Insurance Analytics

Auto Insurers Team Up with Data Brokers It's not just auto manufacturers who are feeding data to insurance companies. Everything 's becoming one big morass. Did you know that Experian, the credit bureau, has their own auto insurance placard up now? 🔴 Big Brother's riding shotgun: Insurers are tapping data brokers for your driving dirt (nyt: https://lnkd.in/ewC4zg48) 🔴 LexisNexis and Verisk: The middlemen peddling your pedal-pushing patterns. (In the graphic below, you can see Verisk integrated directly into the workflow at USAA.) 🔴 GM, Honda, Kia caught with their hand in the cookie jar (err, data exhaust pipe, with class actions coming https://lnkd.in/eYhQQrp8) 🔴 Your lead foot, and all that data collection, could lead to higher premiums - even without accidents or a need to raise rates (this article will want to make you puke https://lnkd.in/ejiDgm2q) 🔴 Claims data is being feed direct to vehicle reports https://lnkd.in/eXx-eky5 "Despite existing rules and regulations, and the general expectation of privacy by consumers involved in this process, some of the PII captured and transmitted digitally during a claim is being used commercially in ways not anticipated or approved by claimants or the businesses involved in such claims, primarily auto insurers and collision repairers." Your car isn't just transportation anymore – it's a four-wheeled snitch sharing your driving habits. Automakers are working with data brokers, selling every turn, brake, and acceleration. And insurance companies are eager to buy this data to adjust your rates. Never had an accident? It doesn'matter. Hard braking at a yellow light? Speeding on the highway? Your "driving score" reflects every move, potentially raising your premiums. Most drivers are unaware of this surveillance, as automakers bury these details in fine print, expecting you to click "I agree" without reading. By the time you notice, your insurance bill might have already increased, and your data could be widely shared. So next time you drive your "connected" car, remember: your habits are being monitored and reported to your insurance company. 🛡️🚘 Andrea Amico, Kimberly L., Justin Sherman, Suzanne Marie Smalley, Christian Kameir #DataBrokers #Autolnsurance #Surveillance #Privacy #BigBrother #DrivingData #ConsumerRights #DataPrivacy #InsurancePremiums #ConnectedCars

As an investigative reporter, when I come across things that I think are wrong in the world, I start looking into them and if the facts suggest that there is indeed a problem, I write a story, hoping that it will lead to change. Last year, the thing that I looked at was automakers collecting data about how and where people were driving their cars. And change has come. The most egregious practice I found was at General Motors, which was collecting information -- as often as every 3 seconds -- from people's cars about when they sped, slammed on the brakes, or made harsh turns, as well as when, where, and how far they drove. G.M. was selling that information to the insurance industry which was using it to give people risk scores that could affect whether they could get auto insurance and how much they would pay for it. The vast majority of consumers had NO IDEA this was happening until I reported it in March of last year: https://lnkd.in/eAc_cTSh This line of reporting has had real impact. There is a federal class action lawsuit happening, but also, this week the Federal Trade Commission banned G.M. from selling individual drivers' behavior and location for five years, and put the automaker under a 20 year consent decree saying, essentially, it can't do creepy stuff like this with people's data without their explicit consent: https://lnkd.in/ey6FxP4q Another happening this week: The Texas attorney general, which has also sued G.M. for privacy violations, filed a lawsuit against an Allstate subsidiary called Arity: https://lnkd.in/ec2EEKQp. Arity was doing something similar -- gathering data about people's driving from smartphone apps, such as Life360, and selling it to insurance companies, a practice I wrote about in June: https://lnkd.in/eucJKfnX I'm not opposed to people's driving being monitored to determine their insurance rates if they are aware and consent to it. It could lead to safer roads. BUT THEY NEED TO KNOW THAT IT IS HAPPENING.

