Navigating AI in Insurance: Balancing Policyholder Concerns & Insurer Benefits
Insurers and policyholders are grappling with the integration of AI into underwriting and claims processes, revealing a divide in attitudes toward this technological advancement. Chris Lafond, CEO at Insurity, emphasizes the importance of understanding consumer sentiment toward AI, noting a need for a balanced approach that combines AI with human judgment to foster trust and acceptance. While consumers are becoming more accustomed to AI in everyday interactions, such as customer service chatbots, they express reservations about its use in decision-making roles within insurance. According to the 2024 AI in Insurance Report by Insurity, 50% of respondents oppose AI in claims management, and 45% are against its use in underwriting. Conversely, insurers view AI as a tool to enhance efficiency and service quality for policyholders. Sylvester Mathis, Chief Insurance Officer at Insurity, emphasizes the need for insurers to build trust and transparency around AI’s role in underwriting and claims processing. He suggests that transparent communication about AI’s benefits in improving accuracy and efficiency can help increase consumer confidence. Consumers fear that AI may erode the human aspect of insurance decisions, particularly in underwriting and claims management, where personal judgment plays a significant role. However, industry experts highlight that AI complements human expertise by streamlining routine tasks and allowing underwriters to focus on more complex cases. Scott Hawkins, from Conning, explains that AI systems triage applications, processing straightforward cases quickly and leaving complex ones for human underwriters. This approach combines the speed of AI with the nuanced judgment of experienced underwriters. Sathish Kumar Manimuthu, CTO at NeuralMetrics, underscores the importance of finding a symbiotic relationship between AI and human decision-makers in insurance. While AI can expedite processes and provide instant access to data, it cannot replace the intuition and judgment of human underwriters. Ultimately, the successful integration of AI into insurance requires a balanced approach that preserves human judgment while leveraging AI’s capabilities to enhance efficiency and accuracy. Insurers must prioritize transparency and communication to build consumer trust in AI’s role in underwriting and claims management. #SkyscraperInsurance #AIinInsurance #Underwriting #ClaimsManagement #ConsumerTrust #InsuranceTechnology #Insurity #NeuralMetrics #Conning #WeShareYourVisionForABetterTomorrow
Protecting California Homes in 2024: Navigating Insurance Challenges
In California’s dynamic homeowners insurance realm, staying proactive is paramount. With over two decades of experience in insurance advising, I’ve observed the myriad hurdles and opportunities homeowners encounter. This article aims to illuminate the current landscape and offer practical steps for safeguarding homes while managing costs effectively. The Current Landscape:Since 2022, California’s homeowners insurance market has faced substantial upheaval. Ten major insurers have either halted or severely restricted new policy applications, introducing instability and uncertainty. Understanding Factors at Play:Hyperinflation, heightened wildfire risks, and surging reinsurance premiums have prompted insurers to reassess their risk exposure. Additionally, escalating construction material costs influence home rebuilding expenses and, consequently, insurance premiums. The California Department of Insurance’s reluctance to approve rate increases has further impacted insurers’ market participation decisions. The Rise of Wildfire Risk:Wildfires remain a significant threat in California. While most home insurance policies cover wildfire damage, securing coverage in high-risk areas can be challenging. Insurers may impose exclusions, high deductibles, or caps on wildfire/smoke damage, underlining the importance of proactive risk management. Proactive Measures for Homeowners:Despite challenges, homeowners can mitigate risks and secure affordable coverage: Mitigate wildfire risk by enhancing a home’s resistance.Explore surplus lines carriers and specialty insurers for flexible underwriting criteria.Regularly review and update policies to reflect home improvements or changes.Bundle home and auto insurance for potential savings and better negotiation leverage.Consult experienced insurance advisors for personalized coverage solutions.Additional Tips for the Hard Market:Enhance home security, maintain clear brush areas, consider wind mitigation devices, and understand mudflow coverage under flood insurance policies. In Summary:Navigating California’s homeowners insurance demands vigilance and adaptability. With regulatory changes, market dynamics, and environmental threats at play, homeowners must remain dedicated to protecting their homes. #SkyscraperInsurance #RiskManagement #BuildingProtection #InsuranceTips #PropertyInsurance #WeShareOurVisionForABetterTomorrow
