AI in Insurance
Nonstandard Auto Insurer, Falcon Selects Liberate for 24/7 Bilingual Voice AI FNOL
Falcon Insurance Group has chosen Liberate Voice AI FNOL to modernize its First Notice of Loss (FNOL) process and deliver quality, bilingual, 24/7 claim response.
Falcon is a non-standard auto insurance carrier and MGA operating in Illinois, Oklahoma, Texas, Indiana, Arizona, Colorado and Utah. The company is growing, and it needed a new FNOL solution that could scale while providing consistency and uniformity in its claims response.
Like many carriers, Falcon has used overseas third-party call centers to provide FNOL support. The arrangement had many positives, but Falcon wanted to perform even better.
Liberate Voice AI FNOL offered a new solution. "Like call centers, our solution provides bilingual and affordable options for insurers," says Amrish Singh, CEO of Liberate. "But unlike call centers, our solution delivers 100% consistent customer service with zero wait times – and that's true 24/7."
Before selecting Liberate, Falcon vetted several other options. "We chose Liberate due to the quality of the engineering team, the honesty of the management team and the quality of the claims accuracy," says Brandon Miller, Chief Technology Officer at Falcon, explaining the importance of capturing claims information correctly as early as possible.
"If we don't receive the FNOL right away, important details are forgotten. We find that many people don't like completing forms, so a 24/7 phone option is important to us," he adds.
With Liberate Voice AI FNOL, Falcon can expediently capture all the necessary claims information, 24/7, while it's still fresh in claimants' minds.
Financial Results
P&C Insurance Industry Weathers Market Challenges in 2024
Despite a $2.6 billion net underwriting loss in 2024, P&C insurers show resilience through rate increases and investment gains, AM Best reports.
The U.S. property & casualty insurance industry showed resilience in 2024 despite $2.6 billion in underwriting losses and 27 billion-dollar weather disasters, with AM Best projecting continued improvement for 2025.
P&C insurers faced a barrage of weather-related challenges in 2024, with natural disasters leaving an indelible mark on financial statements and risk management strategies. The economic toll of these events surpassed $200 billion, with insurance coverage extending to only about half of the losses.
Hurricane Helene inflicted $17.5 billion in insured losses, while Hurricane Milton followed closely behind with $20 billion in insured damages. These storms, part of an unusually active late-season hurricane period, underscored the increasing volatility of weather patterns and their potential to wreak havoc on insurers’ bottom lines.
Catastrophe losses contributed 7.7 points to P&C insurers’ combined ratio in 2024, slightly lower than the 8.5 points recorded from CAT losses in the previous year. However, the outlook for 2025 suggests a potential uptick, with projections indicating that catastrophe losses could add 8.5 points to the combined ratio, primarily due to anticipated losses from wildfire activity in California, AM Best noted.
Commentary/Opinion
[Ed. Note: Recommended] Six Things Newsletter | Insurance Thought Leadership
Six Things
Each week ITL delivers our weekly Six Things E-Newsletter directly to thousands of inboxes. Carefully curated by our Editor-in-Chief, Paul Carroll, each edition of Six Things includes articles written by some of the risk and insurance industry's most prominent thought leaders. Paul also provides his thought-provoking perspective on a topic or trend weekly
Sneak preview of this week's newsletter lead article.................
Experimentation With Gen AI Must Be Far Bolder
Generative AI will likely alter the business models of many industries; insurers should go beyond seeking efficiencies and experiment with deeper changes.
Paul Carroll, editor-in-chief, Insurance Thought Leadership
How To Explain the Homeowners Market to Your Clients
The U.S. homeowners insurance market commenced 2024 in a state of flux. New policies experienced an average premium increase of 17.4% and homeowners who renewed their insurance in 2024 paid about 69% more, or an extra $865 yearly, according to Matic, an InsurTech platform.
By mid-year, the rate of premium rises had started to slow down, with the average rise dropping from 10.7% in the first half of the year to 6.6% in the second half.
As a result, a record 6.8% of all home insurance customers were actively shopping for new policies through the second quarter, according to the "2024 U.S. Home Insurance Study" from J.D. Power. Yet, only 2.2% of homeowners switched policies as a result, down from 2.5% two years ago. Despite increased shopping, the lack of switching was the result of the fewer alternatives available for consumers, the report said.
Overall, many homeowners experienced a difficult year. Premiums increased, fewer carrier alternatives were available in certain locations—especially areas with heavy catastrophe activity—and many coverage options became limited or simply unavailable.
“Globally, the whole homeowners industry has been impacted by unprecedented CAT losses," says Casey Kempton, president, property & casualty lines, Nationwide. “The recent trends that we're seeing today are abnormal relative to what we have seen in the past. These escalating loss trends span across perils: hurricane, hail, severe convective storm, and wildfire."