Let’s understand a very important insurance concept that is CAT Modeling - Catastrophe (Cat) Modeling in insurance is a method used to assess and quantify the potential financial risks associated with catastrophic events such as natural disasters (e.g. earthquakes, hurricanes, floods) or large-scale man-made events (e.g. terrorism). The goal is to estimate the probability and severity of such events and to predict the potential impact on insurance portfolios, helping insurers better manage risk, set premiums, and plan for reinsurance. Key Components of Cat Modeling: Hazard Models: These models simulate the occurrence and intensity of catastrophic events. For example: Earthquake Hazard Models: Predict the likelihood and intensity of earthquakes in a region. Exposure Data: This refers to the data about the assets or properties that could be affected by a catastrophe, including: Location of buildings. Vulnerability Models: These models assess how likely different assets are to be damaged by a specific type of catastrophe. For instance: Flood Vulnerability: How susceptible various structures are to flooding depending on factors like elevation, construction type etc. Financial Impact Models: These estimate the potential financial losses caused by catastrophic events, such as damage to property, business interruption costs, and claims payouts. Loss Estimation: After applying hazard, exposure, and vulnerability data, cat models calculate the probable loss, which helps in determining insurance premiums and reinsurance needs. Earthquake Cat Modeling: Scenario: An insurance company insures properties in California, which is highly prone to earthquakes. Cat Model Use: The company applies earthquake cat models that use geological data to predict the likelihood of earthquakes in various areas. The model considers factors like fault lines, soil types, and historical earthquake patterns. Outcome: The insurer can assess the probable losses from potential earthquake events, allowing them to set premiums that reflect the actual risk and adequately prepare for possible claims. Hope this helps! #catmodeling #insuranceconsultant #reinsuranceconsultant #p&cbusinessanalyst #insuranceanalyst #insurancesme #insuranceconsulting

Pricing sophistication & mutualisation & availability and affordability of coverages 🤔 ⬛️ We have been used to hear doubts about the impact of #telematics based pricing on mutualisation ▪️ assume that you have the ability to perfectly asses (in the reality we are not yet any near to perfection, however it is more accurate that any traditional risk assessment) the probability to claim a certain amount for each individual policy. It is still a probability, not a certainty ▪️the probability of each individual policy will contribute to the overall risk of the portfolio [AS IN ANY TRADITIONAL PORTFOLIO] ▪️the individually calculated premiums paid by all the policyholders in the portfolio will be cumulatively used to pay the claims of the the unlucky few who actually had an accident 👉🏻 MUTUALITY IS STILL THERE, it hasn’t gone anywhere 🔷 ok mutualisation isn’t eliminated, but what about availability and affordability of coverages? 🔹The usage of telematics data allows for better matching rates to risks [together with the promotion of safer driving behaviors and reduction of frauds], so contributes to offer a coverage at a lower price to a large part of the policyholders [many of the policyholders will pay a lower premium (higer affordability of coverage for many), a few will pay an significant higher premium (if they don’t become safer driver)] 🔹This means being able to profitably manage a book of auto business while increasing the availability and affordability of coverage 👉🏻 https://bit.ly/4eRjGkK. #iotinsobs 🟧 ok, but let’s make a theoretical scenario that you have an extremely granular understanding of the risk exposure and the regulator don’t put any limit to the level of surcharge, what about that small percentage of extremely risky drivers who would deserve and extremely high surcharge? Here my personal perspective to this last philosophical question 👇🏻👇🏻👇🏻

