AI in Insurance
Pragmatic AI Strategy for Insurance Leaders | Insurance Thought Leadership
Lately, I've been getting a lot of questions about how to leverage multi-cloud AI capabilities across platforms while minimizing complexity and cost. In my experience working with P&C insurers implementing AI strategies, success depends on strategic clarity rather than the use of the latest technology. The most effective approach balances innovation with pragmatism.
A Business-First Approach
P&C insurers succeed with AI when they start with specific business challenges rather than technology capabilities. Insurers should identify quantifiable business objectives such as claims leakage, underwriting accuracy, customer retention, or operational efficiency. Then link AI initiatives directly to business KPIs aligned on those objectives. This business-first approach will help create a balanced road map of quick wins and strategic capabilities, ensuring investments address actual business needs.
Fit-for-Purpose Strategy
Recently, a client with an M365 E5 subscription was wondering whether implementing Copilot would conflict with their AWS-based analytics platform.
A fit-for-purpose approach would allow insurers to match appropriate AI technologies to specific functions, reducing integration complexity and avoiding the "one-size-fits-all" pitfall that has derailed many AI initiatives. MORE
'Connected' Headline of the Day
Auto Insurance Rates Set to Moderate; Geico, Progressive Earning Huge Profits - Barron's
Auto insurance rates are set to moderate after outsize increases in the past two years and that could help put a damper on consumer prices.
The auto insurance industry has gone from big losses in 2022 to profitability in 2024, and large insurers like Progressive and Geico are generating outsize underwriting profits considerably above their targeted levels. Geico is a key part of Berkshire Hathaway’s big property and casualty insurance business.
Insurance industry executives have said they are generally satisfied with insurance rates that now average about $2,000 per vehicle in the U.S.
“We will probably see a moderation” in increases as the year progresses, says Meyer Shields, the property and casualty insurance analyst at KBW.
The March consumer price (CPI) index report on Thursday morning could offer a read on trends. Goldman Sachs economists, however, don’t see moderation showing up yet in the auto insurance component. They forecast a 1% increase in March and an 0.1% rise in the overall index.
The auto insurance industry had underwriting profits totaling 8.5% of premium revenue during 2024, according to preliminary results from A.M Best. That compares with break-even underwriting results in 2023 and underwriting loss of 6% of premiums in 2022.
Telematics, Driving & Insurance
AAA study on UBI effectiveness finds improvements in speeding, hard braking, rapid acceleration; phone use unchanged | Repairer Driven News
The AAA Foundation for Traffic Safety recently conducted a study with 1,449 drivers recruited nationally via social media advertisements for a 24-week randomized controlled trial. Their speeding, hard braking, rapid acceleration, and handheld phone use were measured with a smartphone app during a six-week baseline period.
David Yang, the foundation’s president and executive director, said in a AAA press release that the research gauged what motivates drivers to change certain risky driving behaviors.
“Finding ways to reduce these behaviors can positively impact traffic safety and reduce injuries and fatalities on our roads,” he said.
The foundation notes that research shows speeding, aggressive driving, and distraction contribute to a significant number of crashes, and efforts to change these behaviors often involve driver education, public awareness, and legislation.
Research
CCC: Longer vehicle life, more expensive and complex repairs, more total losses trends continue | Repairer Driven News
Research provided in CCC Intelligent Solutions’ Crash Course Q1 2025 report shows that changes in the U.S. vehicle car parc are causing longer vehicle life; increasingly complex, costlier, and tech-driven repairs; more total losses, and cost inflation.
Kyle Krumlauf, director of industry analytics at CCC and co-author of Crash Course, called the transformation “anything but cyclical.”
“It’s this intersection — not any single trend — that marks a true inflection point for the auto claims and repair economy,” he said, in a CCC press release. “Our Q1 report helps the industry understand these forces and plan accordingly.”
Civil Unrest Tops Business Concerns Amid Rising Global Political Risks
Allianzreport reveals 51% of companies fear civil unrest as protests spike worldwide; terrorism, state-sponsored sabotage, and environmental activism pose growing threats to operations.
Political risks and violence remain a top 10 global concern for businesses for the third consecutive year, with civil unrest, terrorism, and state-sponsored sabotage posing significant threats to operations and assets, according to a report from Allianz Commercial.
