AAIS hosted the webinar AI Exploitations: How P&C Insurers Can Protect Themselves, featuring insights from Joseph Petrelli, President of Demotech, and Todd Kozikowski, CEO of 4WARN, with Werner Kruck, President and CEO of AAIS, moderating. The session explored operational, legal, and reputational implications of AI-driven threats, giving insurers practical guidance to identify exposure, implement safeguards, and stay ahead of evolving fraud techniques.

Lessons From Insurance Market and Carrier Failures

Petrelli opened the conversation by examining recent trends in claims and litigation, pointing to Florida’s wave of insurer insolvencies in 2020. Several carriers collapsed despite strong financial ratings, adequate reinsurance protections, capital contributions, and unqualified audits. “The safeguards were in place, but the issue was claims, not solvency,” Petrelli explained.

He pointed out that litigation surged to unsustainable levels, overwhelming even well-managed insurers. New technologies accelerated solicitation and claim manipulation, allowing opportunistic actors to reach policyholders faster and at greater scale. What might once have been a localized or manageable challenge quickly cascaded into systemic risk for the market.

Petrelli emphasized that this historical perspective carries an urgent lesson: vulnerabilities in operations and claims handling can undermine carriers regardless of their balance sheet strength. As AI becomes more prevalent, he cautioned, insurers face similar dynamics—only now the risks are amplified by the speed, automation, and reach of digital manipulation.

The Evolution of Fraud with Digital Risk

Digital fraud in insurance has shifted from opportunistic scams to highly organized, scalable operations. Kozikowski explained that one of the most concerning developments is Ghost GPT—malicious, customized AI models sold on the dark web. These tools have effectively created a “fraud-as-a-service” market, enabling even non-technical actors to launch sophisticated attacks.

He noted that by flooding the internet with manipulated content, bad actors can influence multiple AI platforms simultaneously, producing consistent but false responses that shape consumer perception and behavior. “These tools are lowering the barrier to entry for fraud,” Kozikowski emphasized. “Insurers need to understand the external attack surface just as well as their internal systems.” As fraud becomes more organized, AI itself has emerged as a new attack surface for these coordinated campaigns.

AI as a New Attack Surface

AI has introduced entirely new vectors for exploitation. Fraudsters are no longer limited to internal systems—they can manipulate public data, SEO strategies, and digital channels to amplify attacks. From generating fake content to influencing search engine results, AI-enabled threats are faster, more sophisticated, and increasingly difficult to detect.

Kozikowski explained that coordinated fraud campaigns are rarely confined to a single tactic; instead, they operate as layered operations designed to overwhelm insurers from multiple angles at once. He pointed to black hat SEO campaigns as a growing threat, where fraud actors flood search engines with fake websites and keyword-optimized content that impersonate legitimate insurers or legal resources.

At the same time, Kozikowski said, these groups deploy AI-generated articles, reviews, and social posts to reinforce the false narrative, ensuring that consumers and even automated systems encounter consistent—but misleading—information across platforms.

He also noted the rise of coordinated litigation solicitation efforts, where fraud networks use AI-driven digital ads, text campaigns, and robocalls to push policyholders toward opportunistic lawsuits. By automating outreach and scaling rapidly, these campaigns can generate litigation volumes that overwhelm carriers, regardless of their financial strength.

“What we’re seeing is a lifecycle of propagation,” Kozikowski said, “where fraudsters create content, amplify it through multiple channels, and then reinforce it with claims or legal action. The digital ecosystem gives them a playbook to move faster than insurers can respond if we’re not paying attention.” Understanding these external and internal vulnerabilities is critical, and 4WARN has developed strategies to help insurers respond proactively.

Mitigation Strategies and Industry Collaboration

4WARN was founded to help insurers understand and defend against emerging digital threats, focusing on how fraud campaigns spread and take root across the internet. By tracking the propagation lifecycle of fraudulent content and analyzing claims and litigation patterns, 4WARN enables insurers to anticipate and address risks before they escalate. “Our goal is to see the threats early, understand how they’re evolving, and work with the industry to stop them before they cause real damage,” Kozikowski said. Through continuous monitoring, trend analysis, and close collaboration with industry partners, insurers can proactively strengthen their defenses rather than simply reacting after the fact.

Kozikowski also stressed the importance of education and awareness, equipping internal teams to recognize early signs of AI-driven manipulation—such as brand impersonation or black hat SEO tactics, where fraud actors deliberately game search engine algorithms to elevate misleading or malicious content. He pointed to the growing role of third-party litigation funding networks, which can magnify the reach and financial impact of AI-enabled fraud. According to Kozikowski, this evolving threat landscape underscores the need for insurers to adopt proactive, layered defenses and integrate AI risk monitoring into their core risk management frameworks.