Crucially, customers who receive a rate increase and understand the reason for the increase are 14% less likely to shop for a new policy than those who do not understand the reason for the rate increase, according to J.D. Power.
Awards
Insurtech in 2025: Who leads the pack?
The global insurtech market is forecast to be valued between $22 billion and $34.3 billion in 2025, according to recent research from the corporate services consultancy Wolters Kluwer.
The firm’s survey of 120 business leaders indicated that three out of four organizations plan to increase their technology budgets in 2025.
What’s driving the spending trend? Process automation demands thanks to AI and machine learning; wearable technologies; and cybersecurity concerns.
Insurance organizations looking to showcase their solutions in these areas or take the proverbial lead in an industry where data now plays a role at every level of the business, can highlight successes via PropertyCasualty360’s Insurance Luminaries recognition program.
Nominations are due March 14, 2025. Now in its fourth year, this annual honor spotlights P&C insurance professionals who shove off dated industry stereotypes and push for fresh thinking and practices.
The honor is rooted squarely in the P&C insurance world. It recognizes people, teams, companies, programs, products and practices that are modernizing and humanizing insurance work.
Announcements
New CARFAX Vehicle Build Score Revolutionizes Auto Insurance Risk Assessment
**CARFAX, the leader in vehicle history data, along with Pinnacle Actuarial Resources, a renowned actuarial consulting firm, have developed an innovative score designed to modernize and replace traditional vehicle symbols. The CARFAX Vehicle Build Score* utilizes the full 17-digit VIN to help insurers refine their rating by better understanding a vehicle's value and specific attributes through a simple score***.
The CARFAX Vehicle Build Score incorporates a proprietary vehicle valuation model that prevents both over and underpricing by providing precise current market values. CARFAX uses advanced modeling techniques to analyze a vehicle's loss experience at the component level, eliminating the need for yearly updates and adjustments to existing symbols.
"The existing practice of utilizing symbols does not reflect an understanding of a specific vehicle's bumper to bumper configuration" said Don Hendriks, Director of Insurance Analytics at CARFAX. "The CARFAX Vehicle Build Score leverages CARFAX's database of more than 36 billion records to provide insights into a specific vehicle's factory and post-factory installed features, helping insurers better understand risk and price policies appropriately. "
"For insurers, the Vehicle Build Score is an evolution towards a more advanced and refined approach to symbols and the rating process," Pinnacle Managing Principal Roosevelt Mosley said. "Our partnership with CARFAX allows us to translate detailed vehicle data into actionable risk assessments via a simple score, giving insurers a critical edge in underwriting and pricing."
InsurTech/M&A/Finance💰/Collaboration
NSM Insurance - Carlyle - New Mountain Capital | Transaction Details
Houlihan Lokey Advises NSM Insurance Group
Houlihan Lokey is pleased to announce that NSM Insurance Group (NSM), a global specialty insurance provider and a portfolio company of global investment firm Carlyle, has reached an agreement to sell its U.S. commercial insurance division to New Mountain Capital (New Mountain). The transaction is expected to close in the next 45 days, subject to regulatory approvals and other customary closing conditions.
The agreement encompasses NSM’s diverse portfolio of 15 market-leading niche insurance programs across property and casualty, accident and health, and reinsurance—as well as its retail agency, NSM Insurance Brokers. These programs will form a new independent business entity, which will continue to be marketed as NSM until a new brand is established.
Since the company’s founding in 1990, NSM has grown and evolved into a global specialty insurance provider with more than $2 billion in premium across 30+ niche insurance programs. NSM has developed a winning formula for building the industry’s most successful and sustainable insurance brands, consistently outperforming competitors and driving industry-leading growth and profitability. More than 20,000 agents nationwide rely on NSM’s specialized insurance programs to meet the unique needs of their clients.
New Mountain is a leading growth-oriented investment firm with more than $55 billion in assets under management. Geof McKernan and Bill McKernan will join the board of directors upon the closing of the acquisition to ensure continuity and a smooth transition. Aaron Miller, Chief Commercial Lines Officer of NSM, will become the Chief Executive Officer of the new entity backed by New Mountain. Mr. Miller has more than 20 years of experience in the P&C commercial lines industry and has held various management and leadership roles throughout his career.
Since joining NSM in 2021, he has been instrumental in driving the continued growth and transformation of the B2B programs by enhancing product offerings, improving operational efficiency, and strengthening carrier relationships.
Floodbase Announces Ecosystem Integrity Fund as new Investment Partner, to Accelerate Growth as the Leading Platform for Uncovered Flood Risk
Floodbase, the parametric platform for insuring uncovered flood risk, today announced a $5 million investment led by Ecosystem Integrity Fund (EIF) with participation from Pulse Fund. The investment will allow Floodbase to accelerate development of flood insurance programs, cementing its position as the industry standard for a new category of flood insurance.
