P&C Insurance Survey: 50% Plan to Prioritize Investment in Claims Automation in 2023  May 2nd 2023

P&C Insurance Survey: 50% Plan to Prioritize Investment in Claims Automation in 2023

The Five Sigma-commissioned report sheds light on a claims industry increasingly eager to adopt cloud-based, automated and data-driven technologies.

Five Sigma, an emerging leader in cloud-native insurance claims management solutions (CMS), today published the findings of a survey providing insight into the current state of claims intelligence, as well as insurers’ views and future plans regarding innovation and modernization of their claims operation. Taken together, the report’s key findings paint a picture of an insurance industry increasingly eager to adopt new technologies for both managing and automating claims.

Among its key findings, the report points to a positive view of claims automation among insurance leaders. Specifically, 50% of respondents stated that implementing automation along the claims journey is a top investment priority for their company. Furthermore, when asked whether smart automation can significantly improve claims organizations’ accuracy, efficiency, both or neither, 58% of respondents replied that it can significantly improve both.

The survey also found that 72% of respondents said they manage claims in-house (up from 66% in last year’s survey), and 63% said they plan to replace their claims management software by 2026. While 89% said they currently rely on an on-premises claims management system, 87% said they plan to move to a cloud-based solution.

OnStar exec says telematics will create ‘transformative’ insurance process

Andrew Rose is President of GM OnStar Insurance (formerly Elephant Insurance, Admiral Group and compare.com). This summarizes his presentation and interview at IBIS (International Bodyshop Industry Symposium) last week. He describes OnStar as GM’s telematics-based insurance provider,

Regarding crash detection, he told delegates that.....

“onboard data will eventually create a “transformative” insurance process from the moment an accident occurs”

IBIS Boardmember Sean Carey during a sit down discussion with Rose asked how insurers can foresee repair costs, planning and procedures. He also asked where inflated repair costs will have the largest impact on insurers.

Rose said it comes down to three things: loss ratio, expense ratio and the claims handling expenses.

“You can create all the fancy metrics that you want, but at the end of the day, the math is the same. You have to run those numbers,” Rose said. “When you look at a loss ratio, it is frequency (the number of times you’re going to have an accident) by how bad the accident is. And overall, a lot of the technology is aimed at reducing the number of times you have an accident, but often the stuff that does that costs money.”

Moody’s analysts say electric vehicles will be more costly for insurers

The growth of electric vehicles will have unintended consequences for auto insurers, Moody’s Investors Service analysts say.

Speaking during a recent podcast, Matthias Heck, a senior credit officer, said battery electric vehicles (BEVs) will likely represent about one-third of vehicle sales by 2030 and nearly half of vehicles by 2035 worldwide.

“This is actually a faster uptake than we had previously forecast because of tighter environmental regulations, and more aggressive electrification targets from automakers,” he said.

“In the U.S. because of growing consumer interest and subsidies made available by the legislation passed during the Biden administration, we expect BEVs to account for 35 to 40% of total light vehicle sales by 2030, up from just 5% in 2022. Combined with plug-in hybrid electric vehicles and other hybrids, we see alternative fuel vehicles representing just over half of U.S. total vehicle sales by 2030, up from just 13% in 2022.”

The uptick in emission-free vehicles won’t necessarily benefit everyone, analysts said, noting that they will be more costly to repair, meaning insurers will be on the hook for larger payouts.

Auto Insurance Shopping and Carrier Switch Rates Reach New Highs as Premiums Increase

J.D. Power finds State Farm ranks highest among large insurers for shopping experience. The Hartford best among midsize insurers. Progressive gaining market share as GEICO raises rates above industry average.

The nation’s auto insurers are locked in a vicious cycle of inflation, rising premiums and steadily increasing customer defection rates. The result, according to the J.D. Power 2023 U.S. Insurance Shopping Study, released today, is a sharper focus on saving money as large numbers of auto insurance customers shop for new policies and switch to new carriers, largely based on price.

“Auto insurance customers are starting to shop for insurance like they shop for gas,” said Stephen Crewdson, senior director, insurance business intelligence at J.D. Power. “They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives. In the near term, this shopping trend manifests itself in increased customer interest in usage-based insurance (UBI) plans and some reshuffling of market share among the top carriers.”

Thieves covet these vehicles' catalytic converters the most

The number of catalytic converters stolen in the U.S. this past year is estimated to be as many as 153,000, according to an estimate from Carfax. Earlier projections peg the number of stolen catalytic converters at around 77,000.

“Catalytic converters are valuable because of the precious metals in them, which fetch high prices on the black market,” Rich Randazzo, president of Brownyard Claims Management, Inc., told PropertyCasualty360.com. “Additionally, the part is quickly and easily stolen, however, based on their placement it is not easily obvious when they are taken.”

For drivers with comprehensive auto insurance policies, a theft of this nature could be covered under clauses of the policy that cover non-accident related damages. The average cost to replace a catalytic converter ranges from $1,000-$3,000.

