commercial insurers formed dedicated, multi-disciplinary telematics teams, with Loss Control being the most represented area.
Claims
Holiday Communication Strategies for Insurance Claims Professionals
For insurance claims professionals, the holiday season can bring unique communication challenges, both in the office and with clients.
Whether navigating sensitive workplace conversations or managing client expectations during a time of heightened stress, mastering effective communication strategies is essential.
Start by knowing your audience. When addressing colleagues, tailor your tone to align with their communication style—whether they prefer concise updates or require a softer touch during high-pressure moments. For client interactions, particularly in emotionally charged claims situations, lead with empathy and clear, actionable information to build trust and avoid miscommunication.
InsurTech/M&A/Finance💰/Collaboration
Top insurtech funding rounds, November 2024
There were about 40 funding events in the insurtech sector between November 1 and November 30, 2024, according to a review by Digital Insurance.
What follows is a selection of these, focusing on those in the insurtech and property & casualty sectors that are part of the venture-capital financing model. (Other funding events, such as private-equity infusions, are included in the overall count.)
A portion of the data was sourced from Crunchbase. Other information, including quotes from investing VCs, comes from company announcements. For our previous edition, which covered the month of October, click here. These updates will continue monthly.
People
Liberty Mutual Names Marc Orloff President, GRS North America
Kevin Smith, the current President of Global Risk Solutions North America, has announced his retirement.
Liberty Mutual Insurance (Boston) has announced that Marc Orloff has been named President of Global Risk Solutions (GRS) North America, effective Jan. 1, 2025. Reporting to GRS President Neeti Bhalla Johnson, Orloff will be accountable for delivering GRS North America’s financial and operational performance, which includes commercial and specialty businesses in the U.S., Canada and Bermuda and operates across Major Accounts, Middle Market and Specialty segments.
Orloff’s appointment follows the announcement that Kevin Smith, currently President, Global Risk Solutions North America, has decided to retire at the end of 2024. Smith, an executive with nearly 35 years of experience across property, casualty and specialty insurance, will continue to serve GRS in an active advisory role. He will continue to report to Bhalla Johnson and remain engaged with key clients and broker partners.
Canada
INTERPOL, Canada Government Join Forces to Put Brakes on Transnational Vehicle Theft
A new initiative, between INTERPOL and the Government of Canada, will target the multi-billion dollar global industry fueling organized crime involved in vehicle theft and illegal trade of spare parts.
Canada has become a major origin point for stolen vehicles in recent years, due to the country’s high demand for high-end SUVs and crossovers.
The vehicles are often smuggled to destinations in the Middle East and West Africa, where they are subsequently sold or traded.
2025 PREDICTIONS
Can AI Deliver On Its Promises For Insurance In 2025?
A year ago, we predicted a more stable, if not stellar, performance for insurers in 2024 after a couple of years of higher-than-expected claims costs. In 2025, we predict that insurers will continue to pass on higher costs of rising claims expenses to customers.
This improving profitability will translate into increased tech spending as insurers prioritize innovation, data, AI, and automation, but most insurers won’t see immediate, material, and direct benefits from AI. AI’s promise of transforming underwriting, claims, and customer experience remains untapped, and only a tiny fraction of insurers will harness its full potential by 2025. Tech-driven product innovation such as embedded insurance and usage-based insurance may yield faster results, but long-term AI gains remain on the horizon. In 2025:
Tech spending will be on the rise.
Forrester predicts an 8% increase in tech spending across the insurance industry in 2025. Through tech projects, including advanced analytics and AI, insurers will enhance customer experiences, improve claims management, and optimize processes.
As insurers prioritize agility and quicker time to value, they will cut back on new multiyear and complex transformation programs.
Forrester