AI in Insurance
Why the insurance industry needs its own large language model
The successful launch of OpenAI's ChatGPT has most recently brought attention to large language models. It is important to understand their limitations and downsides, particularly in the context of the insurance sector, despite the fact that they have the potential to transform human-AI interactions.
Large Language Models
Certain advanced AI algorithms called Large Language Models (LLMs) reads, organizes, predicts, or generates text based on a substantial body of written knowledge. For instance, ChatGPT currently understands and is capable of producing natural language responses based on its training on books, Wikipedia articles, websites, code, and literature from all over the internet.
While differing in accuracy or depth, LLMs like ChatGPT are able to respond to user inquiries on a wide range of subjects. A one-word retort or a multi-page torrent of material may be used as an answer. However, there are certain issues that come with existing LLMs.
With a lack of control or siting of sources and frequently plucking sentences and words out of context, tools like ChatGPT can construct an answer and present it to the user as reality. OpenAI has recognized this problem and warned that users of LLMs who are unable to distinguish between fact and fiction face a serious risk, especially in industries like insurance where specificity and context are crucial for critical business processes such as settlements.
John Cottongim, Co-Founder And CTO, Roots Automation
Gradient AI Introduces WriteSpeed: The Out-of-the-Box AI Solution for Workers’ Compensation Underwriting
Enables Insurers to Improve Workers’ Comp Underwriting Immediately, Bypassing Typical AI Data and Implementation Hurdles
Gradient AI, a leading enterprise software provider of artificial intelligence (AI) solutions in the insurance industry, today announced the launch of WriteSpeed, a turnkey solution that allows workers’ compensation insurers to rapidly leverage AI-enabled underwriting, accelerating time to value.
WriteSpeed leverages Gradient AI’s vast industry data lake to deliver a pre-trained AI model that workers’ compensation underwriters can put to work immediately using the easy-to-use WriteSpeed solution web portal. With WriteSpeed, insurers can assess the risk of policy submissions without requiring internal IT resources or customization. The pre-trained model has been trained on millions of policies and delivers significant value in evaluating policy risk, enabling insurers to make informed underwriting decisions and accurately price policies.
Cover Genius Partners with Volaris to Offer Low-Cost Travel Insurance Solutions
Cover Genius used AI-driver survey to assess customer expectations
Cover Genius has announced its new strategic partnership with Volaris, the low-cost Mexican airline serving various regions including Mexico, the United States, and Central and South America.
Cover Genius, which specialises in embedded protection, will provide Volaris customers with comprehensive travel protection options, including medical insurance, baggage protection, flight cancellation insurance, and more, at the time of booking their flights.
Through the integration of Cover Genius’ XCover global distribution platform, Volaris passengers also now have the opportunity to purchase personalised travel protection specifically tailored to their itineraries. This initiative marks the first time that Volaris offers such protection to all its customers, regardless of their travel destinations.
News
Navigating the storm: Reinsurance industry faces volatility
The reinsurance sector is grappling with a host of negative forces that have led to considerable volatility in the market. As June renewals approach, insurers are seeking ways to weather this storm and adapt to the changing landscape.
Since fall 2022, reinsurance rates have seen a significant increase, and this trend is expected to continue throughout 2023. Recent estimates reveal that property reinsurance rates surged 60% during the Jan. 1 renewals. This tightening of the reinsurance market can be attributed to a confluence of factors, including macroeconomic uncertainties, environmental challenges, consistently high natural catastrophe claims, and capacity constraints. Organizations must adapt to this pivotal moment in the industry.
"Insurers will need to enhance their understanding of evolving cyber risks, develop specialized underwriting methods, and collaborate with technology partners to design comprehensive and effective cyber insurance products."
Marlene Dailey, financial services senior analyst, RSM US LLP
"Tightening in the reinsurance market can be attributed to macroeconomic uncertainties, environmental challenges, consistently high natural catastrophe claims, and capacity constraints. Organizations must adapt to this pivotal moment in the industry."
