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Why Not a Bot? Adjuster Bots for Connected Cars

Why Not a Bot? Adjuster Bots for Connected Cars

We’re not quite there yet. But there is a path to get there—probably in only a few years.

We’re already at the point where fender bender claims can be estimated with a set of smart phone photos (offered by esurance and many other carriers)

But what more serious accidents which involve damage to a car’s mechanical systems? 

Here is one element of an Adjuster Bot solution: electonic control units, ECUs. For years, automobiles have been manufactured with dozens ECUs which control, monitor, and diagnose a broad away of systems within the vehicle, including its engine, power train, brakes, steering, airbags, electronic stability control. Information from ECUs can be accessed from vehicle’s On-board Diagnostic Port (OBD-II). The primary purpose of the OBD-II is to enable maintenance and repair of the various systems. (Telematics devices–aka dongles–plugged into the OBD-II port have been the primary method to gather and transmit telematics data to insurers.)

A second critical piece of the puzzle falls into place: communication. Automobile manufacturers are racing towards creating connected cars—typically using 3G or even 4G LTE cellular modems.

So this is what an automobile Adjuster Bot ecosystem would look like:

  • A cellular modem which tells the Adjuster Bot that an accident has occurred
    • And transmits data from ECUs describing the functional/non-functional status of major car systems
  • The AI-powered Adjuster Bot which, through deep learning, identifies the probability of repairing or replacing components within those systems; and which:
    • Alerts police and/or medical assistance as warranted (e.g. if airbags deployed)
    • Queries repair estimation and total loss systems
    • Integrates with the insurer’s Direct Repair Program
    • Creates an initial estimate of cost and time to repair
    • Presents a customized video to the driver, describing:
      • Arrival of tow trucks, transportation to a rental car facility, the split of insurer and policyholders financial responsibility; links to download a claimant app

Next up: Adjuster Bots for Connected Homes

How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle

How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle
It’s open season on insurance technology acquisitions in general, and for Insurity in particular. Today’s announcement of Insurity’s acquisition of Valen Analytics is now Insurity’s fourth acquisition in a multi-year string: Oceanwide, Tropics, and in rapid succession Systema and Valen.   The potential for crossing selling among the five customer bases is obvious.   Less obvious, but of potentially even greater value, is Insurity’s ability to invite all of its insurer and other customers to use its Enterprise Data Solutions IEV solution as the gateway to Valen’s contributory database and Valen’s InsureRight analytic platform.   Insurity now has the scale and the means to create a virtuous analytics circle: individual customers contributing a lot of data through IEV to Valens and receiving back analytic insights to feed into their pricing, underwriting, and claims operations.   Good move.

CES 2017: JUST HOW SMART IS AI GOING TO MAKE CONNECTED CARS AND CONNECTED HOMES?

CES 2017: JUST HOW SMART IS AI GOING TO MAKE CONNECTED CARS AND CONNECTED HOMES?
Walking the exhibit halls and attending sessions at the mammoth Consumer Electronics Show, it was easy to identify the dominant theme: AI-enabled Intelligent Personal Assistants (IPAs).
  • Manufacturers and suppliers of connected cars and homes are betting big on IPAs: overwhelmingly favoring Amazon Alexa.
  • Impressionistically, Google Assistant, Siri, Cortana and others trailed some distance behind.
Natural language commands, queries and responses provide a vastly more intuitive UX. And these capabilities in turn make owning and using a connected home or car much more attractive. But there is a deeper potential benefit for the connected car and connected home sellers: developing context-rich data and information about the connected home occupants and the connected car drivers and passengers. This data and information include:
  • Who is in the house, what rooms they occupy—or who is in the car, going to which destinations
  • And what they want to do or see or learn or buy or communicate at what times and locations
Mining this data will enable vendors to anticipate (and sometimes create) more demand for their goods and services. (In a sense, this is the third or fourth generation version of Google’s ad placement algorithms based on a person’s search queries.) Here’s what this means for home and auto insurers:
  • As the value propositions of connected cars and homes increase, so does the imperative for insurers to enter those ecosystems through alliances and standalone offers
  • The IPA-generated data may provide predictive value for pricing and underwriting
  • IPAs are a potential distribution channel (responding to queries and even anticipating the needs of very safety- and budget- conscious consumers)
A note on terminology: the concept of “Intelligent Personal Assistants” is fairly new and evolving quickly. Other related terms are conversational commerce, chatbots, voice control, among others.