Flooding is the most common and pervasive natural disaster, yet 83% of global economic flood loss over the past decade was uninsured. Hurricane Helene was the single most devastating natural catastrophe event in 2024, estimated to have caused $75 billion in economic loss, mainly due to flooding. Season after season, businesses and local governments are left to navigate financial uncertainty and millions of dollars in damages, lost revenue, and recovery expenses. The expected increase in flood intensity and frequency only amplifies the need to address uninsured risks and secure rapid funds as floods happen.
"Flood insurance has typically been limited to direct property damage, which only represents a fraction of the overall economic loss" said Bessie Schwarz, Co-founder and CEO of Floodbase. "We're enabling a financial safety net that can cover any economic loss associated with a flood event. Not only does this remove uncertainties around what's covered, the fast and flexible liquidity is a game changer for those managing the aftermath".
From Best's Review: Lloyd’s Chief Commercial Officer: Accelerator Nurturing More Than 100 New Insurance Startups
Lloyd’s Lab has raised $1 billion of capital for those companies, said Dawn Miller, chief commercial officer, Lloyd’s, and chief executive officer of Lloyd’s Americas.
Lloyd’s Lab has been described as an innovation tool that has accelerated and fostered new products and solutions. The venture has nurtured 130 companies over six years, with 97% still active in the insurance industry, according to Dawn Miller, chief commercial officer, Lloyd’s, and chief executive officer of Lloyd’s Americas.
Global Insurance Forum in Miami, said Lloyd’s has seen over $1 billion of capital raised for those companies, too. Following is an edited transcript of the interview with Miller.
What are some of the key challenges facing the insurance industry today, and how can innovation help address those challenges?
The entire conference that’s been here at the Global Insurance Forum, and even some of the carry-on conferences that we will see here, is all about innovation. Talent is definitely on the agenda, but even broader than that we see it’s the innovation challenge.
It’s how to shift this large-based industry that we’re in to tackle tomorrow’s challenges, and having capital coming into the industry, understanding innovative ways of working, as well. One of the things that we’ve done at Lloyd’s Lab to really help what we’d like to say is solidify our position as the center of our industry’s innovation. We created the lab six years ago.
We’ve had 130 companies go through the lab at this point. They go through doing a cohort cycle, as we call it. Some 97% of those companies are still participating in the insurance industry today. Over 85% are still in the Lloyd’s ecosystem, which is incredible. They’re providing services, they’re taking risk, all types of different partnerships. We’ve seen over a billion dollars of capital raised for those companies, as well.
Lori Chordas is a senior associate editor Best Magazine, page 46 READ ON
Claims
Claims Handling Accounts for Large Share of Insurance Complaints, Poll Shows
Claims handling continues to be one of the biggest sticking points in the insurance process, a new report shows.
Complaints about the claims handling process appear to be on the rise. In 2024, nearly half of Americans who filed a formal complaint saw their insurance provider either settle the claim or overturn their decision, according to a recent poll by ValuePenguin.
Los Angeles Wildfires
California Governor Asks Congress for Nearly $40B for LA Wildfire Relief
California Gov. Gavin Newsom has asked Congress to approve nearly $40 billion in aid to help the Los Angeles area recover from January’s devastating wildfires, which he said could become the costliest natural disaster in U.S. history.
Newsom sent a letter Friday asking for support from lawmakers including House Speaker Mike Johnson (R-La.) and Rep. Tom Cole (R-Okla.), the House Appropriations Committee chair.
“Los Angeles is one of the most economically productive places on the globe, but it can only rebound and flourish with support from the federal government as it recovers from this unprecedented disaster,” Newsom wrote.
California lawmakers propose bills to stabilize state's property insurance market
California lawmakers have introduced new legislation aimed at stabilizing the state’s property insurance market.
These bills propose expanding FAIR Plan coverage to manufactured homes, extending nonrenewal and cancellation moratoriums, and establishing a commission to study community hardening programs, according to a report from AM Best.
Senate Bill 547 would extend the state’s one-year nonrenewal and cancellation moratoriums to commercial properties in ZIP codes within or adjacent to fire perimeters after a state of emergency is declared. The extension would apply to homeowners associations, condominiums, affordable housing units, and nonprofits, according to the California Department of Insurance (CDI).
Senate Bill 525 would allow the California FAIR Plan to cover manufactured homes by modifying the definition of “basic property insurance.”
Another proposal would create the Community Hardening Commission as an independent CDI unit. The commission would meet at least quarterly to develop wildfire community hardening standards and provide recommendations. It would be required to consult with specified stakeholders, including the insurance industry and public safety districts.