Weekly Wrapup: Regulators and insurers' 2018 tech plans go hand-in-hand
The Weekly Wrapup is an analysis of the week's insurance tech news from the editors of Digital Insurance.
Insurance regulators are starting to more closely align their efforts to modernize with those of the companies they oversee. Earlier this week, DI reported that the National Association of Insurance Commissioners (NAIC) has released a new three-year plan, “State Ahead: Strategy Plan 2018-2020,” aimed at equipping the organization with cloud capabilities, AI and self-service business intelligence tools for data storage and the launching of proof of concepts, among other use cases.
More than half of 36 regulators surveyed in a separate Deloitte study released in February also suggested insurers’ increased use of insurtech has impacted the NAIC’s view of emerging technologies.
“The NAIC has never experienced such a convergence of forces with the potential to reshape the industry. We need to evolve with the marketplace around us, lest we be left behind,” the NAIC says in its 30-plus page report.
The organization has now turned its attention to another topic of concern for insurers: distracted driving. The group has launched a new campaign, “Keep the Road Code,” right in time for Distracted Driving Month. The intent is to educate consumers through the NAIC’s InsureU website on the dangers of driving while using a smartphone.
According to the NAIC, 10% of all fatal accidents in the U.S. involve at least one distracted driver, resulting in 3,500 deaths each year. In addition to higher accident frequency, insurance premiums have skyrocketed as well, the NAIC says. The average annual premium paid by customers in 2009 was $787, a seven percent decrease from 2004. Rates have now increased every year since 2010.
"We know that there has been a significant increase in distracted driving accidents and fatalities since 2008," said Julie Mix McPeak, NAIC President and Tennessee Commissioner of Commerce and Insurance. "Accordingly, I've focused the NAIC's consumer education efforts this year on the prevention of distracted driving."
Insurtech investor Eon Venture Partners announced a new $100 million fund targeting early and growth stage companies. The news follows a record year for insurtech investment in 2017, according to CB Insights. Startups earned in excess of $2.3 billion last year, spanning 52 deals. The number is also a 36% increase from the $1.7 billion recorded in 2016 by the researcher.
Eos, formed in 2016, will also launch an insurtech innovation center in India in 2018 to accompany its offices in London and Philadelphia, it says. The independent VC firm has made eight insurtech investments so far in startups, such as RightIndem, a SaaS claims partner of XL Catlin, and Digital Fineprint, which enables insurers to link policyholders’ social media identity to historical records in order improve product marketing and customer retention.
Speaking of social media, Facebook, the world’s largest social networking site, has been under fire since news broke in March that swathes of company data were illegally obtained by British political firm Cambridge Analytica—which worked on Donald Trump’s 2016 presidential campaign, according to Bloomberg.
This comes at a time when social media analysis tools have gained significant traction among top insurers looking to thwart fraudulent claims, bolster underwriting and streamline distribution. A 2016 "State of Insurance Fraud Technology" report, conducted every two years by the Coalition Against Insurance Fraud, found two-thirds of carriers are leveraging social media sites, such as Facebook and Twitter for fraud detection.
A recent industry example is Allstate’s announced partnership with insurtech Carpe Data in November. The agreement enables the company’s claims adjusters to request on-demand background checks on policyholders using publicly available information. The insurtech then utilizes AI algorithms to scour social media sites, public databases and news outlets for proof of limited physical prowess or recent criminal activity.
But this week's Congressional hearings are likely to result in new federal regulations aimed at all companies that collect personal identifiable information, including carriers, data vendors and insurtechs. Experts predict U.S. lawmakers will be looking to implement data privacy statutes similar to those first established in Europe back in 2012—now rolled into GDPR. That means private information cannot be sold or reused in anyway, without permission.