ChatGPT and AI adoption: "big AI revolution in insurance isn't going to happen overnight".  April 10th 2023

ChatGPT and AI adoption in insurance | Digital Insurance

The upstart ChatGPT heralded an advent of conversational-AI platforms that can passably converse with humans based on a wide range of inputs. In addition to ChatGPT, which is made by the Microsoft-backed nonprofit OpenAI, other big tech companies are getting into the game with competing projects from Google (Bard) and Facebook (LLaMA). 

The rise of AI to kitchen-table prominence raises a question: Are insurance companies, which have been transforming digitally for years, ready to invest further in large language models and turn their precious customer relationships over to a chatbot?

Forrester Principal Analyst Indranil Bandyopadhyay says that a big AI revolution in insurance isn't going to happen overnight.

Insuring Tomorrow: Insights on Future-Proofing Insurance with President & CEO of Erie Insurance

The insurance industry is evolving at record pace, and carriers are faced with the challenge of keeping up with the changing times. The need for future-proofing insurance has become more critical than ever, and insurers must adapt their strategies to remain relevant in the industry. That's why Reuters Events caught up with some of the CEOs of Erie Insurance, Allianz Life, Plymouth Rock & Zurich Ventures to share their honest perspectives on how industry leaders can future-proof their organizations, and the insurance industry as a whole. We'll be sharing the conversations weekly, or you can download the full report here.

First up is Timothy NeCastro, who has served as President & CEO of Erie Insurance since 2016. NeCastro joined ERIE in 1996, starting a career that has spanned finance, services, and sales. He serves on the boards of the American Property Casualty Insurance Association, UPMC Hamot, and is a council member for The Pennsylvania Society. NeCastro is also founding board president of the Erie Downtown Development Corporation, which is transforming the downtown core of Erie, Pennsylvania, through real estate development and sparking investment and revitalization across the region.

GEICO, Progressive, State Farm, USAA, Keynova mobile score

Keynova Group, a financial services intelligence firm specializing in benchmark insights, released its Q1 2023 Mobile Insurance Scorecard, which evaluates the mobile website and mobile app offerings from the 12 largest U.S. property and casualty firms.

GEICOscored first overall and in mobile web and app. Progressive and State Farm scored second overall. Progressive scored second in mobile web. State Farm and USAA tied second in app. State Farm scored third in mobile web.

The report analyzes user capabilities and customer experience to identify trends that are driving mobile and app strategy. Scoring is based on an evaluation of approximately 250 objective criteria.

Beth Robertson, managing director of Keynova, told Digital Insurance in an email: "For mobile apps, GEICO continues to hold a more substantial lead, though its scoring margin over second ranked State Farm and USAA is narrowed in this review. State Farm performs particularly well in enabling core functional capabilities for prospects and for policyholder education, while USAA shines in customer support, providing key information such as hours of availability and wait times for phone or chat assistance."

Huge insurer impairments revealed

Catastrophe losses were the driving force behind the 17 impairments of US property & casualty insurers in 2021, according to a new report by AM Best.

AM Best defined impairments as “situations in which a company has been placed, via court order, into conservation, rehabilitation or insolvent liquidation.”

Seven of the impairments that took place in 2021 were caused by hurricanes, mainly in Louisiana and Florida.

Furthermore, among the 17 insurance companies that became impaired during the year, 16 were placed into liquidation.

Along with five companies based in Louisiana and two in Florida, the impairments identified in 2021 included four commercial auto insurers and a pair of Vermont-based risk retention groups.

Insurance industry execs seek higher yields amid bleak economy

A major survey of insurance industry CIOs and CFOs revealed they expect a deterioration of credit quality and a recession this year but, for the first time, ranked increasing yield opportunities in the current environment.

The 12th annual global insurance industry investment survey by Goldman Sachs Asset Management, released Tuesday, found insurers are leaning heavily into fixed income and seeking to increase duration and credit risk.

“With high inflation, rising geopolitical tensions, and the effects of tightening monetary policy, insurers are looking to take advantage of higher rates while managing their market risk,” said Matt Armas, global head of Insurance Asset Management at Goldman Sachs Asset Management. “As shown in the survey results, the journey to rebuilding yield is done with a balance of duration and high-quality credit opportunities.”

Your Used Car May Soon Come With Subscription Fees

BMW and others have been criticized for charging monthly fees for features in new cars like heated seats. Now the tactic is coming to used cars.

News reports often get people angry, but wow, did people get mad over an article published last summer about BMW. It described how the German automaker now sold some features of its vehicles as subscriptions, including an offering in South Korea that charged $18 for things that drivers are accustomed to coming standard, such as heated seats.

Subscription-weary consumers reacted with outrage. Spotify, Netflix, razors, coffee: All now come with monthly fees. But being asked to subscribe to heated seats seemed to point to something broken at the core of the money-for-stuff compact that is global capitalism. If a car company could give or take away access to tuchus warmers with the press of a button in faraway Germany, what did it mean to “own” anything?

6 states now have PII, data privacy laws; 7 more considering legislation

Six states now have data privacy laws on the books, with Iowa as the latest. What this means for collision repair shop owners is the need for end-user license agreements and data collection/use consumer disclosures sooner rather than later, if not already in place.

Iowa’s passage of SF 262 lays out standards and practices for types of data that can be collected and consumer rights in data processing.

“In our digital age, it’s never been more important to state, clearly and unmistakably, that consumers deserve a reasonable level of transparency and control over their personal data,” said Gov. Kim Reynolds. “That’s exactly what this bill does, making Iowa just the sixth state to provide this kind of comprehensive protection.”

“Personal data” is defined in the new law as “any information that is linked or reasonably linkable to an identified or identifiable natural person” and doesn’t include de-identified data (data that cannot reasonably be linked to an identified or identifiable natural person,” aggregate data, or publicly available information.

Beyond Moneyball

Baseball season has arrived.  

"Moneyball," by Michael Lewis, it’s hard to believe, was published almost 20 years ago in 2004. For the unfamiliar, "Moneyball" tells the story of how Billy Beane, general manager of the Oakland A’s, used advanced analytics to identify high-value, low-budget players and win with payroll a fraction of major-market teams like the Yankees and Dodgers.    

Moneyball-type analytics, based on static player and team outputs, have since become table stakes. 

Last year’s World Series champion, the Houston Astros, won despite letting a billion dollars in free agents walk. Their opening day payroll of $180 million ranked eighth in the league. The Astros also won the World Series in 2017 with a payroll of $124 million, ranked 17th. Over the last six seasons, among legitimately contending teams, the Astros rank a clear first in payroll-cost-per-win. 

The Houston Astros were the first team in the league to go beyond Moneyball, investing in observational process intelligence, measuring player and team inputs, not just outputs. Installing computer vision devices and Doppler radar for bullpen and batting practice sessions as well as live games (this year a league-wide standard), the Astros created a class of kinetic data on players in motion to help them improve. An example of observational process intelligence from a different sport is Trackman in golf.