🕵️♂️Forget 007: Your Car is the New Spy, Using Your Driving Data Against You 📈 By 2030, over 95% of passenger cars sold are projected to feature embedded internet connectivity, with McKinsey estimating potential annual revenue of $250 billion to $400 billion from car-data monetization. Exciting prospects, right? But hold on, it's not all smooth driving ahead. 📰Recent reports reveal concerning practices in the automotive industry. General Motors (GM) has been sending driver data to insurance companies, which has been impacting customer rates. 📊For instance, a Seattle driver reported a 21% increase in insurance costs due to GM's OnStar Smart Driver, which collects data on braking, accelerating, and speeding. 🔒 Data Dilemma 📌According to CNBC, by 2030, car connectivity will enable manufacturers to offer safety features, predictive maintenance, and more. However, this also means increased data collection, raising privacy issues. 📌While some opt-out options exist, they're often buried in menus, leaving consumers unaware of their choices. 📌While car data might be useful for safety and functionality purposes, such as predictive maintenance to prevent part failures, some privacy experts say concerns persist as car companies share data with insurers and even venture into insurance themselves, potentially impacting rates based on driving habits. 🛑 Privacy Predicament Jen Caltrider of the Mozilla Foundation warns that excessive data collection by car companies leads to privacy breaches and the sale of sensitive information. A recent Mozilla report gave 25 major car brands failing marks for consumer privacy, signaling a dire situation. ⚖️ Legal Landscape 🔎In response to mounting concerns, the government is scrutinizing car privacy regulations. ⚖️General Motors, facing a consumer lawsuit, announced it ceased sharing driver data with data brokers collaborating with the insurance industry. GM emphasized its commitment to customer trust and is evaluating its privacy processes and policies. 🤔 What's Next? 📌With regulatory efforts underway to address data-sharing practices and privacy violations, the automotive industry is at a crossroads. As consumers, it's crucial to be informed and proactive. 📌Before using connected services, please consider your options for opting out and safeguarding your privacy. ⁉️Do you feel at ease knowing that your car data is being shared with insurance companies and potentially sold to third parties?😕 🛣️ #ConnectedCars #PrivacyMatters #DataEthics #emergingtech #technews #tech #linkedinnews #innovation #techeducation #technology #dataprivacy #trendingnews #breakingnews

On the 20th anniversary of Hurricane Katrina, we reflect not only on the catastrophic devastation and horrific loss of life, but also on the storm’s lasting impact and the lessons learned as an industry. Hurricane Katrina was a defining event for the insurance industry, and it reshaped how insurers prepare for, and respond to, disasters. As the costliest insured loss event in history, Katrina resulted in more than 1.7 million claims. Since then, insurers have invested heavily in innovation and technology, such as mobile claims centers, drones, digital tools, and more, to help speed up assessments and claims payouts when disaster strikes. Hurricane Katrina showed us that flood risk isn’t just a coastal issue—it’s a national one. Thousands of homeowners perceived to be ‘low risk’ for flooding did not have flood insurance, which resulted in massive uninsured losses and hindered the ability of families and communities to recover. New Orleans is still grappling with these lasting impacts as its population remains 20 percent lower than pre-Katrina levels. Flood insurance gaps continue to be a major exposure for homeowners across the U.S., and more work is needed to help close the coverage gap. Katrina also taught us that mitigation and resilience efforts are not optional—they are essential in order to save lives, limit costly damage, and protect local economies. This is more important today than ever before as climate change is escalating the risk landscape through more intense rainfall events, higher sea levels, and stronger storms. A major hurricane striking a highly populated metropolitan area could easily cause more than $100 billion in insured losses today. Insurers are updating catastrophe models to more accurately reflect our nation’s changing risk environment and help consumers better understand and manage their exposure. Two decades later, the insurance industry remains committed to building a more resilient future. Insurers are investing heavily in building safety research through the Insurance Institute for Business & Home Safety to help develop real-world, actionable solutions for consumers and communities. By working together with policyholders, lawmakers, governments, and all stakeholders, we can help prevent another tragedy of such magnitude and usher in a new era of preparedness and resiliency.

Telematics plays a significant role in auto insurance by providing insurers with real-time data about a policyholder's driving behavior. This data allows for more personalized and fair insurance pricing. Key aspects of its role include: 1. Usage-Based Insurance (UBI): Telematics devices or smartphone apps track driving habits such as speed, braking, acceleration, and mileage. Insurers use this data to calculate premiums based on how safely and frequently a driver operates their vehicle. 2. Risk Assessment: Telematics data helps insurers assess risk more accurately. Safer drivers can receive discounts, while riskier behavior may result in higher premiums. 3. Accident Reconstruction: In the event of an accident, telematics data can provide valuable information for claims processing and accident reconstruction, helping determine fault and expedite settlements. 4. Theft Recovery: Telematics can assist in locating stolen vehicles through GPS tracking, aiding law enforcement in recovery efforts. 5. Driver Feedback: Insurers can offer feedback to policyholders based on their driving data, encouraging safer habits and potentially reducing claims. 6. Customization: Telematics enables insurers to customize policies based on individual driving behavior, promoting fairness and affordability. Overall, telematics technology is reshaping the auto insurance industry by fostering safer driving practices and improving risk assessment, ultimately benefitting both insurers and policyholders.

