Commentary/Opinion
(Re)defining Empathy in Insurance
The expression “empathy in insurance” is as abused and misunderstood as “innovation in insurance”. The underlying intent and value of both are important but vague, and contradictory at times and often misapplied by industry practitioners.
Insurance innovation began to emerge with the insurtech wave roughly a decade ago. Insurance carriers added “innovation” in job titles, opened “labs” and launched corporate venture funds attracted by the prospects of modernizing insurance. Despite these advances, outsiders and many insurance insiders appropriately viewed “insurance innovation” as an oxymoron, challenging the notion that the industry is or can be legitimately innovative. This was most evident when sincere expressions of cheerleading for true breakthroughs evoked gushing terms like; “transformational”, “revolutionary” and “game changing”.
The same can be said about the debate over empathy in insurance, including empathy in claims. Escalating this debate is the introduction of conversational AI, emergence of generative AI and opposing views on just where and how far to apply these in insurance. A popular explanation from insurance executives is that artificial intelligence should have boundaries to certain functions or in replacing people. Rather, they advocate equipping people to perform better in their jobs by automating repetitive, menial tasks in order to concentrate on more valued work. And, connecting information in new ways, faster, better and cheaper while keeping humans-in-the-loop is the popular current thinking. Afterall, insurance is considered a relationship business.
By Stephen Applebaum and Alan Demers
The Future of TPAs | Insurance Thought Leadership
Third-party administrators face intense market consolidation as private equity drives unprecedented M&A activity in insurance services.
In the last half of 2024, there were over 300 announced M&A transactions in the insurance space, valued at more than $20 billion. While the number of deals was down due to economic uncertainty, persistent high interest rates, and regulatory scrutiny, deal value was higher than normal.
What's driving a substantial amount of insurance M&A activity? The third-party administrator (TPA) market.
TPA investment and acquisitions are nothing new. But several factors are creating a hotter market, encouraging acquisitions now and over the next few years:
- Private Equity Demand: Private equity interest is driven by a desire to deploy capital and achieve greater returns through growth potential and operational efficiency.
- Top Line Growth: TPAs are embracing a growth-through-acquisition model – improve top-line growth through acquisition, then implement cost takeout initiatives to improve business unit margin.
- Market Consolidation: TPAs have to achieve critical size to effectively provide services across multiple lines of business and remain relevant in the market – consolidation is how larger TPAs remain relevant.
The result is clear – acquire or be acquired. As a TPA, your acquisition strategy is either to add services to provide multiple lines of business at scale or become focused on a particular niche and establish market dominance through expertise.
Chris Taylor is a director within Alvarez & Marsal’s insurance practice. He focuses on M&A, performance improvement, and restructuring/turnaround. He brings over a decade of experience in the insurance industry, both as a consultant and in-house with carriers.
Navigating Talent Shortages and Making Claims Cool
Through my 35 years in the claims industry, and experience ranging from casualty adjusting to property and construction to third-party administration, I’ve seen a significant amount of knowledge and expertise come and go. For decades, as workers have aged out of our industry, they’ve been replaced by new, young and talented cohorts of professionals ready to make a name for themselves in the claims industry.
Even with these challenges, I cannot shake the idea that the real problem here is that we—and by “we,” I mean those who have been in this industry for decades and seen the real-world, impactful work we accomplish for residents, companies and governments alike—must make claims cool for the next generation of workers. As leaders, this will be our legacy.
Yet, just as in any number of industries right now, we are experiencing talent shortages that require diverse, updated and improved strategies to address this challenge. Another key factor in this conversation is the rapid evolution and adoption of artificial intelligence and emerging technologies into industries, which has both increased the skill level and knowledge requirements of new workers, while also creating a generational divide between young employees and long-time members of the workforce.
David Armstrong, executive vice president, Property Americas, at Sedgwick
AI in Insurance
What Banks Can Teach Insurers on AI | Insurance Thought Leadership
Banks have an inherent advantage over insurers when it comes to learning how to use AI most effectively, Aditi Subbarao of Instabase says in this interview with Ron Rock of JobsOhio. Banks simply have more data because their interactions with customers are deeper and more frequent, and banks’ data is organized more accessibly.
