Insurtech funding flight to quality to accelerate after SVB collapse  March 23rd 2023

Insurtech funding flight to quality to accelerate after SVB collapse

Insurtechs' recent increased focus on profitability over growth should gain speed with the recent collapse of Silicon Valley Bank.

The Federal Deposit Insurance Corp. took over SVB on March 10, and whereas the immediate concern was access to deposits, the tightening of venture capital purse strings is the more serious threat facings cash-hungry insurance startups.

SVB was much more than just a traditional bank in that it provided both debt and investment facilities to startups, according to Sam Evans, a partner at insurtech-focused Eos Venture Partners.

The bank's collapse exacerbates an already challenging set of conditions, according to Evans.

"[It] will accelerate the trends that were already happening."

Those challenging conditions include a chastening year for many would-be disrupters in the insurance space — companies such as Root Inc. have seen year-over-year stock price falls of over 90% as they struggle to turn a profit on the back of high-speed growth strategies.

"We already saw evidence of lower fundraising by insurtechs coinciding with more scrutiny of business models, cash burn, and path to profitability," said Tommy McJoynt-Griffith, an insurtech analyst with Keefe Bruyette & Woods. "The shake-up of a large, established venture and credit capital provider like SVB does suggest even more headwinds to insurtech fundraising."

How Much Is a Picture Worth? Let Jury Decide in Personal Injury Claim, Says Court

Photos of damaged vehicles are relevant to the likelihood and degree of personal injury in a car accident case and they are admissible at trial, even when no expert witnesses are around to testify about them, the Massachusetts high court has ruled.

The Supreme Judicial Court upheld a lower court judge who exercised discretion in permitting the defense to submit photos, in a case where there was no expert witness, and allowed the defense to argue there is a correlation between the property damage from the collision and personal injuries sustained by the plaintiff.

“[M]ost courts believe that a jury is ordinarily quite capable of correlating outward appearance of damage with likelihood and extent of injury,” the high court said, agreeing with the rule of a majority of states.

In the case before the court, photographs of the plaintiff’s vehicle depicted minimal front-end damage and slight rear-end damage, and photographs of the defendant’s vehicle depicted minimal front-end damage.

“These photographs were relevant to assist the jury in determining the extent of the plaintiff’s injuries and whether her ongoing medical issues were a likely result of the accident or of preexisting conditions,” the court found in affirming the lower court action.

Andy Simpson, Chief Content Officer, Wells Media Group

Indiana Farmers Insurance is the Latest Carrier to Leverage AI-Powered Estimating from CCC

CCC Intelligent Solutions Inc. (CCC), a leading cloud platform powering the P&C insurance economy, announces today Indiana Farmers Insurance is the latest auto insurer to leverage its industry-first AI-powered CCC® Estimate – STP solution.

Estimate-STP uses advanced AI and insurer-driven rules to automatically initiate and populate detailed and actionable estimates in seconds. In market with 15 insurers, including 7 of the top 10 carriers based on direct written premium, representing 50% of U.S. auto claims volume, CCC Estimate – STP offers line level estimates from photos without the need for human intervention.

"Indiana Farmers Insurance is committed to providing our members with an exceptional claims experience," said Wes Sprinkle, President and CEO, Indiana Farmers Insurance. "By using CCC Estimate – STP we can reduce the time our members are without their vehicles. With a combination of AI and our own business rules, CCC helps us automate the repair estimate and frees up our claims representatives to focus on our relationship with members."

CCC Estimate – STP uses a powerful combination of technologies, data, and partner connections to digitally generate comprehensive estimates for qualified repairable claims. The outcome is actionable estimates with line-level detail, including parts, labor operations and hours. CCC Estimate – STP is configurable by insurer, including claim eligibility thresholds and desired policyholder communication experiences.

“Indiana Farmers Insurance epitomizes the customer-centricity and spirit of innovation that’s pulsing across the industry today,” said Mike Silva, Chief Commercial and Customer Success Officer, CCC. “Technology has an important role to play in the P&C insurance economy as participants face mounting pressures from macroeconomic trends and consumers, who have high expectations for service and personalization. The CCC cloud and our configurable AI-powered solutions are designed for speed and scale, helping businesses of any size quickly ramp on the latest technologies to meet their business objectives.”

How will blockchain technology reshape the insurance market?

Blockchain technology is one of the most exciting new frontiers for insurance, having the potential to fundamentally transform the way consumers protect their prized assets.

To understand the benefits it can bring to insurers and insureds alike, we must first understand the technology that underpins it.