Staying Ahead of AI-Driven Fraud

As AI technology continues to advance, so too will the methods of bad actors. Insurers are encouraged to build robust internal governance structures, invest in advanced monitoring tools, and foster industry collaboration. “Understanding the AI attack surface—inside and outside the organization—is essential to protecting operational integrity, compliance, and consumer trust,” Kozikowski concluded. By taking a proactive approach, insurers can safeguard their operations and maintain confidence in an increasingly complex digital environment.

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

Werner Kruck
President & CEO, AAIS
wernerk@aaisonline.com

Joseph Petrelli
President, Demotech
jpetrelli@demotech.com

Todd Kozikowski
CEO, 4WARN
todd@4warn.com

The post Webinar: AI Exploitations: How P&C Insurers Can Protect Themselves first appeared on AAIS.

Why AI Is a Hot Topic Across the Insurance Industry
While predictive modeling has long been a part of insurance operations, the rise of advanced AI technologies, including generative models such as GPT, has created new possibilities. Habayeb shared, “Once we got into the world where GPT and generative happen, you now had non-technical people, non-actuaries, and business leaders, saying, ‘I want to build a model to do this thing.'” This democratization of AI technology has sparked growing interest in how AI can solve insurance’s unique challenges, especially in a low-margin, often manual environment. Aufenthie further emphasized AI’s mainstream rise, noting that as AI becomes more accessible, it signals a significant shift in its potential across the industry.

Regulatory Perspective of AI in the Insurance Industry
The growing role of AI in insurance has caught the attention of regulators. This can be proven by the NAIC Innovation Cybersecurity and Technology (H) Committee, which was created to address AI and its potential to transform the industry, Block explained. “Insurance is an industry that is sort of perfect for the use of technology,” she noted. Regulators are focused on ensuring AI is applied within existing frameworks, though the complexity of integrating emerging technologies with traditional regulations remains a key challenge.

Consumer-Facing Applications of AI in the Insurance Industry
Regulators are particularly concerned with AI’s consumer-facing applications, such as in underwriting, fraud detection, and claims processing. Block referenced surveys in the auto insurance sector, highlighting a significant gap between the intention to use AI and its actual implementation. “The numbers went from… 80-90% are thinking about using it… to 20% are actually using it,” she revealed. Despite this, areas like claims, fraud detection, and marketing are seeing more widespread AI adoption.

Biggest Hurdles That Insurers Face in Advancing Their AI Journeys
One of the largest obstacles for insurers, especially smaller carriers, is the reliance on third-party vendors for AI solutions. While large insurers may have the resources to build and tailor their own AI systems, smaller companies often lack the infrastructure to do so. Habayeb advised smaller carriers to manage relationships with external vendors to implement AI solutions effectively.

The AI Bulletin: Its Purpose and How It Hopes to Protect the Consumer
The AI Bulletin, passed about a year ago, serves as a crucial step toward regulating AI in the insurance industry. Block explained that the bulletin is not a statute but provides clarity on regulators’ expectations for AI use within the context of existing laws. “It aims to ensure that AI is used responsibly and transparently, focusing on protecting consumers,” she explained. The bulletin addresses concerns such as AI-driven pricing, ensuring fairness, and avoiding discriminatory practices in line with established regulations. However, Block noted that this is only the beginning. Future legislative efforts may further refine AI governance, particularly around third-party data and models.

Managing State-by-State Differences With AI Compliance
Habayeb explained that navigating AI regulations is complicated by the different approaches taken by individual states. “If a state establishes their AI risk management program in 2025, the degree to which you have robust testing, validation, and continuous monitoring of the high-risk things… might take a little bit more time,” he said. States like New York, Colorado, and California have already implemented their own policies that differ from the AI Bulletin’s guidelines, creating additional challenges for insurers trying to maintain compliance. Habayeb advised insurers to develop a consistent, repeatable structure for managing AI compliance, with a focus on the highest-risk use cases in 2025. “Have some consistent structure for knowing that it’s happening, proving that you evaluated its appropriateness, and that you’re keeping an eye on it,” he said.

NIST: Finding a Framework and Importance of Investing in AI Now for the Future
The NIST AI Risk Management Framework (AI RMF) offers a critical tool for companies seeking to ensure responsible AI use. While Habayeb noted that the framework is still evolving, he praised its structure as a valuable guide. He emphasized that insurance companies should start aligning AI governance with existing industry standards, such as actuarial practices.

Steps for Insurers to Align With the Bulletin’s Goals
To align with the AI Bulletin’s guidelines, Block emphasized that insurers must assemble the right team to build a practical governance structure. “You need all the people in the room to build a practical governance structure so that it makes sense,” she said. After the team is in place, insurers should focus on defining clear internal policies that outline the roles, responsibilities, and risk management strategies related to AI. Habayeb added that insurers should be ready to explain how their AI systems align with corporate policies and regulatory expectations. “You want to see those connected, right? How have you affected that policy?” he asked, reinforcing the need for transparency and clear communication with regulators.