Outsmarting Vishing: Striking a Balance between Emotions and Logic for Enhanced Protection
In the ever-evolving landscape of cyber threats, fraudsters are adept at exploiting vulnerabilities through various tactics, including vishing, or voice phishing. Unlike traditional phishing emails or texts, vishing targets victims over the phone, making it a particularly insidious form of cybercrime. Cybercriminals employ a range of techniques, including spoofing, spamming, and robocalls, to deceive individuals and extract sensitive information or financial gain. With over 4,000 ransomware attacks occurring daily, according to the FBI, the stakes are higher than ever. The perils of vishing are evident in real-life scenarios where victims, including well-informed individuals, fall prey to emotional manipulation. In one instance, a financial writer shared her harrowing experience of succumbing to a vishing scam, resulting in a significant financial loss. The success of vishing lies not in sophisticated technology but in exploiting human emotions and psychology. To combat vishing effectively, insurers must prioritize employee training and policyholder education. Recognizing vishing red flags, such as unusual requests or a heightened sense of urgency, is essential. It’s crucial to verify the authenticity of callers, especially when dealing with sensitive information or financial transactions. Javvad Malik, a security expert, emphasizes the importance of remaining vigilant and questioning unusual phone calls. Vishing actors often employ tactics to appear legitimate, such as providing fake claim numbers or becoming agitated when questioned. By staying calm and applying critical thinking, individuals can thwart vishing attempts and protect themselves from falling victim to cyber fraud. For comprehensive cybersecurity solutions and expert guidance, trust Skyscraper Insurance. We’re committed to safeguarding your digital assets and empowering you to navigate the complex landscape of cyber threats. #VishingProtection #Cybersecurity #SkyscraperInsurance #RiskManagement #FraudPrevention #EmotionalIntelligence #WeShareYourVisionForABetterTomorrow
🌞 Solar Panel Popularity Demands Better Property Valuations
As skyscrapers increasingly turn to solar energy to reduce their carbon footprint and operational costs, ensuring accurate property valuations becomes paramount for effective insurance coverage. In 2023, solar power accounted for 5% of the world’s electricity, a figure projected to grow significantly in the coming years, driven by both environmental concerns and economic incentives. The 2022 Inflation Reduction Act further incentivizes smarter energy use, with solar energy playing a pivotal role in meeting sustainability goals and reducing reliance on traditional energy sources. However, determining the value of properties with solar installations isn’t always straightforward. Factors such as available space, rooftop geometry, and orientation all influence the practical power generation capacity of solar panels, complicating the valuation process. Emre Karagozlu, director of renewable energy valuation at JLL, suggests that the Discounted Cash Flow (DCF) approach offers a solution by allowing detailed input for a more accurate appraisal that captures the benefits of solar panels effectively. Accurate valuations are crucial for various financial aspects, including financing, sales pricing, financial planning, and tax considerations. A precise valuation ensures that potential benefits, such as specialized tax credits and depreciation valuations, are appropriately accounted for, optimizing the return on investment for property owners and investors. Navigating the complexities of solar panel valuations is essential for maximizing the benefits of solar energy adoption in skyscrapers and commercial real estate properties. By leveraging innovative valuation techniques and staying abreast of evolving industry standards, property owners can ensure that their investments in renewable energy infrastructure are accurately reflected in their insurance coverage, contributing to a more sustainable and resilient built environment. SkyscraperInsurance #SolarEnergy #PropertyValuation #RenewableEnergy #FinancialPlanning #ESG #Sustainability #SolarPanelInstallation #WeShareYourVisionForABetterTomorrow #GreenBuilding #CommercialRealEstate #InsuranceCoverage
🏢 Exploring Small Business Insurance Costs in 2024