The blockchain, in its simplest sense, is a network of computers used to store data securely. Because it is a network and not a central authority – like a bank or insurer – any changes to the data must be agreed right across the network for it to be accepted, hence why the blockchain is often described as a ‘truth platform’.

Nish Kotecha, Chairman of blockchain firm Finboot, says: “By storing data on the blockchain, insurance companies can reduce the risk of human error when completing tasks like processing claims or updating records. For example, someone could forget to switch out a name on an insurance policy. When trying to find the original policy, they might accidentally process it with someone else’s information, creating a dispute down the line. Human error makes paying out for claims very difficult – and claims are often processed manually rather than by machine, increasing room for error.”

How to bring efficiency to the insurance claims process

2020 marked the beginning of a tumultuous chapter for the insurance industry. A global pandemic changed the way we worked and forced carriers to rapidly develop new remote work strategies. "The Great Resignation" resulted in tremendous amounts of knowledge leaving the industry. And, a general lack of interest in insurance by younger workers left insurers with a wide gap to fill.

It is no surprise then that a 2021 Jacobson Group/Aon study found that staff expansion throughout 2022 was top of mind for more than half of survey respondents. While many of these understaffing challenges are a result of long-term, experienced employees taking new opportunities elsewhere or approaching retirement, knowledge gaps are left unfilled across organizations that are unable to keep the pace of hiring and training up with customer demand. In this current environment, it may simply be seen as impossible to match the pace of hiring and training to that of those leaving the industry.

The good news in all of this is that perceptions are not the same as reality. Despite an, at times deserved, reputation for taking a conservative approach to technology adoption, insurers view digital transformation strategies as one important way to bridge the knowledge gap. But despite best intentions, technology adoption is not a panacea. Digital transformation must be approached holistically, or these crucial efforts are destined to deliver suboptimal results. For example, deploying incompatible systems that are not interoperable with one another creates redundancies and workflow gaps, overworked and overloaded employees and operational inefficiencies.

To avoid these pitfalls, we must evaluate how to best embrace digital transformation.

Kamala Wedding, Head Of Customer Success, Shift Technology

Trump attacks DeSantis over insurance

The ongoing conflict between former President Donald Trump and Florida Governor Ron DeSantis has shifted from personal to policy-oriented.

On Truth Social, Trump criticized DeSantis for allegedly supporting what he called "the worst insurance scam in the entire country."

Trump accused DeSantis of providing the largest-ever bailout for “globalist” insurance companies.

Trump also blamed DeSantis for the inadequate compensation received by Florida homeowners whose properties were devastated by hurricanes, accusing the Insurance Commissioner of inaction. It is unclear, however, which Insurance Commissioner Trump was referring to in his statement.

New Annual Claims Report Exposes Potential Claims Leakage Risks for Insurance Carriers

Insurance professionals now have access to the most current claims data to refer to as the increased costs of goods and services continue to impact the insurance industry. The newly released HVACi 2022 Annual Claims Report is a single source for HVAC system claim trends and exposes key areas for potential claims leakage risk.

Each year thousands of adjusters seek help from HVACi, the branch of Alpine Intel that serves as the nation's leading provider of HVAC and refrigeration assessments for insurance carriers. Insurance professionals receive cause of loss, scope of damage, and repair and replacement recommendations with market value pricing. The annual claims report reflects these assessment results for nearly 100 types of HVAC and refrigeration equipment included in claims nationwide in 2022.

Smart risk prevention strategies will lead to success for insurers

Prevention Instead of Payouts: P&C Insurers’ New Levers for Stability and Growth

No matter who you are in insurance, financial crisis headlines will have your head swimming. Is our company safe? What are the implications for our holdings and reserves? How can we shield ourselves from unexpected claims and allow us to improve profit share while still being competitive with our pricing? Pricing is an especially hot touchpoint when the economy is still “on the edge.”[i]

Pursuing risk resilience in order to establish firm foundation

Customers want confidence and security, but traditionally what is sold is a loss-recovery contract. While most insurers are focused on how they can better assess risk, many more are now expanding to also focus on the prevention of losses and creating risk resilience for customers. The old adage of “control what you can control” is now front and center for insurers as they look at new risk management strategies as a crucial component of their underwriting and customer service strategy.

Insurers are looking at growing levels of risk and they are assessing their ability to find real stability and also grow. Can higher risk and stability and growth live in the same, balanced business model? The answer is yes. Adjustment and improvement are more possible than ever — even with growing risks. Today’s best insurance business models are those that account for competitive pricing and improved claims and loss ratios. They do this by using technology to apply pressure to risk. They make the risks jump the hurdle of expectations by working to remove risks where possible.

Denise Garth, Chief Strategy Officer, Majesco