Civil unrest has emerged as global businesses’ primary political violence concern, with 51% of companies ranking it as their main worry. Since 2017, more than 800 significant anti-government protests have occurred across 150+ countries, with more than 160 events in 2024 alone, according to the report.
In the top 20 countries for protest activity, Allianz documented more than 80,000 incidents in 2024, with India (18,626), the United States (8,549), and France (5,517) experiencing the highest frequency of protests. In terms of the countries with the greatest increase in the frequency of protests between 2023 and 2024, Allianz identified India (+21.2%), Germany (+35.9%), Kenya (+57.7%), Poland (+102.1%) and Morocco (205.9%).
The impact on businesses from protests and riots can be substantial, ranging from direct property damage to operational disruptions. Organizations particularly vulnerable include retail premises (especially foreign-owned or high-value stores), government buildings, transport infrastructure, critical assets like petrol stations, and tourism businesses, according to the report.
Supply chain disruptions represent another significant threat, with 41% of companies expressing concern.
Commentary/Opinion
Business Reporter - Insurance - Why IoT and AI are elevating insurance to a social good
Why IoT and AI are elevating insurance to a social good
Insurers utilize IoT for enhanced pricing sophistication, loss prevention, and improved claim management. Its holistic adoption enables satisfactory profitability while expanding coverage, availability, and affordability.
There are approximately 19 billion connected devices worldwide, and numerous industries have integrated the IoT paradigm—sense, analyze, and act—into their operations. The insurance sector has embraced this trend as well, with its most prominent application evident in auto business, commonly referred to as telematics.
The capability to sense events affecting the insured, transmit this information in real time to insurers, analyze the continuous data stream through artificial intelligence to understand, decide, and learn—and subsequently act—represents a remarkable opportunity to perform insurance activities better. The noble job of assessing, managing, and transferring risk stands to be fundamentally transformed by leveraging the IoT paradigm.
Numerous IoT-driven solutions exist across various insurance segments beyond the widely recognized automotive telematics, many of which have generated remarkable success stories accompanied by robust returns on investment.
Ting is enabling insurers to mitigate fire risks within their homeowner insurance portfolios proactively. US Insurers has already sent to their policyholders over one million devices, designed to be plugged directly into an electrical outlet. Upon detecting an electrical fault, Ting immediately notifies the homeowner and arranges for an electrician to resolve the hazard before it can develop into a fire. Dozens of insurers are expanding this preventive safety initiative across their portfolios, with some—including Nationwide—already highlighting its compelling business case.
HSB maintains continuous connectivity with tens of thousands of sensors deployed across commercial properties, enabling insurance programs and carriers to effectively mitigate water-related risks. Its real-time escalation procedure, triggered whenever a sensor detects an issue, has consistently achieved an average reduction in expected insurance losses of $8 for every dollar invested in the IoT initiative.
Matteo Carbone, director of the IoT Insurance Observatory and Chairman of Net Insurance’s Innovation Advisory Board
InsurTech/M&A/Finance💰/Collaboration
Top insurtech funding rounds, March 2025
There were about 57 funding events in the insurtech sector between March 1 and March 31, 2025, 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 February, click here. These updates will continue monthly.
The Hanover and Hagerty Collaborate to Provide Collector Car Protection
The Hanover Insurance Group, Inc. (NYSE: THG), a leading national insurance provider for individuals, families and businesses, today announced a collaboration with Hagerty (HGTY) to provide specialized insurance for classic cars.
The new product, Hanover Collector Car, powered by Hagerty, combines the total account protection The Hanover is known for with Hagerty's expertise in collector vehicle claims and valuation services.
"We believe protecting customers' most precious assets with one carrier is critical in helping them gain true peace of mind," said Brad McCreedy, vice president of personal lines strategy at The Hanover. "The Hanover's relationship with Hagerty allows us to strengthen our total account offerings and ease of doing business, with the outstanding claims experience our customers expect – backed by experts who really understand this unique market. It's the best of both worlds."
Hanover Collector Car, powered by Hagerty, is offered through The Hanover's independent agents in Michigan and Illinois to new and existing customers. The company expects to expand this offering to more states in the future.
