AI in Insurance
Class action lawsuit against UnitedHealth's AI claim denials advances
Class action lawsuit against UnitedHealth's AI claim denials advances The plaintiffs have accused the insurer of using artificial intelligence algorithms to illegally deny claims.
A federal judge has dismissed five out of seven counts in a class action lawsuit against UnitedHealth Group but will allow it to continue, with the suit claiming that UHG, UnitedHealthcare and naviHealth denied claims by using an artificial intelligence program instead of medical professionals in Medicare Advantage plans.
The plaintiffs are members who were denied benefit coverage. They claim in the lawsuit that the use of AI to evaluate claims for post-acute care resulted in denials, which in turn led to worsening health for the patients and in some cases resulted in death.
They said the AI program developed by UnitedHealth subsidiary naviHealth, nH Predict, would sometimes supersede physician judgement, and has a 90% error rate, meaning nine of 10 appealed denials were ultimately reversed.
The plaintiffs also allege that UnitedHealthcare breached its insurance contract, which stipulated that it would cover medically necessary healthcare services and that coverage decisions be made by clinical staff.
The two remaining claims in the case are one for breach of contract and one for breach "of the implied covenant of good faith and fair dealing."
AI appeal in insurance ‘mainly about the speed of service to consumers’
Many consumers are open to the use of AI in insurance for improving the speed of contacting providers and resolving issues.The most appealing aspect of artificial intelligence (AI) to consumers in the insurance sector is the potential for which it can speed up service, according to a new report.
GlobalData’s Artificial Intelligence in Insurance report in part outlines the results of the company’s 2024 Emerging Trends Insurance Consumer Survey, which was conducted across 11 countries and had a total of 5,520 respondents. It outlines that consumers indicated the speed at which they could contact insurers and resolve issues to be the most compelling potential use of AI for them within the sector.
“The clear most popular response to which AI feature would be most useful was 24/7 availability, with nearly half of the respondents selecting it – but all of the top responses revolved around hearing back from insurers quickly,” the report states. “The least-selected option was that consumers would prefer insurers did not use AI at all – which suggests the vast majority of insurance customers do believe that it has a place.”
Uses of AI in insurance
Among the top responses the question “What AI-based feature would be most useful to you from insurers?”, 48.7% of respondents indicated 24/7 availability, 38.2% instant responses, 37.8% faster claims processes, 34.2% efficient and 30.3% faster application processes.
Panel: AI alone won't be enough to carry insurtechs in 2025
Meaningful innovation, more so than strictly generative artificial intelligence, is needed to drive insurtech business and development in 2025, according to a panel of experts on a recent Majesco webinar.
Panelists discussed future trends and projections for the American insurtech landscape, noting that AI will necessarily play a major role. However, they emphasized that innovation will have to stretch beyond just a surface-level to demonstrate solid value for stakeholders and encourage investment.
“I see no slowing down of innovation. I feel like there’s a shift, though, to more thoughtfulness, a little bit more seriousness. There’s definitely a change in tone, and I think it’s a good correction,” Megan Kuczynski, senior strategic advisor, Insurtech Insights, said.
“You know, the technology itself is not what makes the difference. It’s the support of a very, very clearly defined business mandate. Ultimately, it comes down to the leadership team, and the insurtechs that have been most successful are those that have extremely strong, well-understanding, very empathetic leadership teams,” Andrew Johnston, global head of insurtech, Gallagher Re (USA), said.
Ubiquitous technology
Johnston said the last decade of insurtech has proven there is a “huge appetite” for innovation in the industry. In his view, the biggest benefit to emerge from this has been the pervasiveness of technology.
“Technology, as a line item, is in basically every single insurance company on earth now, in a way that it probably wasn’t 10 years ago,” he said. “The fact that, with such open arms, we have welcomed technology companies, invested in them and put our money where our mouths are, is indicative of us wanting to be cutting edge.”
Rayne Morgan
News
Homeowner files lawsuit against Liberty Mutual over reason behind canceled insurance policy: 'They've insured these homes for years'
A California homeowner who lost their insurance coverage sued Liberty Mutual for "demonstratively false" business practices.
What's happening?
The legal action requests damages as well as a change in how the company operates, according to the San Francisco Chronicle.