Understanding the landscape of small business insurance costs is essential for companies seeking comprehensive coverage in 2024. As businesses continue to navigate the evolving risks and uncertainties of the modern economy, having adequate insurance protection is more critical than ever. Here’s an in-depth look at the factors influencing small business insurance costs and strategies to optimize coverage: 💰 Cost Factors: Small business insurance costs primarily depend on the policies you buy and the specific risks your business faces. While general liability insurance remains the most common and affordable policy, other factors such as industry risks, business size, claims history, and geographic location all play significant roles in determining premiums. Businesses with higher exposure to risks, such as those with frequent public interaction or a history of claims, may incur higher insurance costs to mitigate potential liabilities. 📉 Impact of Risks: Insurance premiums reflect the likelihood of encountering risks associated with your business operations. For instance, businesses operating in industries prone to accidents or lawsuits, such as construction or healthcare, may face higher insurance premiums due to elevated risk levels. Similarly, businesses with valuable assets or extensive public interaction may require more comprehensive coverage to protect against potential losses. 📊 Average Premium Costs: While insurance premiums vary based on the types of policies purchased and individual business characteristics, understanding average premium costs can provide valuable insights for budgeting purposes. On average, monthly premiums for common small business insurance policies include: General liability insurance: $42Workers’ compensation insurance: $45Business owner’s policy (BOP): $57Cyber insurance: $145Commercial auto insurance: $147Errors and omissions insurance (E&O): $61Professional liability insurance: $61Directors and officers insurance (D&O): $138Commercial umbrella insurance: $75Commercial property insurance: $67Employment practices liability insurance (EPLI): $222🔄 Factors Affecting Costs: Policy limits, deductible amounts, business size, industry risks, and location all impact insurance costs. Choosing higher coverage limits or deductibles may affect premiums, as well as the insurance company selected. Additionally, businesses with comprehensive risk management strategies and a history of minimal claims may qualify for lower insurance rates. 💡 Cost-Saving Strategies: While insurance is a necessary expense for businesses, there are several strategies to optimize coverage and reduce costs. Shopping around for competitive quotes, bundling policies to access discounts, making annual premium payments to save on fees, maintaining continuous coverage to avoid gaps in protection, and implementing robust risk management practices are all effective ways to manage insurance costs while safeguarding your business. Navigating small business insurance costs requires careful consideration of your business’s unique needs and risk profile. By partnering with Skyscraper Insurance, businesses can access tailored insurance solutions and expert guidance to ensure adequate coverage and financial protection in an ever-changing business landscape. #SmallBusinessInsurance #RiskManagement #SkyscraperInsurance #WeShareYourVisionForABetterTomorrow
🏙️ Business Insurance Risks in 2024
As we stand on the threshold of a new year, the business landscape reflects both the resilience and fragility of modern enterprises. 2023 bore witness to a myriad of challenges, prompting a collective reassessment of risk management strategies. As businesses brace themselves for the uncertainties that lie ahead, it becomes imperative to delve deeper into the evolving insurance landscape and proactively address potential pitfalls. In an era marked by increasing climate volatility, the specter of natural disasters looms large over businesses of all sizes. The traditional distinction between primary and secondary risks has blurred as severe storms, wildfires, and other calamities wreak havoc with alarming frequency. The record-breaking surge in billion-dollar disasters across the U.S. underscores the urgency for organizations to fortify their resilience against the unpredictable forces of nature. The advent of per- and polyfluoroalkyl substances (PFAS) heralds a new frontier of environmental risk management. Dubbed “forever chemicals” for their persistent nature, PFAS compounds pose multifaceted challenges due to their toxicity and widespread contamination. Regulatory efforts to curb PFAS exposure are gaining momentum globally, prompting insurers to reassess their coverage policies. As businesses confront the prospect of restricted coverage and heightened liability, proactive measures to mitigate PFAS-related risks assume paramount importance. In an era of heightened corporate accountability, Environmental, Social, and Governance (ESG) considerations have emerged as pivotal determinants of organizational success. Investors, regulators, and consumers alike scrutinize companies’ ESG practices, demanding greater transparency and accountability. The proliferation of ESG reporting requirements, particularly in jurisdictions like California, underscores the imperative for businesses to align with evolving standards. Failure