So what should insurers learn from banks?
Subbarao says insurers should learn to be braver, especially in using AI for risk management, fraud detection and improving the customer experience. Saying you need to clean your data first is an excuse, she says.
She also says insurers should think about setting up a federation of AI agents, which can pull data from the many silos where insurers store it and provide a clear understanding of a client’s situation.
That would go a long way to eliminating the data advantage that banks now enjoy.
Ron Rock
What inspired you to get into AI and be in the financial services industry with AI.
Aditi Subbarao
I must say, I'm really, really fortunate, because the way I see it, AI is very much kind of the center of activity and innovation in the industry at the moment. Having spent more than 12 years in financial services myself, Ron, I have first-hand experienced the problems and the difficulties that most people working there face in trying to find the information that you need to have to better serve your clients and to do your job better. If there is one thing that any banker or even insurance professional would think of it is, "I wish I knew how to do something. I wish I knew what would happen. I wish I knew."
MAPFRE Launches AI Manifesto, Opens Global AI Center
MAPFRE (Madrid) has launched a Manifesto for a Humanistic, Ethical, and Responsible AI, becoming the first IBEX 35 company to publicly define its principles for the development and use of artificial intelligence. The announcement coincides with the opening of MAPFRE’s new AI Center, a global hub for AI strategy, governance, and innovation.
The Manifesto sets out five commitments guiding MAPFRE’s approach to AI
- Hybrid AI Model – Integrating human judgment and AI capabilities to drive business value
- Responsible Governance – Aligning AI use with ethical standards and corporate strategy
- Trust & Transparency – Ensuring secure, explainable, and reliable AI
- Empowerment & Growth – Supporting human productivity and potential
- Sustainable Development – Leveraging AI in line with social and environmental goals
The new AI Center will centralize MAPFRE’s AI efforts, integrating teams in Spain, Brazil, and the U.S. to support global collaboration, regulatory compliance, and local adaptation. The Center will oversee scalable use cases and coordinate AI applications that improve customer experience and operational performance.
MAPFRE reports that it has already deployed more than 115 AI use cases worldwide across claims processing, customer support, and internal operations. The company says that over 40 percent of transactions are now managed by virtual assistants, while 1.2 million customers benefit from automated document handling.
Spain has served as the launch market for MAPFRE’s AI strategy, with 70 percent of the company’s 7.7 million customers engaging with AI tools. More than 60 ongoing AI projects have powered over 16 million customer interactions. MIA GPT, an internal virtual assistant for agents, handles more than 90,000 inquiries annually, with customer satisfaction ratings exceeding 80 percent.
Liberate and Snapsheet Announce Seamless Integration to Streamline Claims with AI-Powered Automation
Liberate, the leading conversational voice AI platform designed to transform the insurance industry, has announced a new partnership and pre-built integration with Snapsheet, an industry leader in modern claims management technology. This collaboration allows insurance carriers to go live with a fully automated, AI-driven claims experience—without the heavy lift.
With this integration, Snapsheet customers can easily add Liberate's conversational voice AI into their claims workflows, delivering fully automated first notice of loss (FNOL), claim status updates, and document requests—24/7, with zero hold times. The result is a faster, more affordable path to claims automation that doesn't require additional headcount or complex implementation.
"Liberate exists to help insurers break free from the inefficiencies and rising costs of manual work and deliver 5-star service at a fraction of the cost," says Amrish Singh, CEO and co-founder of Liberate. "Together with Snapsheet, we're giving insurers the ability to transform claims operations—within days, not months—and delight customers with always-on, conversational AI that gets things done."
Snapsheet customers can now deploy voice-powered digital claims experiences using Liberate's pre-integrated platform, without writing a single line of code. This plug-and-play approach enables carriers to automate repetitive, high-volume tasks like FNOL intake and status checks, while maintaining compliance and delivering a human-like customer experience.
Branch Insurance, a long-time Snapsheet customer, is already reaping the benefits of the integration and has achieved a 65% adoption rate for its new Voice AI + Digital FNOL claim reporting and a substantial 70% cost savings with Liberate.