Maria Badin, who lives in Poway outside of San Diego, had her homeowners insurance canceled in November after 31 years with the company, which said her roof had "algae/mildew/mold/moss." Liberty Mutual had taken "a long-distance aerial photo," but a roofing company countered that the roof was "in incredible shape," per the Chronicle.
Badin had to acquire a new policy through the state's FAIR Plan. It costs more and covers less.
"The proposed class-action suit would include at least the 17,000 policyholders who lost their fire insurance coverage when a Liberty subsidiary refused to renew them late last year," the newspaper reported.
Why is this important?
The Chronicle said such aerial photographs can be taken from 10,000 feet and mix up neighbors' properties. Insurance companies use them to deny coverage in increasingly disaster-prone environments. (The 17,000 cancellations were not a result of aerial photography.)
Commentary/Opinion
Conning research: Insurers must be flexible in the 2025
A new administration in Washington continues to add uncertainty to the broader macro environment. So this is the year that insurers must be strategically flexible.
That was the word from Conning as the research company gave its outlook for the coming year in a recent webinar.
Insurers must remain adaptable to seize emerging opportunities as several key trends will shape the 2025 insurance landscape. Scott Hawkins, head of insurance research for Conning, listed four forces that will drive the insurance industry this year: economic growth, insurance regulation, growth of artificial intelligence and shifts in reinsurance.
Insurers are focusing on efficiency for the coming year, said Alan Dobbins, Conning’s director of insurance research. Carriers are increasing automation, streamlining operations and continuing to find opportunities to reduce costs – whether through increased use of artificial intelligence or reduced staff.
P/C industry strong despite high cat losses
The trends that will impact the P/C industry in 2025, Dobbins said, are the homeowners insurance crisis, improving the auto insurance market, adverse litigation trends, increasing cyber liability, stabilizing reinsurance, integrating data, and excess and surplus lines opportunities.
“These are challenging trends in 2025,” he said. “When you layer them with uncertainty over the new administration’s agenda, insurers must prepare for flexibility.”
Conning predicts strong P/C premium growth in 2025 as the U.S. economic outlook picked up following the 2024 elections. Premium growth is expected to be highest in commercial property, commercial auto and homeowners insurance.
Home Insurance Crisis: Are These States Next? - Newsweek
The property insurance crisis weighing on homeowners in California and Florida could soon loom over other states where the risk of devastating natural disasters is growing, experts warned.
California regulators are trying to enforce tougher measures to keep insurers from abandoning homeowners, while officials in Florida are trying to attract private companies back with "much more of a free market, open economy and let the market dictate kind of thing," Chris Schafer, senior editor for home insurance at Insurify, told Newsweek. "Neither state has really found a great solution to the problem," he added.
While these states are struggling to solve their climate-related home insurance crises, the problem risks spilling over to other states soon.
Home Insurance Crisis: Are These States Next?
The conditions that have created the ongoing insurance crises in California and Florida are likely to be replicated in other states, experts warn.
"It used to be that you had two or three 'dangerous states' and the other 47 kind of offset that," Schafer said. "But we're seeing increases in a lot of places. It's California, Florida, Louisiana. But there's also states like Colorado—where there's spillover wildfire risk—, Arkansas, and Texas—where there's humongous tornado risk," he added.
InsurTech/M&A/Finance💰/Collaboration
HDVI Announces $40 Million Fundraise, Expanded Reinsurance Capacity, and New Leadership Roles
High Definition Vehicle Insurance (HDVI), a technology-driven commercial auto insurance provider, has secured $40 million growth capital, bringing its total funding to over $87 million.
The round, co-led by existing investors 8VC, Autotech Ventures, Munich Re Ventures, and Weatherford Capital, will support the enhancement of HDVI’s telematics-driven products, expanded coverage, and improved tools for insurance agents as the company scales nationwide.
DUAL secures $100 million per risk capacity for luxury assets
DUAL North America has secured $100 million per risk capacity for fine art, jewelry, couture, wine and spirits and other valuable assets.
This expansion provides higher limits and broader coverage, strengthening DUAL’s ability to address risks in these sectors, the company said.
The new capacity is designed to meet the evolving needs of the fine art market and other high-value asset owners. Coverage includes protection against wildfire, hurricane, earthquake and flood, which are key risks that have become more pressing due to changing environmental conditions.
The $100 million per risk capacity offers proprietary open peril coverage, which applies to private collectors, galleries, museums and corporate collections.