New research from the Society of Actuaries Research Institute and Casualty Actuarial Society explores how insurers approach deterministic scenario analysis—a vital tool in today's complex risk landscape. This study examines how companies respond to a global IT disruption scenario, revealing key insights on operational risk, resilience strategies, and the value of tabletop exercises in enterprise risk management. Read the full report to see how the industry is preparing for tomorrow’s disruptions. https://lnkd.in/g_aCBrhv #ActuaryResearch #ERM #InsuranceIndustry #OperationalRisk #RiskManagement #ScenarioAnalysis #SOAResearch #CASActuaries #LeadershipInRisk

"Extreme heat is not just a weather event. It’s a silent, escalating disaster wreaking havoc on health, economy and infrastructure". Ricardo Lara, California’s Insurance Commissioner. 👉 Heat waves have become more intense, longer lasting and three times as frequent as they were 60 years ago. 👉 Injuries to construction workers were 20% higher when the temperature climbed above 95 degrees Fahrenheit, compared with milder days (Workers Compensation Research Institute). 👉 The damage caused by heat can lead to significant underwriting losses for insurers. Source: The Wall Street Journal A couple of own thoughts and ideas: ◾ Extreme heat, a byproduct of climate change is an escalating phenomenon, causing severe economic damages, which are increasingly excluded from insurance coverage. ◾ The unpredictability and frequency of extreme heat events can disrupt the core principles of insurability, resulting in insurance coverage exclusions rooted in fundamental changes in actuarial and risk assessment calculations. ◾ The exponential rise in temperatures and their associated phenomena have made future risk prediction models less reliable since the use of historical data and risk models is inconsistent to extreme weather events. ◾ Multi-sector heat-induced damages extend to human health leading to higher healthcare costs and lost productivity. ◾ Reinsurers are recalibrating their portfolios to limit exposure to climate-related risks leaving businesses and individuals vulnerable against climate-induced damages. ◾ Existing infrastructure is neither adaptive nor heat-resistant, exacerbating vulnerability, while escalating uninsured losses. ◾ Artificial intelligence and machine learning can improve predictive models for climate risk combining large datasets incl. historical weather patterns, satellite imagery, real-time climate data, providing insurers with advanced and enhanced predictive capability. ◾ Blockchain technology and smart contracts can be particularly beneficial in the context of parametric insurance streamlining operations, while increasing trust and reliability. ◾ IoT devices can monitor and proactively manage building temperatures in real-time optimizing energy use, while reducing strain on power grid. ◾ Geographic Information Systems (GIS) and remote sensing technologies allow for an enhanced spatial analysis of heat impacts. Insurers are able to capture a granular understanding of risk distribution towards more tailored and equitable coverage. ◾ Quantum computing enhances climate and financial risk modelling using multifactorial simulations to accurately predict climate patterns and extreme weather events, along with simulating molecular interactions to engineer material with superior thermal properties. #climatechange #extremeheat #extremeheatinsurance #climatechangeinsurance #climaterisk #climateriskmodelling #extremeheatinsurance #climatechangesimulations #climateriskscenarios #emergingtechnologies #climaterisktechnologies

Your car is spying on you… …or at least, your automaker is. And refreshingly, this isn’t a story about AI, it’s a story about plain old data. It turns out that when drivers enable optional features in their car apps, those apps are sharing telematics and other driver information with data brokers like LexisNexis and Verisk. Who then sell the data onto insurance companies. Who then use that information to adjust your rates. The issue here isn’t necessarily the transfer of data, it’s more the fact that it’s not always obvious to drivers that is what’s going on. Those data brokers often aren’t mentioned in the fine print of the data privacy policies being agreed to. And in some instances, impacted drivers then suffer from increased premiums, or worse, having coverage denied. While we might be inured to search engine and social media companies selling our data for profit, we are now going to have to consider the fact that the same thing is happening with information gathered from embedded technology in vehicles, internet-connected home appliances and smart TVs. Welcome to the future - a golden age where you are a target market of one. An age where your driving habits are being used against you, often without your knowledge. NYT Gift Article: Automakers Are Sharing Consumers’ Driving Behavior With Insurance Companies by Kashmir Hill https://lnkd.in/eVkeZ-2K