"The integration with our claim system has improved data integrity and enhanced the vendor assignment process, leading to more consistent claim outcomes. These capabilities enable real-time data sharing that accelerates the entire claim process, which not only enhances accuracy, but also provides a much better customer experience," says Charlie Wendland, Chief Claims Officer at Branch.
'Connected' Headline of the Day
What will happen to auto insurance when millions of cars drive themselves? What Jain and Buffett articulated is perhaps the most sweeping disruption facing a mature U.S. industry since Henry Ford’s Model T rolled out of Dearborn.
[Ed. Note: Ajit Jain's comment have enormous implications for the broader auto insurance industry ecosystem, from carriers to aftermarket vendors to technology and information providers. Those who are not actively planning are already disadvantaged]
On Saturday, at Berkshire Hathaway’s annual shareholder meeting in Omaha, the future imperiled the past as executives faced a question with profound ramifications: What will happen to Geico and auto insurance when millions of cars drive themselves?
It was more than an abstract concern. Autonomous vehicles, led by the likes of Alphabet’s Waymo and Tesla, are already maneuvering city streets without human hands on the wheel. Insurance, meanwhile, remains an industry built on analyzing—and pricing—the foibles and failings of human drivers.
Ajit Jain, Berkshire Hathaway’s vice chairman for insurance operations and a key mind behind Geico, did not hedge his answer. “There’s no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality,” he said, speaking from the stage in the shadow of Berkshire’s nonagenarian CEO, Warren Buffett.
What Jain and Buffett articulated is perhaps the most sweeping disruption facing a mature U.S. industry since Henry Ford’s Model T rolled out of Dearborn.
“Most of the insurance that is sold and bought revolves around operator errors,” Jain explained. “To the extent these new self-driving cars are more safe and are involved in fewer accidents, that insurance will be less required. Instead, as you mentioned, it’ll be substituted by product liability.”
Put differently: as driving shifts from the flawed judgement of people to the complex calculations of machines, the focus of insurance must migrate from indemnifying drivers to insuring automakers, software developers and the labyrinthine logistics behind the code that keeps cars from colliding.
News
Florida Senate Rejects Legal-Reform Challenge - Triple-I Blog
The Florida House’s attempt to curtail recent legal system reforms met firm resistance from the state Senate this week, preserving the 2022 and 2023 legislation that stabilized the state’s property insurance market.
Aiming to reinstate one-way attorney fees in insurance litigation, the House added an amendment – originally part of a separate bill – to an unrelated Senate bill focused on creating legal protections for owners of former mining sites.
Filed by state Rep. Berny Jacques, the amendment would have restored Florida’s previous requirement for insurers to shoulder the insured’s legal costs, even if the insured’s jury award was only slightly higher than the settlement insurers offered. Current law stipulates that each side is responsible for their own fees.
Senate members refused to concur with the proposal and sent the bill back to the House, which can either remove Jacques’ amendment or let the entire bill die.
Insurers and policyholders benefit
Jacques’ amendment prompted instant criticism from industry leaders, notably Florida Insurance Commissioner Michael Yaworsky, who sent an email warning the governor’s legislative affairs director that it would dismantle “hard-won progress” achieved by the 2022-2023 reforms, according to a report by the South Florida Sun Sentinel.
Financial Results
My 4 Favorite Buffett-isms | Insurance Thought Leadership
Here's one: "It's when the tide goes out that you find who's been swimming naked."
I had the briefest of interactions with Warren Buffett -- and he nailed it.
When an authorized biography of him was published in 2008, I wrote a very favorable review for the Wall Street Journal. This was just weeks after my own book, "Billion Dollar Lessons," had come out, and I took the liberty of mailing Buffett a copy, along with the WSJ's rave review of B$L.
Buffett had a cameo in my book (written with Chunka Mui) on lessons to be learned from business failures because he once invested in USAir while it was in the midst of doing a bunch of dumb things. I figured that connection, plus my having written a review he surely liked, might merit at least a glance. Who knows? Maybe he'd even read parts of the book and say something nice while Chunka and I were out hyping it.
Exactly one week after I mailed the book, I received a return letter from Buffett. He thanked me for the book, adding:
"Yes, that investment in USAir was the worst I ever made. I expect to make a worse one soon."