David Mamane, financial services senior analyst, RSM Canada
Guidewire says Customer Centricity will Determine Success for Insurers in Latest Report
Insurance companies must win the hearts and minds of customers in order to remain competitive in 2023, according to a new survey by Guidewire, the insurance software provider.
The report, entitled “How Insurers Can Support Their Customers in Uncertain Times,” examines how factors such as the cost of living, new technology, and data privacy are affecting consumer attitudes towards insurance and insurers.
The study was conducted by market research agency Censuswide and surveyed approximately 1,000 insurance consumers aged 18 to 55-plus years old in the UK, France, Germany, and Spain. The results show that while cost-of-living concerns continue to affect insurance spending for some, others are more interested in new technologies and data privacy.
Tighter marketing budget? Time to re-evaluate auto insurance KPIs
Take a lesson from savvy insurance marketers and use this period of change to realign.
Proficiency in metrics and data analysis is an essential skill for auto insurance marketers, but even some of the savviest marketers are using the wrong KPIs to measure success.
Over the past year, top auto insurers significantly reduced their marketing budgets, and reports indicate the auto insurance industry continues to spend less on advertising year-over-year. Industry veterans have seen this play out before. Budgets get tight, executives panic and the next thing you know, marketing is the first line item to see major cuts.
So, this isn’t the first time marketers have been asked to do more with less. But this time around, many are looking for a more permanent solution — something that helps them prove their value in both good and bad economic conditions, and over the long term.
In today’s economic climate, auto insurance marketers have an opportunity to turn the current downturn into an upswing. But it will require them to redefine success through better KPIs and realign their marketing strategies accordingly.
Jen Gold, director of Product Marketing, Arity
More consumers opt-out of telematics programs, TransUnion
Auto and property insurance shopping continued to rise in the first quarter of the year, according to the TransUnion 'Insurance Personal Lines Trends and Perspective' Q2 2023 report.
Despite an interest in lower premiums, more consumers are opting-out of telematics programs, according to the report. The number of consumers who accepted a telematics offer was 53% or 12 percentage points lower than a year ago, at 65%.
Kaitlyn Mattson, Managing Editor, Digital Insurance
Drivers Are Shopping, Swapping Auto Insurance Policies at Record Pace
Drivers are kicking the tires and trading up for new auto insurance policies.
In the first quarter, new policy growth rate was up 17% over the same period in 2022, and a record-breaking shopping growth rate was up 10.2% compared to 2.8% in Q4 2022.
The new LexisNexis® Insurance Demand Meter report examines auto insurance trends and demographics. Overall, the report finds new policy shopping and sales have the pedal to the metal.
LexisNexis Reports Auto Rate Increases Drove 17% Growth in New Auto Policies in First Quarter
Growth likely to slow in second half of 2023 as more auto insurers raise rates.
The latest edition of the LexisNexis Risk Solutions Insurance Demand Meter reports the quarterly year-over-year U.S. auto insurance shopping growth rate rose 10.2% in Q1 2023, up from +2.8% growth in Q4 2022 as auto insurers continue to implement widespread rate increases.
New policy growth, or the rate at which consumers either switched or purchased new coverage, continues to be a big story. It was up a staggering 17% for the quarter compared to Q1 2022, and also increased from 10.2% growth in Q4 2022, continuing the record upward streak from November 2022.
30 Million Drivers at Risk from Air Bags; Few Know it
More than 33 million people in the United States are driving vehicles that contain a potentially deadly threat: Airbag inflators that in rare cases can explode in a collision and spew shrapnel.
Few of them know it.
And because of a dispute between federal safety regulators and an airbag parts manufacturer, they aren’t likely to find out anytime soon.