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

Chris Aufenthie
Director of Regulatory Filings, AAIS
chrisa@aaisonline.com

Anthony Habayeb
Co-Founder & CEO, Monitaur
anthony@monitaur.ai

Mary Block
Director of Insurance Regulation, Vermont Department of Financial Regulation
mary.block@vermont.gov

The post Webinar: Advancing AI in Insurance: Navigating Regulatory Trends first appeared on AAIS.

The Flaws in Traditional Rating Methods

Lynch explained that traditional flood insurance rating has historically relied on FEMA (Federal Emergency Management Agency) flood zones, which categorize areas into low and high-risk zones. “In the market today, it’s largely been zone-based. FEMA flood zones represent about three-quarters of the market,” he noted. However, this approach has significant limitations. “About 25% to 30% of FEMA claims come from areas outside these high-risk zones,” he pointed out. This indicates that many properties at risk of flooding may be overlooked due to their classification. “The Congressional Budget Office estimated that in 2020, 40% to 50% of flood damage occurred outside special flood hazard areas,” Lynch further elaborated. He explained that while NFIP (National Flood Insurance Program) created flood zones, they have moved away from using them in their rating methodology. “It seems reasonable that probably everyone else should consider not using them as well,” he stated, urging the industry to rethink traditional methods.

The Role of Catastrophe Models

In a market saturated with outdated methods, Lynch emphasized the importance of catastrophe (cat) models for predicting flood risks. “Cat models build out simulated possible futures,” he said, explaining how they analyze various scenarios to assess potential damage. They consider factors like storm strength, geographical location, and even tide levels to generate a more comprehensive view of risk.

However, he cautioned that no single model is sufficient to capture the complexities of flood risk. “Every model has its strengths and weaknesses,” Lynch remarked. The need for multiple viewpoints is crucial for a well-rounded assessment. “Those that take it further, often professional consultants and large reinsurers, will use multiple models. They may average the results, which is potentially dangerous,” he noted.

Understanding and Distinguishing Flood Damage

A significant challenge in flood insurance is the difficulty in separating flood damage from other storm-related damages, such as wind or tornado damage. “The cat models do the heavy lifting on that,” Lynch explained, noting that simulations help clarify what happened during an event. Yet, in the real world, distinguishing these damages can be problematic because of the ambiguity. “If the building’s not there anymore, did it get blown away, or did it get washed away?” he questioned. Despite these challenges, Lynch acknowledged that rainfall-driven floods are generally easier to assess. “Rainfall is typically a lot easier to separate out,” he stated. Understanding these distinctions is vital for accurate claims projections.

Leveraging AI for Improved Predictions

To address the limitations of traditional models, the webinar introduced an innovative AI technology developed by reThought Flood. “We used our AI technology to focus on this problem, not to replace catastrophe models, but to make them better,” Isaacson explained. The reThought team applied a bottom-up approach, analyzing detailed information on over 100 million buildings in the U.S. This method offers a more granular view of risk compared to traditional top-down models that assess geographical footprints. Lynch elaborated, stating that their approach helps identify strengths and weaknesses of various models. “We use our technology to develop our own specific view of each building and then we can roll that up to a policy, a portfolio, a state, or a country view,” he said. This innovation enhances the accuracy of damage predictions and ensures that rates are sustainable and profitable.

Closing the Coverage Gap

Despite advancements in technology and modeling, Lynch warned that having the best technology is not enough; product coverage is really important. He described the challenges faced by policyholders, particularly with federal programs like NFIP, which often lack adequate coverage for secondary dwellings, basement contents, and additional living expenses. “If someone buys a flood insurance policy, has a loss, and finds that much of it is not covered, that would be horrible,” Isaacson noted. He and Lynch underscored the critical role of education in closing the flood protection gap, particularly the need for property owners to understand the risks and potential for loss. “Unfortunately, flood is one of the weakest parts of education for insurance agents. We really need to provide them not only with education but also with the tools for them to help educate others,” Lynch stated.

Community Engagement and Awareness

Isaacson and Lynch highlighted that community involvement is crucial for increasing flood insurance uptake. “Communities need to educate their populations about the risks they face,” Isaacson stressed. “Two-thirds of flood losses are currently uninsured, and around 90% of the country lacks flood coverage.” They encouraged collaboration with communities to disseminate information and promote attainable mitigation measures. “Something like backflow preventers can help mitigate risks without requiring significant structural changes,” Lynch suggested, advocating for educational initiatives that inform property owners about effective, low-cost mitigation strategies.

