Insurers respond to California wildfires

The Camp Fire in Northern California has become the most destructive and deadliest wildfire in state history, with a death toll of 42 to date. In the southern part of the state, firefighters are battling the Woolsey Fire, which has taken two lives so far. Up to a hundred people are still missing, according to local authorities.

I.I.I.’s California representative Janet Ruiz had advice for residents impacted by fires in this CNBC article.

Many insurers, like Farmers pictured above, have deployed mobile units to assist homeowners with filing claims and to distribute debit cards for living expenses.

Below are the top 10 homeowners insurers in California.

 

“Deepfakes”: a looming nightmare for insurers?

Picture a world where sophisticated machine-learning algorithms generate hyper-realistic video footage of you doing things you’ve never done and saying things you’ve never said.

If that sounds like a nightmare, I’ve got bad news for you. That world is increasingly our world. Those videos, called “deepfakes,” are already being created, often for unsavory purposes.

(You can watch a deepfake video of former president Obama giving a fake speech here.)

Anyone can download the software needed for DIY deepfake videos. And even though deepfake technology hasn’t yet been perfected, it’s getting better every day.

This has obvious implications for national security. Indeed, congressmen have already expressed concerns about the use of deepfakes as weapons of international intrigue.

What about insurance – could deepfakes be the next frontier of risk? It’s not hard to imagine some scenarios:

  • Cyber: A deepfaked audio recording of a CFO directs a company’s billing department to route thousands of dollars to a fake bank account.
  • Directors and officers: A deepfake video is created of a large corporation’s CEO reporting (fabricated) negative financial results, leading to a significant drop in the company’s stock.
  • Employment-practices liability: An employee is “deepfaked” to portray him making disparaging remarks about coworkers and engaging in harassment.
  • General liability: Someone creates a deepfake video of a person slipping in a grocery store and “injuring” herself, leading to allegations of negligence.

I’m sure you could think of a hundred more like these. How will we adapt to a world where video and audio can’t be trusted to tell the truth? What if deepfakes become too sophisticated to detect – how will this impact insurance claims and fraud prevention?

If the worst comes to pass, deepfakes could soon become an insurance nightmare.

But hopefully, the best case scenario happens instead: detection technology keeps up with deepfake advancements – and keeps everyone honest.

From the I.I.I. Daily: Our Most Popular Content, November 2 to November 8

Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.

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The state of the Insurtech market 2018

S&P Market Intelligence has recently published a report on the state of the Insurtech market, and on November 7 the company held a briefing on the subject. Panelists included Slice CEO Tim Attia, Drew Aldrich, Principal at American Family Ventures and the report’s author, Research Analyst Thomas Mason.

Here are some of the trends observed by S&P in the insurtech space:

  • Insurtechs are still in very early stages and that means it could take up to seven years before the recent crop of successful insurtechs go public and return investor capital.
  • Digital agencies and tech-focused underwriting generated the largest amount of deal value in the first half of 2018.
  • Companies that have full control of distribution, underwriting and servicing their policies (full-stack companies) have amassed substantial funding.
  • Disruption of the sort wreaked by Netflix on the entertainment industry is unlikely for the many lines of insurance (auto for instance) that are already dominated by the direct distribution model.
  • In commercial insurance where direct sales are not as prevalent, large incumbents are vigorously competing with startups for direct sales.

The panelists had this advice for incumbents who are looking to compete with nimble insurtechs:

  • Prediction is the next big frontier.
  • Spin off a separate digital insurer, it’s a lot easier than changing existing systems, silos and layers.
  • Embrace a culture of entrepreneurship and willingness to experiment.
  • Consumer expectations are changing quickly – the disruption could have happened already, and we don’t even know.

 

 

Drivers are underprepared for car accidents, new survey finds

Nobody wants to be in a car accident, but they happen to almost all of us. According to a new survey from Esurance, 77 percent of U.S. drivers have been in at least one accident (which aligns well with previous research showing the average driver will be in 3 to 4 accidents in a lifetime).

The survey also found:

Drivers aren’t taking post-accident precautions to ensure their well-being.

  • More than half neglected to file a police report or document the damage.
  • Only 42 percent talked to the police after their incidents.
  • And, of respondents who suffered injuries in an accident, fewer than half (47 percent) sought medical attention.

And drivers are underprepared before an accident even happens.

  • 75 percent of drivers believe they’re well covered by insurance but may have gaps since 3 out of 4 drivers experience some out-of-pocket costs (and 16 percent know they have coverage gaps but choose to take the risk).

Ideally no one should be involved in a collision, but since car accidents are still a fact of life, the I.I.I. has advice on steps to take after an accidents here.

 

Like Uber, but for lawsuits

As anyone who has rented an apartment in New York City knows, your security deposit is basically a gift to your landlord. Good luck ever seeing it again after you move out.  

There are a few theories for how to avoid this. Mine has been to pray fervently for divine intervention, which worked out…once. An acquaintance tells me to simply never pay the last month’s rent. (The I.I.I. does not in any way endorse this strategy.) 

But one strategy no one suggests is to contest the withholding of your deposit in small claims court. Because you’ll end up spending more money than your original deposit was worth. 

If only there were an app for that… 

Turns out, there is. DoNotPay is an app that uses algorithms to determine whether someone has a case in small claims court – and will help file legal documents. From contesting parking tickets to resolving landlord disputes to filing lawsuits for data breaches (like Equifax), the app apparently has about a 50 percent success rate in court.  Without recourse to a single lawyer. And it’s free. 