“With this increased capacity, DUAL is responding more effectively to the rapidly evolving needs of our clients, who are increasingly looking for more substantial and consistent coverage in today’s volatile climate,” said Peter Gosselink, EVP of Fine Arts. “We are not just underwriters, we are problem solvers, and this new coverage capability enables us to offer our clients more comprehensive and robust solutions for their commercial and personal account needs, giving them the security they need.”
Announcements
NAIC Announces 2025 Initiatives
The National Association of Insurance Commissioners (NAIC) announced its 2025 roadmap today: "Securing Tomorrow: Advancing State-Based Regulation." This roadmap for the year ahead is designed to support the mission of state insurance regulators to protect consumers and monitor industry solvency.
Advancing state-based insurance regulation and balancing the dynamics of the insurance marketplace involve enhancing local oversight and adapting to regional insurance needs, ensuring that every policyholder receives reliable coverage and service.
"As state insurance regulators and NAIC Members, our efforts are anchored by two core principles: maintaining fair, sound, and stable insurance markets, and protecting and educating consumers," said NAIC President and North Dakota Insurance Commissioner Jon Godfread.
"Insurance remains a cornerstone of everyday security — it protects our homes, vehicles, and livelihoods. With the industry and marketplace rapidly evolving in response to emerging technologies, catastrophe risks, and economic shifts, state insurance regulators will continue collaborating with all stakeholders to ensure that insurance products remain accessible."
The 2025 initiatives include:
- Aligning Communication Strategies and Services
- Amplifying the State-Based Insurance Regulatory System Domestically and Abroad
- Ensuring Resilience, Relevance, and Prosperity for Generations to Come
- Focusing on Committee Priorities
Recommended Events
Insurtech Hartford Symposium
April 29th & 30th |Connecticut Convention Center
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Los Angeles Wildfires
Insurers have paid nearly $7 billion in LA wildfire claims
More than 30,000 claims have been filed so far.
Insurers have so far paid out $6.94 billion to policyholders for residential and commercial claims related to the LA wildfires, according to new data from the California Department of Insurance.
The department says 19,854 claims have been partially paid as of Feb. 5. So far, 33,717 claims have been filed for home, business, living expenses and other needs.
The department also said 5,597 auto insurance claims have been filed, and $73 million has been paid out to auto insurance policyholders so far.
The numbers include data from admitted residential and commercial property insurers, surplus lines writers and the state’s FAIR Plan. They were released as an update to a public consumer claims tracking system set up by Ricardo Lara, the state’s insurance commissioner.
“With so much misinformation and speculation surrounding our insurance market after the Southern California wildfires, it is crucial for the public to track claims and monitor payouts,” Lara said in a statement. “I want consumers to know that we are closely overseeing the entire claims process to ensure their protection. I expect insurance companies, including the FAIR Plan, to continue providing essential advance payments to help survivors recover as quickly as possible.”
The department says it has helped more than 5,000 people file claims in the aftermath of the wildfires. That includes 2,300 people at in-person workshops and disaster recovery centers and more than 1,100 people through the department’s help hotline.
California utility gear ignited more fires in 2024 than previous year - Business Insurance
Southern California Edison’s equipment ignited nearly 60% more fires in 2024 than in the previous year, mainly tiny ones that were quickly extinguished, as the utility battled to prevent catastrophe in the months leading up to the Los Angeles wildfires.
The escalation of fire ignitions in SCE’s territory, disclosed this month by the utility in a quarterly filing for regulators, preceded multiple wildfires that devastated metropolitan Los Angeles at the start of this year.
SCE, a unit of Edison International, faces multiple lawsuits blaming its equipment for starting the Eaton Canyon blaze, one of the major wildfires. No official cause has been determined. SCE has said it does not know what caused the fire.
SCE’s ignition reports reveal an escalating number of incidents throughout 2024, especially in districts where the fire threat is high.
SCE reported 135 fire ignition events in its territory during 2024, up from 86 in 2023, according to the SCE data released this month. Of those totals, there were 35 events in high-fire threat districts in 2024, up from 19 in the previous year.
SCE said low humidity, dry vegetation and high winds were among the factors that boosted fire ignition events in 2024.
“We are concerned when we have all three,” SCE spokesperson David Eisenhauer said. “Weather was definitely one of those factors outside the utility’s control.”