"We believe that joining forces with The Hanover further supports collectible car owners who want to protect the vehicles that mean so much to them," said Nick Cassell, Hagerty's Vice President - Insurance Business Partner. "We look forward to working with The Hanover and their exceptional independent agent partners to achieve our mutual goal of protecting more of these cars."
Cyber Risk
NY attorney general penalizes Root insurance, requires data security enhancements following cyber attack
Root, an auto insurance company, must pay $975,000 in penalties and is required to enhance its data security following a lawsuit from the New York Attorney General Letitia James.
A press release from the attorney’s general office says Root failed to protect the personal information of about 45,000 New Yorkers during a cyberattack the company discovered in 2021.
“When companies have poor data security practices, they put individuals at risk of identity theft and other fraud,” said James in the release. “Auto insurance companies need to make sure that the systems they use to store people’s data are protected to prevent cybercriminals from stealing driver’s license numbers, Social Security numbers, and other private information. Today’s settlement should send a message to companies in the auto insurance industry that my office will take action to protect New Yorkers’ private information.”
Los Angeles Wildfires
Insured losses due to California wildfires to exceed $30 billion -- report
Losses vary significantly across insurers
The January 2025 wildfires in Southern California destroyed more than 16,000 structures in parts of Los Angeles, marking the costliest wildfire disaster in US history, according to the California Department of Forestry and Fire Protection.
Morningstar DBRS estimated insured losses will exceed $30 billion. As of March 5, the California Department of Insurance reported nearly 38,000 claims filed and more than $12 billion paid. Losses varied across insurers, depending on reinsurance structures and market concentration.
Carriers like Mercury General, with a strong presence in California, reported heavier losses. The state’s FAIR Plan, which insurers high-risk properties, also reported significant losses, estimated at $4 billion. Its cash and surplus levels are expected to drop from $1.5 billion at the start of the year to $305 million by June, prompting a $1 billion assessment on private insurers.
State Farm General, the largest homeowner insurer in the state, reported $7.6 billion in gross losses but just $612 million net due to reinsurance support from its parent. The wildfires reduced its surplus by $400 million. On February 3, the company filed for a 22% emergency rate increase, which was provisionally approved in March, pending a public hearing on April 8. Under California law, increases above 7% may require a hearing or settlement if challenged.
People
Liberty Mutual Insurance Elects Timothy M. Sweeney Chairman; David H. Long to Retire
The Liberty Mutual Insurance Board of Directors today elected Timothy M. Sweeney Chairman of Liberty Mutual Holding Company Inc., effective today, April 9, 2025. Sweeney, who is currently the company's President and Chief Executive Officer, will succeed David H. Long, who is retiring as Chairman and Director.
Long has been part of Liberty Mutual for 40 years, and became President in 2010, Chief Executive Officer in 2011 and Chairman in 2013. Sweeney was appointed President and Chief Executive Officer in January 2023 upon Long's retirement as Chief Executive Officer.
"David's tenure has been defined by his unwavering commitment to excellence and the well-being of our employees. His leadership has transformed challenges into opportunities, ensuring that our core values remain at the center of everything we do," said Sweeney. "On behalf of our Board of Directors and the entire organization, I'd like to thank David for a remarkable four decades at the company and wish him and his family the very best in the years to come."
"Experiencing the evolution of this organization is something I will always cherish," said Long. "I'd like to express my immense appreciation to our people, as they truly make Liberty Mutual a best place to work, and to the leadership team for their dedication to driving our business forward. I'm eternally grateful for my time with the company and everyone's unwavering commitment to keep our promises to our customers, partners, communities and each other."
Did You Know?
How Amish community recovers without insurance haggling
No contractors, no repair estimates, no haggling with the insurance company: After a tornado struck an Amish community in Michigan, the work was underway even before the National Weather Service could assess the damage.
Meteorologists make site visits to determine the speed, breadth and impact of a tornado. But sometimes the hammers have already been swinging.
That's what Dustin Norman of the weather service found in Branch County, Michigan, a few days after a tornado Wednesday with peak winds of 100 mph (160 kph). The Amish had put new shingles on a home, reframed a barn and made other major repairs in their community.
He said the situation was similar in an Amish area hit by a tornado that day in Adams County, Indiana, 90 miles (145 kilometers) south.