to adapt to these evolving regulatory landscapes risks not only reputational damage but also legal and financial repercussions. Turning Challenges into Opportunities: Amidst these multifaceted challenges, there exists a unique opportunity for businesses to redefine their approach to risk management. By embracing a holistic and forward-thinking strategy, organizations can not only navigate the complexities of the insurance landscape but also leverage emerging trends to drive sustainable growth. Collaboration with seasoned insurance professionals and strategic alignment with industry best practices are indispensable in safeguarding business continuity and ensuring long-term resilience. As we embark on the journey into 2024, let us embrace the spirit of innovation and resilience, charting a course towards a future defined by opportunity and prosperity. SkyscraperInsurance #RiskManagement #BusinessInsurance #2024Outlook #WeManageRisksForYourSuccess #WeShareYourVisionForABetterTomorrow
Insurance Fraud: A Persistent Threat in 2024
Insurance fraud continues to plague the United States, causing significant financial losses to businesses, insurers, and consumers alike. This deceptive practice involves intentional deceit throughout the insurance process, from policy purchase to claims settlement. Among the various sectors, health care insurance fraud, particularly in Medicare and Medicaid, emerges as the most financially burdensome, closely followed by life insurance and property and casualty fraud. The ramifications of insurance fraud extend beyond financial losses, impacting consumers through increased premiums. However, there’s hope in technological advancements, with insurers investing in auto-fraud detection systems to detect and prevent fraudulent activities early on. A recent survey by the Coalition Against Insurance Fraud (CAIF) highlights the widespread adoption of these systems among insurers, showcasing a proactive approach in combating fraud. Discover more about the costly types of insurance fraud, common schemes, and how to safeguard against becoming a victim. Insurance Fraud Statistics in FocusInsurance fraud inflicts staggering financial losses annually in the U.S., with health care insurance fraud leading the pack in terms of financial impact. Here’s a snapshot of the statistics: An estimated $308.6 billion is lost to insurance fraud annually in the U.S.The average consumer bears the brunt, facing an estimated $900 increase in premiums due to fraud.Health care insurance fraud tops the charts, costing consumers approximately $105 billion annually, followed by life insurance fraud ($74.7 billion) and property and casualty insurance fraud ($45 billion).Types of Insurance FraudInsurance fraud takes on various forms, targeting both individuals and insurers. Here are some prevalent schemes: Hard Fraud: Deliberate fabrication of losses to obtain insurance claim settlements, such as intentional arson or vehicle destruction.Soft Fraud: Involves legitimate claims but with deceptive elements, like inflating a legitimate claim or omitting information on applications to lower premium costs.Combatting Insurance FraudPrevention is key in mitigating the impacts of insurance fraud. Here’s how individuals can protect themselves: Verify potential insurers and work with licensed, reputable companies.Thoroughly complete applications, avoiding the temptation to provide false information.Review policy details meticulously upon receipt and keep records of all insurance-related documents.By staying vigilant and informed, individuals can play a vital role in curbing insurance fraud and safeguarding their interests. Join us in the fight against insurance fraud for a more secure future. #SkyscraperInsurance #ProtectingDairyManufacturers #PeaceOfMindCoverage #RiskManagementSuccess #WeShareYourVisionForABetterTomorrow
Industrial Environments: Vulnerabilities to Cyberattacks in the Digital Age
In the age of digitalization, industrial complexes face unprecedented challenges in safeguarding their operational technologies (OT) against cyber threats. Outdated equipment and open networks create prime targets for cybercriminals seeking to exploit vulnerabilities and disrupt critical processes. Minimizing network visibility to mitigate the severity of attacks.Enhancing staff training to recognize and counter social engineering tactics.Developing robust cybersecurity policies and procedures.Implementing appropriate technologies to prevent and mitigate cyber threats.Training employees on incident response protocols.Leveraging specialized tools for monitoring industrial networks and detecting anomalies.Integrating Security Information and Event Management (SIEM) systems for early detection and response to cyber incidents.By proactively addressing these weaknesses, industrial complexes can bolster their cybersecurity posture and effectively mitigate the risks posed by cyber threats in today’s digital landscape.
