AI adoption, hurricanes' escalating threat: Top insurance news September 2024

October 1, 2024 6:00 AM

Enjoy complimentary access to top ideas and insights — selected by our editors.

In this compilation of top matters affecting the insurance landscape, Nationwide and other insurance agencies further explore artificial intelligence, and experts offer tips on preparing for hurricane season and more.

A phone screen with the ChatGPT website.

Adobe Stock

Insurance agents embrace AI: Nationwide

Article by Kaitlyn Mattson

Independent insurance agents appear ready to deploy artificial intelligence, according to a Nationwide survey.

More agencies and agents are moving to use machine learning and gen AI technologies to meet consumer expectations. Sixty-two percent of independent agents who responded said they are already investing in AI and 28% have adopted an AI platform for their business over the past six months.

The Nationwide Economic Impact Survey Report: Independent Insurance Agents Findings was conducted online in May and includes responses from about 400 agents, with a mix of principals, producers and customer service representatives.

Click here to read the full story.

Lee Ann Thigpen, a partner in the Minneapolis office of Robins Kaplan

The implications of AI in underwriting

Podcast by Patricia L. Harman

Lee Ann Thigpen of Robins Kaplan examines how AI is affecting underwriting in the property & casualty space.

Click here to listen to the full recording.

Derek Szeto, Jill Macdonald, David Himmel and Adrien Niblock of Walnut Insurance

Derek Szeto, co-founder; Jill Macdonald, COO; David Himmel, director of enterprise partnerships, and Adrien Niblock, co-founder and CPO of Walnut Insurance.

Meet the insurtech: Walnut

Article by Michael Shashoua

While working together at RBC Ventures, Adrien Niblock and Derek Szeto saw that the marketing costs of direct-to-consumer business models made them unprofitable for insurers embedding coverage in those businesses' products.

Niblock and Szeto realized that removing these marketing costs could make it possible for insurers to bring down pricing and get a better business model for embedding insurance.

"If you can embed insurance at the right point in time for the consumer, you also are choosing the good risk at the same time," said Niblock. "There's a lot of benefits to embedding insurance and placing it in the customer journey at the right moment of time."

Click here to read the full story.

A person using a laptop and phone with several graphics, including one that reads IoT.

Adobe Stock

What AI tools are insurance agents using?

Article by Kaitlyn Mattson

Insurance agents are using artificial intelligence, but what tools specifically?

Lisa Gobber, Nationwide's P&C director of sales, spoke with Digital Insurance about how insurance agents are interacting with various AI technologies. Independent insurance agents appear ready to deploy artificial intelligence, according to a Nationwide survey.

"They're thinking about which of their carriers are investing in not only the technology but the knowledge management and training support. They naturally look to places like the vendor that they use for their agency management system or their customer relationship management system," Gobber said. "They're looking for something cohesive or complementary from a training pathway and an adoption perspective."

Click here to read the full story.

Melanie Kolp, senior vice president and chief technology officer for strategy, data and innovation at Nationwide.

Laura Sauer

Nationwide's two-pronged approach to gen AI

Article by Michael Shashoua

To get the most out of using gen AI, Nationwide created a Blue Team / Red Team management approach.

The Blue Team thinks of ways to apply gen AI's power to create opportunities and the Red Team is concerned with guidelines and governance mitigating the risks of gen AI. Data management and security emerged as a key consideration in the carrier's implementation of gen AI. The Blue Team used gen AI to develop the "Chat With Your Data" technology, launched in August for use by the carrier's staff.

Nationwide also uses Anomalo, an AI-based data quality tool, and incorporates AI into its claims operations. To learn more about these efforts, Digital Insurance spoke with Melanie Kolp, senior vice president and chief technology officer of Technology Enterprise Solutions at Nationwide. Kolp is also on the Executive Steering Committee that supervises the Red and Blue teams.

Click here to read the full story.

LexisNexis Risk Solutions

How telematics is shaping usage-based insurance

Opinion article by Rob Bhatt

On many fronts, the digital insurance industry looks vastly different than it did five years ago.