The National Highway Traffic Safety Administration is demanding that the manufacturer, ARC Automotive of Knoxville, Tennessee, recall 67 million inflators that could explode with such force as to blow apart a metal canister and expel shrapnel. But ARC is refusing to do so, setting up a possible court fight with the agency.
NHTSA argues that the recall is justified because two people have been killed in the United States and Canada and at least seven others have been injured by ARC’s inflators. The explosions, which first occurred in 2009, have continued as recently as this year.
InsurTech/M&A/Finance💰/Collaboration
Pie Insurance lays off 14% of workforce in "budget revision"
Insurtech Pie Insurance has reduced its workforce headcount by 14% due to a "wider budget revision process".Insurtech Pie Insurance has reduced its workforce headcount by 14% due to a “wider budget revision process”.
This is according to Pie CEO John Swigart who confirmed that 66 staff members would be affected.
Swigart stated: “I’m incredibly proud of what we’ve built together over the last six years, and what this amazing team has accomplished. I’m grateful and humbled by your commitment to fulfilling Pie’s mission of enabling small businesses to thrive. Unfortunately, our assessment of the current funding environment requires us to reduce our expenses and extend our runway to ensure we achieve profitability without additional investment.
“Dax and I take full responsibility for this decision and recognize the significant impact this will have on those who are leaving Pie today. It’s painful and sad to say goodbye to these talented Pie-oneers, and we want to emphasise that these decisions are not a reflection of the value of any individual employee or their contributions to Pie.”
Insurtech Kin, The Home Insurance Firm, Grows 54% YoY, Eclipses $83M In Gross Written Premium
Kin, the direct-to-consumer home insurance company built for every new normal, today announced select operating results through the first quarter ended March 31, 2023.
Kin finished the first quarter of 2023 “with $83.2 million in gross written premium, which was positively impacted by $33.5 million in new bound premium – a 74% increase in production over the fourth quarter of 2022.”
Kin’s positive operating income “jumped to $4.4 million, which was anchored by disciplined expense management and a strong renewal book.” Kin’s premium renewal rate of 116% “was a 14% improvement over the prior-year period.”
Sean Harper, CEO of Kin, said:
“Our first quarter results were strong across the board. We broke all-time records for new business conversion and premium growth, and our unit economics continue to be ‘best in class’ with CAC and payback periods at near historical lows. We’ve also tripled our geographic footprint in the span of six months and are scaling all of our markets quickly and efficiently, putting us on the path to deliver $370+ million in total premium in 2023.” In addition to exceeding its production goals, Kin has “remained focused on driving down its adjusted loss ratio and ensuring its reciprocal exchanges are financially secure.”
Through the first quarter of 2023, Kin’s has “adjusted loss ratio, net of XOL recoveries, decreased to an all-time low of 20.1%.”
Non-cat adjusted loss ratio “was 17.3% through the first quarter of 2023, and has decreased on an inception basis each of the last nine quarters.”
Angel Conlin, chief insurance officer at Kin, said:
“Given the geographic distribution of our exposure, the first quarter tends to have lower loss ratios, due to milder weather conditions and non-weather related loss activity. That said, we continue to outperform the average combined loss ratio for the U.S. homeowners industry due to our accurate pricing and risk selection. We’re in a great position to achieve our loss ratio goals and growth targets, even heading into hurricane season.” Kin’s mission is “to re-engineer insurance to be cost-effective and superior through every step of the journey, including purchasing, servicing, and claims, especially for the geographies that need it most.”
Recommended Events
AM Best TV -- Panel: Insurers Can Improve Auto Claims Experiences by Focusing on Customer Satisfaction
A panel of insurance, data and technical professionals explore trends, relationships and how to marry insights with consumer data that could benefit insurers.
Panelists:
- Tanner Sheehan, vice president and general manager claims, LexisNexis Risk Solutions
- Jeff Gagnon, vice president, department of service center operations, Amica Mutual Insurance
- Carey Geaglone, senior principal, Aite-Novarica Group
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