Guidewire makes blockbuster acquisition of ISCS

Guidewire makes blockbuster acquisition of ISCS
Long sought after by Private Equity firms, other insurers, and the occasional investment banker looking for a transaction, privately held ISCS has chosen to join Guidewire (NYSE:GWRE).   ISCS adds its SurePower Innovation end-to-end suite to Guidewire’s existing InsuranceSuite end-to-end suite. This is a decided change of acquisition strategy for Guidewire. Up to now, all its acquisitions have fit into—or added a single new element—to InsuranceSuite.   Why?   Well, if you are a publicly held company growth is good. ISCS immediately brings more revenue and more importantly brings good market momentum with a solid sales pipeline.   ISCS’ focus on small and midsize insurers brings a few other intriguing possibilities. One is that Guidewire and its SI alliance partners will now aim at the large and very large insurer market, leaving the small and midsize market to ISCS. A second is that ISCS will become a vehicle for small insurer growth outside of the US. The third is that ISCS’ more extensive cloud experience, especially with AWS, will step up Guidewire’s movement to the cloud.   For now Guidewire shareholders have a heckuva gift under their Christmas trees.  

It’s Not Just Twitter’s Problem: What Insurers Need to Know about DDoS and the Snake in the IoT Garden of Eden

It’s Not Just Twitter’s Problem: What Insurers Need to Know about DDoS and the Snake in the IoT Garden of Eden

On Friday October 21 a massive Distributed Denial of Service (DDoS) made over 1,000 websites unreachable, including, Twitter, Netflix and PayPal. Two cloud providers, Amazon Web Services and Heroku reportedly also experienced periods of unavailability.

The attack was directed against a key part of the internet’s infrastructure, a domain name system provider, Dynamic Network Services aka Dyn. When a person enters a web address into a browser, such as google.com, the browser in turn needs an IP address (a string of numbers and periods) to actually connect with that web address. Domain name system providers are a critical source of IP addresses.

On Friday Dyn was the target of perhaps the largest ever DDoS, when its site was overcome by tens of million of requests for IP addresses. Because Dyn could not provide the correct IP addresses for Twitter and the other affected sites, those sites became unreachable for much of the day.

It also appears that the DDoS was mounted using a widely available malware program called Mirai. Mirai searches the web for IoT connected devices (such as digital video recorders and IP cameras) whose admin systems which can be captured using simple default user names and passwords, such as ADMIN and 12345. Mirai can then mobilize those devices into a botnet which executes a directed DDoS attack.

There are a number of potentially serious implications for insurers:

  • An insurer with a Connected Home or Connected Business IoT initiative that provides discounts for web-connected security systems, moisture detectors, smart locks, etc. may be subsidizing the purchase of devices which could be enlisted in a botnet attack on a variety of targets. This could expose both the policyholder and the insurer providing the discounts to a variety of potential losses.
  • If the same type of safety and security devices are disabled by malware, homeowners and property insurers may have increased and unanticipated losses.
  • As insurers continue to migrate their front-end and back-office systems to the cloud, the availability of those systems to customers, producers, and internal staff may drop below acceptable levels for certain periods of time.

The Internet of Things will change insurance and society in many positive ways. But the means used to mount the October 21 attack highlights vulnerabilities that insurers must recognize as they build their IoT plans and initiatives.

Vrooom: New Federal Guidance Should Accelerate Development of Autonomous Cars

Vrooom: New Federal Guidance Should Accelerate Development of Autonomous Cars

September 20 was a good day for the development of autonomous cars. The Feds, as embodied by the Department of Transportation and the National Highway Traffic Safety Administration (NHTSA), have issued guidance and principles for the development of autonomous cars.

There are two key takeaways:

  1. By issuing guidance, rather than regulation, the Feds are trying to facilitate, but not control, the technological developments that will lead to street-ready autonomous cars
  2. The guidance makes some common sense delineations between what the federal government should do and what states should do
  • The feds want one national standard for how manufacturers conduct driverless car R&D–following a 15 part safety assessment protocol (covering data recording, system safety, human:machine interface, etc.).
  • The feds want the states to focus on vehicle licensing and registration, traffic laws, and motor vehicle insurance and liability

If actually followed (are you listening California?) the political and regulatory environment should speed the day when a consumer can walk into a dealer, and be driven out by a shiny, brand new autonomous car.

That day will be good for car buyers, for manufacturers, and for society as a whole.

However, for insurers that day will also hasten the decline of auto insurance—per the recent Celent report The End of Auto Insurance: A Scenario or a Prediction.

Is State Farm Pre-positioning Itself for the End of Auto Insurance (and Maybe the End of Homeowners Insurance Too)?

Is State Farm Pre-positioning Itself for the End of Auto Insurance (and Maybe the End of Homeowners Insurance Too)?

Once in a while an insurance company asks me for advice—and occasionally even follows the advice which I provide.

I can say, however, that State Farm has never asked me for any advice about what they should do if the need for auto insurance disappears or substantially declines. Nor has State Farm ever asked me what they should do if the demand for homeowners insurance should take a similar dive.

Some readers may be wondering why would State Farm seek advice from your humble blogger about either topic?

Well, because I have been writing and talking about the end of auto insurance for four years. My just posted Celent Report, The End of Auto Insurance: A Scenario or a Prediction?  looks at how three technologies—telematics, onboard collision avoidance systems, and driverless cars—will depress auto insurance losses and premiums over the next 15 years.