One of the biggest changes is the continued rise in usage-based insurance (UBI) models, which use data from each particular driver — for example, how fast they go, where they go and how often they drive — to determine their car insurance premium. The UBI industry is expected to be a $175 billion industry by 2028, up from $48 billion in 2023.

Of course, UBI isn't possible without telematics devices. The technology for tracking driver behavior is getting cheaper, sleeker and more convenient for both insurers and their customers — one of the big reasons the sector is growing so quickly.

Click here to read the full story.

Worker atop a roof covered in solar panels.

Solar energy panel installations can create unique coverage risks

Article by Patricia L. Harman

Climate change risks and rising energy prices have encouraged consumers and companies to find alternative energy sources. According to a new report from Allianz on solar photovoltaic panels (PVs), the number of annual solar installations rose 87% in 2023 as compared to the previous year. As the focus on renewable energy increases, so too do some of the risks.

According to the report, China has dominated the transition to solar energy, installing 57% of the world's solar in 2023. Increased government support for solar energy through incentives, lower costs for installation and technology improvements, as well as the desire for low-carbon and renewable energy sources have also helped to make this type of energy more viable.

Click here to read the full story.

Robotic hand and human hand point to holographic AI icon

White humanoid hand on blurred background using digital artificial intelligence icon hologram 3D rendering

sdecoret/sdecoret - stock.adobe.com

Insurers grapple with AI ethics and regulation

Article by Michael Shashoua

With U.S. and Europe both weighing in on insurers' use of AI, insurers and insurtechs are considering the ethics of AI applications in their business.

In the U.S., NAIC, the association of state regulators, adopted a model for AI use in December 2023, with 17 states now using that model and four more using their own guidelines. In July, the European Parliament passed its AI Act, which sets a legal framework for the use of AI.

"AI can be a great — it has been a great help, and will be a great help going forward, to help speed up and gain more insights for the underwriter, as opposed to a black box that's not explainable sitting off to the side," said Jennifer Kyung, vice president, property and casualty underwriting at USAA, a panelist on a webcast hosted by the Insurance Information Institute. "It's really, really important for us to make sure that what we're looking at is explainable and traceable."

Click here to read the full story.

abstract digital technology background, artificial intelligence, generative, ai

carballo - stock.adobe.com

How embedded insurance is transforming brand loyalty and insurer success

Opinion article by Matheus Riolfi

The insurance landscape is undergoing a profound transformation, driven by the rise of embedded insurance models. Forecasts for embedded sales of property and casualty (P&C) insurance from 2023 to 2030 range from $70 billion in the U.S. to $700 billion globally. Deloitte predicts that if as much as 20% of the U.S. personal auto market goes the embedded route by 2030, at least $50 billion in premiums may be diverted from the industry's traditional distribution channels.

Embedded insurance at its core involves integrating insurance seamlessly into the customer journey of non-insurance brands. AirBnB's introduction of AirCover, for example, provides hosts with liability insurance and property damage protection. While this shift in distribution may seem like a threat to insurers initially, it's far from it. In fact, embedded insurance has far-reaching implications for insurers, enabling them to tap into previously untapped risk pools and forge powerful partnerships that can reshape the industry.

Click here to read the full story.

Luke Sharrett/Bloomberg

What businesses need to know this hurricane season

Article by Grace Crane

Of all weather-related disasters in U.S. history, hurricanes have caused the most deaths and destruction, according to the National Oceanic and Atmospheric Administration (NOAA). Last year exceeded multiple weather records, including the Earth's warmest July ever recorded and the highest monthly sea surface temperature anomaly of any month in all of NOAA's records. The U.S. experienced 28 weather disasters that each reached $1 billion, for a combined total cost at over $93 billion.

So far this year, the U.S. saw the destruction of Hurricane Beryl, which started as a Category 5 storm and made landfall as a Category 1, in the Houston region of Texas, as well as Hurricane Debby, which made landfall twice in Florida first and then South Carolina only days later.

"When you're looking at the macro global environment from a property insurance perspective, one of the biggest drivers of global property insurance pricing and rates is the North Atlantic hurricane season," said Michael Prindle, senior vice president and leader of complex property at CAC Specialty. "Hurricane Beryl was the earliest Category 5 storm on record, so that set an ominous tone for the season."

Click here to read the full story.