Looking back at industry leading insurance processes

The insurance industry has seen a process amplification in recent years, policyholders and regulators alike have been scrutinizing insurance company practices more closely – emphasizing the importance of due diligence in underwriting standards. But with the promises of improved efficiency that come with artificial intelligenceHow can insurers safely implement these tools?

Research published by Digital Insurance in January, polled 100 experts from carriers to brokers on their predictions for what 2024 will bring in terms of threats to industry growth, opportunities for digital transformation, growing use of AI and many others.

Operator and agency respondents agreed that using traditional AI and generative intelligence tools is useful, but 73% found it too risky to implement within their organizations.

Broken down by group, this opinion was prevalent among 83% of operators and 60% of agency professionals.

Another 68% thought it too risky to insure customers using AI in some capacity, which led to less of a difference of opinion between carriers and agency experts, with 71% and 66% agreeing, respectively.

John Romano, lead director of Baker Tilly’s financial services risk advisory practice, said that the safe implementation of AI-based tools in an insurance organization requires regular audits to continuously monitor their transparency and explainability.

“The transparency assessment will determine what data is used to arrive at an answer, and the explainability assessment will determine whether AI tools can provide clear and understandable reasons behind decisions,” Romano said.

Read more: Is technology making it easier to commit insurance fraud?

The increase in lawsuits against insurance providers in recent years, although not centered on the technology itself, highlights trend of increasing legal action involving business liability, business interruption and non-hurricane homeowners policies.

Lex Machina, a division of LexisNexis Companypublished his Insurance Disputes Report in June, covering the period 2021-2023. During that time frame, approximately $1.56 billion in total claims were awarded as approved class action settlements, as originally reported by Digital Insurance. Kaitlyn Mattson.

Romano stressed the importance of consistent communication between insurers and insureds as part of customer relationship management – ​​especially in anticipation of an impending claims event.

“In today’s insurance market, especially with the increasing frequency and severity of natural disasters, consumers fear they will not receive the payouts they expect for claims…At the same time, regulators are focused on ensuring that insurers take responsibility to policyholders, with concerns centered on both solvency and the fair treatment of consumers,” Romano said.

Read more: Carriers must inform policyholders of weather damage risks, says Nationwide P&C exec

Read on to explore some of the top lawsuits that have affected insurers in recent years and how they have affected businesses and consumers alike.