I have also been writing and talking about the impact of the Internet of Things on the property/casualty industry for two years. Celent research subscribers can look at my reports: The Internet of Things and Property/Casualty Insurance: Can an Old Industry Learn New Tricks and Can a Fixed Cost Property/Casualty Industry Survive the Internet of Things?

So without even a word of advice from me, it looks like State Farm has pondered potential declines in auto and homeowners insurance; and decided to start some early positioning for itself and its agents if such things come to pass.

Proof Point: A new State Farm commercial called “Wrong/Right” shows a world without windstorms, traffic accidents, building fires, and emergencies. The commercial goes on to ask what about State Farm in such a world? The implied answer is that State Farm and its agents will be in the lending, wealth accumulation, and retirement income businesses. The tag line is “Here to help life go right.”

Which personal lines property/casualty insurer will jump in next?

Apax Partners adds Agencyport to its growing property/casualty technology investment portfolio

Apax Partners adds Agencyport to its growing property/casualty technology investment portfolio

Today’s announcement of Apax Partners’ acquisition of Agencyport makes sense. This deal is a further commitment by Apax to the property/casualty software sector—following shortly after Apax’s announcement of its equity investment in the soon to be independent Duck Creek.

Insurers want the internal and external users of their systems to have seamless mobile access to new business and other functionality. Agencyport has developed one of the leading solutions for agents, brokers, and policyholders find information and execute transactions with insurers’ core systems.

As is true for any technology acquisition, the soon to be combined management teams of Agencyport and Duck Creek will need to focus on communicating the benefits of their new relationship to current and prospective customers—sending a “good before, better now” message. Providing “vendor neutral” support to Agencyport customers who do not use Duck Creek solutions and Duck Creek customer who do not use AgencyPort solutions will also be crucial.

A long time ago in a galaxy far far away, I went to a two hour meeting to reinvent insurance

A long time ago in a galaxy far far away, I went to a two hour meeting to reinvent insurance
It was in the Galaxy InternetBubble, stardate 2000.12.1. I was at a technology firm that was riding the Internet rocket up—and a couple of years later rode it back down. (It actually made a soft landing, and those early Web-anauts lived to tell the tale). In those heady early days of the web, there was a general feeling that the Internet was going to “change everything.” True, there wasn’t a lot of clarity about what “everything” or “change” were, but it was something many people said (and possibly believed). In any event, there was a steady stream of VC-funded insurance start-ups that would visit us, asking for our vision of what the web would wrought—while we were trying to think of some ways to be hired by those start-ups to make those visions real. If any of this sounds familiar to anyone, let me know. So there I was, minding my insurance Subject Matter Expert business, and someone asked me to attend a meeting that afternoon. The purpose of the meeting was to reinvent insurance. And I thought, “Why not?” I entered the conference room, and saw that the other attendees (bright and articulate professionals each and every one of them) had very limited insurance experience. No one in the room (with the exception of your humble blogger) could have defined hazard, exposure, or probable maximum loss, or the law of large numbers, and so on. At the end of the two hours, we had in fact not reinvented insurance. There was no follow-up meeting. Why bring up this bit of ancient history? Because we have arguably entered another period in which claims are made that technology, or digital, or insurtech is going to, if not change everything, at least disrupt everything. As an example, see these Celent reports about the end of auto insurance, or the Internet of Things, or digital strategies. If you want to separate the disruptive wheat from the buzz-based chaff this time around, here are some basic questions to ask:
  • Does the proposed use of a new technology impact the basics of the insurance model?
  • Can it scale?
  • Will it change the relationships among cost, price, and value in a way that is fair to the insurer, the distribution channel and the policyholder?
If the answers to these questions are all yes, maybe maybe someone will reinvent insurance this time around. This time around, may the In-Force be with us.

California DMV flashes yellow light for driverless cars

California DMV flashes yellow light for driverless cars
As a long time resident of the Golden State, let me say that the words “fair,” “judicious,” “California,” and “DMV” just don’t appear together in the same sentence. But, I’ll break precedent and say that the  California DMV’s new draft regulations for driverless cars are (overall) fair and judicious. The regs begin to address the knotty social and legal issues of safety and liability. Manufacturers and a third party tester must certify the ability of a driverless car to meet specified safety and performance requirements. Operators (who used to be called drivers, back in the day) must be able to take control of the car and will be responsible for all traffic violations. It looks like the larger issue for insurers and trial lawyers of “who gets sued” is not directly addressed by the draft regs. Additional parts of the regulations include:
  • Special licensing for driver/operators
  • Obtaining driver/operator consent for collecting information “not necessary for the safe operation of the car” (hello interior-facing dashboard cams)
  • Ongoing reporting requirements by the manufacturers on the vehicles’ performance and safety
  • And, sign of the times, the vehicles must be able to detect and respond to cyber attacks
Some manufacturers may be (privately) impatient. But the reality is that these regs provide a path for broader deployment into a litigious and worried society of technologies still in the R&D stages.