Paul Carroll, editor-in-chief, Insurance Thought Leadership
Berkshire Hathaway's GEICO offsets underwriting losses at reinsurance and primary units in Q1'25 - Reinsurance News
Berkshire Hathaway, the Warren Buffett-run holding company and conglomerate, has reported a $1.3 billion decrease in net underwriting earnings across its insurance and reinsurance operations to $1.34 billion for the first quarter of 2025, compared with $2.6 billion in the prior year first quarter, amid significant losses from the Southern California wildfires.
The carrier warned in its full year 2024 results announcement that its pre-tax losses from the January 2025 Los Angeles wildfires could be approximately $1.3 billion.
Today, the firm has reported current accident year incurred losses from significant catastrophe events, so losses exceeding $150 million per event, in the first quarter of 2025 were $1.1 billion from the wildfires, revealing that underwriting results in Q1 2025 included after-tax losses from the event of approximately $860 million.
The majority of the wildfire loss, approximately $770 million, hit Berkshire Hathaway Reinsurance Group’s property and casualty (P&C) business, which saw losses and loss adjustment expenses increase by $606 million, or 20.2% year-on-year to $3.6 billion. The loss ratio increased 13.6 percentage points to 68.7% in the first quarter of 2025 compared to 2024.
Combined with higher underwriting expenses of $1.6 billion, the P&C reinsurance segment’s total losses and expenses increased 9.3% year-on-year to $5.2 billion compared with $4.4 billion in Q1 2024, with a combined ratio of 98.7% in Q1 2025, up on last year’s 81.5%. P&C pre-tax underwriting earnings fell from more than $1 billion in Q1 2024 to just $68 million in Q1 2025.
Fraud
Database Shows Luxury Watch Thefts, Insurance Fraud on The Rise
Cartier owners may be pleased to know the brand has become one the most popular among luxury watches, but a new analysis also shows the watch’s popularity is rapidly rising among criminals.
Overall, luxury watch thefts—and insurance fraud—are on the rise, according to a new analysis from The Watch Register, which keeps an international database of lost and stolen luxury watches.
Shelter Insurance Goes with Shift for Claims Fraud Detection
Shift Technology, a provider of AI-powered decision optimization solutions for the global insurance industry, today announced that Shelter Insurance has gone live on Shift Claims Fraud to help mitigate exposure to auto & property insurance fraud risk. The insurer is also a member of the recently announced Insurance Data Network (IDN).
As a mutual insurer, Shelter is owned by its policyholders as opposed to shareholders. As such, the company has long been known for its commitment to customer service and its continuous innovation in the service of delivering exceptional policyholder experiences. Viewing claims fraud as an activity that adversely affects legitimate customers and the insurer's combined ratio, Shelter turned to Shift to help them apply artificial intelligence (AI) to the challenge of finding suspicious claims and determining how best to investigate their veracity.
"What is insidious about insurance fraud is that it impacts nearly every aspect of the insurance business, from the policyholder experience to profitability to the premiums our insureds pay," Mark Jones, Director of Litigation and SIU, Shelter Insurance. "Through our work with Shift we are able to identify a greater number of suspicious claims, separate them from legitimate claims, thoroughly investigate, and conclude it as quickly, accurately, and fairly as possible. This is incredibly beneficial to the business and our customers."
According to industry estimates, P&C claims fraud costs U.S. insurers almost $90B per year. Shift Claims Fraud Detection uses the power of AI to help insurers find hidden fraud during the claims process and then make the best determination about how to investigate. Shift's AI-based approach to fraud detection reduces false positives, identifies cases of both individual fraud and more sophisticated network fraud schemes, and delivers clear contextual guidance and supporting documentation to speed investigations. These factors taken together ensure exceptional operational efficiency and efficacy in claims fraud mitigation.
"As auto insurance fraud becomes more sophisticated, insurers must look for solutions that give them advantages over bad actors." explained Barrett Callaghan, Head of Global Markets and Customer Success, Shift Technology. "Shelter truly understands the value technology can bring to their fraud fighting initiatives and we are proud to be supporting their efforts."