This sounds like a dream for individuals who need legal help they can’t currently access. Because lawyers ain’t cheap.  

But is there a sinister side to this? The U.S. is a notoriously litigious society. The plaintiffs bar has been very creative in winning massive verdicts that many argue are distorting the tort system. It’s been estimated that the costs of torts in 2016 were $429 billion – or about 2.3 percent of the GDP of the U.S. Reformers would argue that there’s an entire cottage industry whose primary purpose is to sue anyone and anything with sufficiently deep pockets to justify the effort.  

Could an app like DoNotPay, which today helps the little guy fight his unjust parking ticket, one day turn into the means to seamlessly litigate every aspect of our lives at the push of a button? Only time will tell.  

In the meantime, I just got a parking ticket in Brooklyn, because of course I did. Alexa, open DoNotPay.  

From the I.I.I. Daily: Our Most Popular Content, October 29 to November 1

Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.

 

 

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Halloween is less scary with insurance

As we put the finishing touches on our costumes, here is a short roundup of interesting and spooky Halloween-related news from around the web.

  • Inc. magazine published some good tips for business owners on how to prevent getting burned by liability claims stemming from Halloween-related events at work.
  • I.I.I.’s own Michael Barry provided CNBC with advice for consumers on how to review their insurance policies for potential gaps to help avoid any financial shock from holiday mischief and mishaps.
  • Franz Kafka’s career in insurance is illuminated in this Contingencies article. The writer, famous for his surreal and arguably scary worldview, worked as an insurance agent at the Workers’ Accident Insurances Institute of the Kingdom of Bohemia in Prague from 1908 to 1917. He is described as a successful and valued employee who cared deeply about his work.
  • And speaking of writers, Edgar Allen Poe’s poem “The Bells” was once used in an ad for fire insurance.

The I.I.I. has tips for safeguarding your home against Halloween mishaps.

Highlights from the 2018 Society of Insurance Research Annual Conference

I recently spent two days (10/22-10/23) at the Society of Insurance Research (SIR) Annual Conference in New Orleans where a line-up of insurance executives and intelligence analysts talked about ways the insurance industry can leverage research, analytics, competitive intelligence and analysis techniques to get past the hype and develop effective strategies to move forward.

Here are just a few of the many interesting insights gathered at the extraordinarily intensive conference.

Digital Transformation

Implementing digital transformation will require an integrated approach across departments as well as a companywide culture shift. It will not work if executives are on-board but middle managers are not, said Robert Mozeika, Munich Re’s innovation executive.

Competitive intelligence

Competitive intelligence is not just about understanding what your competition is doing, but having a deep understanding ever changing market conditions, said Dr. Ben Gilad of the Academy of Competitive Intelligence. He suggested companies test strategic moves through role playing, with participants taking the parts of high-impact players.

Gilad had some advice for us information professionals as well – unless you can turn your insightful intelligence-gathering reports into action, they are useless. That’s why we need to become the trusted “sense maker” to our company’s top decision makers.

Innovation by insurance companies – customer experience

This year, SIR conducted a consumer survey on innovation by insurance companies. It found that auto and homeowners insurers were considered “pretty innovative” by 40 percent of respondents when compared with banks which were considered “pretty innovative” by 46 percent. This is a “pretty interesting” finding! When was the last time you heard about a new and exciting bank product?

Interestingly, there was a whopping 365 percent increase in the percentage of people reporting an increase in communication from P/C insurers regarding simplicity and ease of use of their products. It looks like people don’t equate improvements in ease of use and simplicity with innovation.

When asked which three things insurance customers would change through new technology or innovation, the top three were: privacy, ease and personalization in that order.

Artificial Intelligence (AI)

Reliance on AI is expected to increase in the next 20 years. How will AI change the world of insurance? According to Peter Grimm, CEO of Cipher Systems, it will involve:

  • The explosion of data from connected devices leading to new product categories, more personalized pricing and increasingly real-time service delivery.
  • Increased prevalence of physical robots (drones, self-driving cars, autonomous farming equipment) will lead to shifting risk pools, changing customer expectations and new products and channels.
  • Standardized data frameworks and formats will lead to highly connected data ecosystems between multiple private and public entities across many industries.
  • Advances in cognitive technologies (machines that mimic human learning) will enable products that re-evaluate risk in real time based on consumer behavior.

Chatbots and roboadvisors are already making roadways into the insurance industry and according to a survey by AXA; 34 percent of millennials want to interact with their insurer online only which shows that the market is prime for robo-advisor interaction.

Reading List

Here are a couple of books recommended by speakers that I can’t wait to dive into.

Geeta Wilson, vice president, consumer experience at Humana, recommends Competing Against Luck: The Story of Innovation and Customer Choice by Clayton M. Christensen. The author, a Harvard Business School professor who coined the term “disruptive innovation”, introduces the concept of “jobs to be done” theory in this book.

According to the theory, instead of asking customers what they want, companies would do better to get a deep understanding of what their customers do at the point when they require their product. Then the company needs to invent ways to help them do it easier, better and faster. Companies need to become obsessed with solving their customers’ problems or as Geeta put it, they need to “fall in love with the problem.”

Another book I look forward to reading is Professor Al Naqui’s The Beaver Bot of Yellowstone: Pure-Play Leadership for the Artificial Intelligence Revolution.  This book, targeted towards business leaders, promises to be an accessible guide through the mysterious and complicated cognitive transformation that firms are in for if they want to stay alive in the dawning age of AI.

 

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