Cyber Insurance Market Outlook 2024: Insights from OAC
Explore the latest insights on the cyber insurance market for 2024, including growth projections and key risk factors, as outlined by OAC experts Despite anticipated growth in the cyber insurance sector for 2024, OAC, a leading actuarial consultancy within the Broadstone Group, forecasts a nuanced market outlook due to emerging concerns potentially leading to significant loss events and accumulation risks. According to OAC’s Insurance Risk Monitor, 2023 witnessed unprecedented expansion in global cyber insurance business volumes. Munich Re analysts project a substantial surge in demand for cyber insurance over the next decade, with annual premium volume expected to increase by over 20% globally between 2019 and 2022. Moreover, S&P forecasts premium growth rates to soar as high as 25% annually. The surge in demand spans various economic sectors, with heightened interest from industries handling personalized data, confidential information, electronic transactions, and online services. Providers of critical infrastructure seek insurance expertise to mitigate cyber risks effectively. While the rating environment remains competitive, OAC’s non-life consulting team asserts that current rates are generally adequate for delivering underwriting profits. The introduction of exclusions for state-backed cyber-attacks on standalone policies in August 2022 prompted some business to migrate from Lloyd’s to other markets. However, this shift has not notably dampened overall premium volume increase, potentially improving rate adequacy. Concerns over increased exposure to cyber risks stem from various factors, including advancements in AI technology empowering cyber-criminals, heightened geopolitical tensions leading to state-sponsored attacks, and the proliferation of connected devices amplifying the complexity of cyber security management. Bharat Raj, Head of London Markets at OAC, emphasizes the importance of engagement with policyholders, coverholders, and cedants in ensuring strong underwriting performance. He highlights the role of actuaries and risk managers in navigating the evolving cyber risk landscape, emphasizing scenario analyses and actuarial deep dives as essential tools for understanding tail risk. As the cyber insurance market continues to evolve, collaboration between insurers, policyholders, and risk management experts remains crucial in effectively mitigating cyber risks and sustaining underwriting profitability.
Viewpoint: 5 Global Insurance Trends You Need to Know About in 2024
In the insurance world, 2024 brings forth many challenges and transformative trends. From the escalating global risks, such as climate change and cyber threats, to the evolving role of insurers as societal safety nets, the industry is on the brink of significant change. Here are five global insurance trends you must watch out for in the new year. 1. Investing in Proactive Risk Management Insurers are pivoting towards proactive risk management, recognizing the increasing severity of global risks. It is no longer sufficient to look to reactive measures to reduce loss costs, instead the industry has turned its attention to the prevention of losses before they occur. Embracing cutting-edge technologies, insurers are leveraging AI and analytics to detect potential threats early on. A prime example is the integration of sensors and automatic-activation devices which provide early identification and mitigation of looming disasters. This shift underscores the industry’s commitment to being more than just a financial safety net, emerging as a proactive guardian dedicated to minimizing risks and ensuring a secure future for insureds. Moreover, this proactive stance positions insurers at the forefront of innovation. By staying ahead of potential risks, insurers not only protect policyholders but also contribute to the industry’s overall stability. This strategic approach fosters a culture of anticipation and preparedness, transforming insurers into proactive risk prevention advocates. As technology evolves, insurers explore novel ways to harness data, artificial intelligence, and advanced analytics, reinforcing their role as vigilant custodians of financial security and societal well-being. 