Swiss Re reimagines the uses of AI for the re/insurance industry

The report “Decrypting AI for Insurance” written by Swiss Re’s Group’s Chief Digital & Technology Officer, Pravina Ladva has outlined ways in which AI could help achieve the industry’s long-term goals and takes a deep dive into the immediate benefits of AI that can be taken into consideration.

Ladva tries to reimagine AI when it comes to the re/insurance industry as a tool for the future that will potentially enable more precise coverage and pricing adjustments. While this is an attractive long-term goal, the report discusses AI is delivering benefits today and the opportunities for the insurance value chain in the near future.

AI refers to mathematical models that learn patterns from data and enable faster or even automated decisions.

Swiss Re defines AI into various categories, depending on its scope, AI can be referred to as either “narrow-AI” which means a model designed to fulfil a specific purpose in a defined context or “general-AI” which is defined as a universal model with human-like intelligence.

According to Ladva, “No true general-AI exists yet, but recent advances partly begin to exceed capabilities associated with narrow-AI (e.g., Open AI’s ChatGPT and GPT-4 or Google’s Bard). Current insurance AI applications are based on a narrow type of Artificial Intelligence.”

APCIA reports ‘Tornado Alley’ shift, urges resident preparedness

Research shows "Tornado Alley" shifting eastward from its traditional location in the Great Plains, posing a threat to more densely populated areas and putting more properties at risk of loss, APCIA says. "It is critical that homeowners and businesses take action now to ensure they are ready for severe and sometimes deadly weather. When a tornado is near, minutes matter, which is why advanced preparation is key," APCIA's Jeff Brewer says. APCIA offers an insurance information kit on tornado recovery.

Insurance News: Generative AI experience, efficiency and risk | Insurance Blog | Accenture

Every day we see headlines about generative AI. For the insurance industry, this technology offers acceleration in many areas in which AI-led transformation is already underway. But, like any emerging technology, it also introduces new areas of risk.

In this Insurance News Analysis, Abbey Compton and I are joined by Daria Lee Sharman for a discussion of the topics she highlights in her article, 7 challenges the insurance industry is facing with generative AI. We talk through many of the questions the technology is raising across the value chain and industry segments.

As Daria shares, generative AI offers new potential for the level of personalization carriers have long talked about achieving in underwriting. There is greater potential with generative AI to augment the human underwriter and improve employee experience and knowledge transfer.

However, the creativity and personalization that can be achieved by carriers using generative AI is also at the fingertips of every claimant. Carriers will need to take steps to guard against increasingly plausible but fraudulent claims.

As claims volumes continue to rise, so does the need for innovation in claims. Generative AI has great potential, but carriers and public sector entities must continue to innovate in other ways. For example, insurance villages are popping up across Florida to help settle claims from Hurricane Ian, and the new Insurance collaboration to save lives seeks to use tech solutions to bring down persistently high mortality rates even as COVID-19 deaths have fallen.

Kenneth Saldanha, Senior Managing Director – Global Insurance Lead, Insurance Blog, Accenture

Top Insurance and Insurtech Influencers on LinkedIn

SPOILER: Matteo Carbone is #1 Top Influencer

Ever wondered who to follow on LinkedIn? We've scoured the professional networking site to find the most followed insurtech influencers out there.

They say it’s not what you know, but who – and sometimes, in the close-knit world of insurtech, that can definitely feel true. Networking is an important part of staying connected, meeting new people, and being inspired by new ideas. What better place to do that than on LinkedIn? We’ve scoured the professional networking site for the top influencers talking about insurance and insurtech, and ranked them by number of followers.

InsurTech Magazine

The Need to Improve Data Maturity

It’s challenging for insurers to differentiate themselves through products and services, but data and analytics can enable them to break free from commoditization with better and faster decisions. This potential is reflected in increasing levels of investment in data and analytics across the industry; these investments now exceed 0.7% of direct written premium (DWP), on average. Recent Aite-Novarica Group studies indicate that over half of all insurers are replacing or conducting major enhancements to their data environments and associated capabilities.

According to an Aite-Novarica Group survey of insurer CIOs, the average property/casualty insurer is spending 4.4% of DWP on IT. Of that, 17% is spent on data, resulting in average spending of 0.68% of DWP. (For more information, see the Aite-Novarica Group report Property/Casualty Insurer IT Budgets and Projects 2023.) The term “data” typically includes data warehouses, business intelligence (BI), predictive analytics, third-party data and practices such as master data management.

Where Insurers Are Investing

Insurer business units are prioritizing further expansion of BI and analytics over all other capabilities in 2023, reflecting the fact that carrier capabilities tend to lag in this area. Many insurers face data access challenges, resulting in significant effort expended for sourcing and merging data to produce reports. Data quality issues also affect insurers’ ability to receive the full benefit from analytics efforts.