2. Customer-Centric Evolution: Tech-Infused Transformation A seismic shift towards a customer-centric model is redefining the insurance landscape. This evolution requires insurers to embrace advanced technologies and undergo a cultural transformation. Exploring the potential of AI and generative AI tools for risk assessment, the industry aims to fine-tune large language models for specific roles. By leveraging these advanced technologies, insurers seek to create intricate and highly specialized language models tailored for specific roles within their organizations. It involves a nuanced approach where AI algorithms are not just deployed broadly but are precisely calibrated to fulfill distinct functions, enhancing the precision and relevance of risk assessment processes. Fine-tuning large language models signifies a departure from one-size-fits-all solutions. Insurers recognize the need for a more nuanced and role-specific application of AI, allowing these models to adapt to the unique requirements of various facets of the insurance sector. This approach ensures that the benefits of AI go beyond generalization, providing targeted and practical solutions that address the intricacies of risk management in a rapidly evolving landscape. As insurers navigate this technological frontier, the emphasis is on adopting AI and its strategic and tailored integration to enhance overall efficiency and decision-making. While this customer-centric approach promises enhanced experiences, it also introduces challenges. Insurers must carefully navigate the delicate balance between technology adoption, regulatory considerations, and the reliability of AI-generated decisions. 3. M&A Dynamics in Flux: Adapting to Economic Headwinds Mergers and acquisitions (M&A) within the insurance sector have experienced a slowdown driven by macroeconomic factors. While the decline since the second quarter of 2022 is evident, signs of change loom on the horizon. As interest rates and inflation show signs of easing, a potential upswing in M&A deals in 2024 becomes plausible. Notably, insurance technology companies (insurtechs) remain pivotal in acquisition activity. Traditional carriers recognize insurtechs as instrumental in implementing transformative solutions across the value chain, signaling a broader industry acknowledgment of the critical role technology will play in its future. Moreover, this shift in M&A dynamics is not just a reaction to economic headwinds but a strategic alignment with the changing landscape. Insurers are increasingly viewing insurtechs as tools for overcoming challenges and as partners in shaping the industry’s future. This collaboration signifies a forward-looking approach, where innovation and technology become the driving forces behind staying competitive and agile. The industry’s resilience is evident as it navigates economic uncertainties through strategic partnerships, preparing for a future defined by technological advancements and transformative endeavors. 4. Sustainability as a Driving Force: Shaping Tomorrow Beyond financial transactions, insurers are assuming the mantle of sustainability ambassadors. Despite waning Wall Street support for ESG, insurers have the burden of insuring catastrophic risks and as such have a heightened focus on societal and environmental impacts. Many insurers are leveraging their role as business advisors, to guide their customers towards decarbonization initiatives. Setting decarbonization goals and aiding clients in transitioning to net zero, some insurers are leveraging their risk assessment and management expertise to influence executive decisions and strategies across industries. It reflects a commitment to sustainability and acknowledges the interconnectedness of risks in our globalized world. Moreover, the industry’s scope extends beyond traditional risk coverage. Insurers actively evaluate and reshape underwriting and investment portfolios to align with sustainability goals. This strategic realignment is not just a trend; it’s a fundamental repositioning of the insurance sector as a catalyst for positive change. Insurers contribute to a better workplace, marketplace, and society by integrating sustainability into their core missions. As the world grapples with climate change and social equity challenges, insurers are at the forefront of catalyzing positive transformations. The industry’s commitment to sustainability goes beyond rhetoric; it’s a proactive effort to shape a future where insurance mitigates risks and actively contributes to a more sustainable and resilient global ecosystem. 5. Regulatory Changes and Enhanced Reporting Requirements In 2023, insurers had to change their accounting disclosures for long duration contracts and to reflect the global change in the acceptability of benchmarked reference rates. The effective date for accounting rules on long term insurance and annuity contracts (US GAAP LDTI and IFRS 17) which required publicly traded insurers (other than smaller reporting companies) to adopt the guidance for fiscal years beginning after 15 December 2022 (i.e., 2023 for calendar-year insurers) and for interim periods therein and for privately held and mutual companies to comply by 2025. The rule changes how insurers account for and make disclosures about long-duration contracts and how insurers recognize and measure insurance liabilities and deferred acquisition costs. In addition, insurers are adapting to the effects