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

John Kadous

Vice President of Products, AAIS

johnk@aaisonline.com

Cory Isaacson

Chief Executive Officer, reThought Flood

cory.isaacson@rethoughtinsurance.com

Derek Lynch

Chief Underwriting Officer, reThought Flood

derek.lynch@rethoughtinsurance.com

The post Webinar: Making Flood Insurance Insurable and Profitable first appeared on AAIS.

Introduction to Actionable Insights

Mayfield defined actionable insights as “curated data that allows the end user to make informed decisions and ask thoughtful questions.” He identified three key components of actionable insights:

• Business Focused: A collaboration between business units and IT is required to transform data from two-dimensional to three-dimensional.
• Clear Requirement Gathering Framework: A standardized approach helps streamline the process from request to report generation.
• Data Storage and Visualization Solution: Effective reporting solutions need strategies for easy data retrieval, transformation, and visualization.

Examples of Actionable Insights

Mayfield shared practical examples of actionable insights, illustrating how data can be used to make informed decisions. For instance, a claims team leader might ask, “How does average days to close impact my cost per claim?” This question aims to identify factors that can be controlled to improve cost efficiency. Another example involves examining the performance of underwriters by asking, “What’s the closure ratio of my top-performing underwriters, and which brokers are they working best with?” To pull out actionable insights, Mayfield explained, “You want to really look at submission data and get an idea of which underwriters are performing amazingly with certain agents, which may need some help, which agencies are providing equality results…things like that.”

Helping Carriers Make Informed Decisions with Data

To help carriers generate actionable insights, Mayfield emphasized the need to focus on the business problem and not the current limitations. “It’s about what the business wants,” he stated. Mayfield explained that actionable insights are rooted in addressing specific business questions and challenges. For instance, an underwriter might be concerned with increasing policy premiums, while a claims manager might focus on forecasting staffing needs based on task completion times.

Mayfield also highlighted the importance of frameworks and methodologies in generating actionable insights. One such framework that OneShield utilizes is the “BADIR” framework from the book Behind Every Good Decision. This framework helps bridge the gap between business questions and meaningful reports. It emphasizes the importance of understanding the goals of analysis and considering regional differences when generating reports.

Solutions to Evolve Reporting

Mayfield addressed the limitations of traditional reporting tools like Excel, highlighting the need for more advanced solutions. He recommended tools like Power BI and Azure Data Factory, which enable dynamic, interactive reporting and allow users to generate actionable insights efficiently.

Utilizing Core Systems for Actionable Insights

According to Mayfield, actionable insights require a core system capable of providing two-dimensional data that meets initial business needs from day one. Rather than focusing on regulatory requirements, he believes the emphasis should be on essential data needed to manage a business effectively. This includes policy details, earned premium, written premium, renewal rates, accounts receivable, and claims information such as average days to close and average cost to close. Mayfield advised this data to be available in various formats—by region, in real-time, monthly, or quarterly. “There’s a lot of different ways to view this data, and once you get there, you might want to mix and match the different elements to manage your business,” he said. But before advancing to three-dimensional reporting that provides tailored actionable insights, companies need a reliable core system for detailed data.

Leveraging Actionable Insights for Dynamic Analysis and Proof of Concept

When developing actionable insights, Mayfield believes it is crucial to understand that end users may not always know exactly what they need but will recognize valuable information when presented with it. For example, a claims manager might be uncertain about how to improve claim processing efficiency but will benefit from a flexible report that allows them to explore various data perspectives. In a given scenario, the manager might want to investigate how closing claims more quickly affects the overall cost of those claims. Mayfield explained that the report should provide detailed insights, such as identifying high-performing individuals like an adjuster who significantly reduces the average cost to close claims. Additionally, the manager might hypothesize that closing more claims within 90 days will reduce average costs. Mayfield added that the purpose of such reports is to allow users to verify their hypotheses through concrete data. “We’re no longer speculating about what the results are,” he confirmed. “We can now make informed decisions and go forward knowing that we’re building something that’s valuable, making decisions that we can back by data, and see results in areas that matter the most.”

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

John Kadous

Vice President of Products – AAIS

johnk@aaisonline.com

John Dunn

Vice President of Sales, Americas – OneShield

jdunn@oneshield.com

Travis Mayfield

Reporting Product Manager – OneShield

tmayfield@oneshield.com

The post Webinar: Leveraging Core Systems for Actionable Insights in Policy Claims first appeared on AAIS.

Defining Speed to Market

White defined “speed to market” as an insurer’s ability to introduce new products or services or make updates to products that already exist as quickly and efficiently as possible. Speed to market covers the entire product development lifecycle, beginning with product ideation, regulatory approvals, marketing and distribution, and finally, the ever-important need to deliver on customer engagement. “GhostDraft finds it critical for our customers and carriers to be first to market with product innovation by making sure that those products address emerging customer needs, especially when you look at the overriding context of being in a fast-paced environment and the need to have a significant competitive advantage,” White shared. “So, we work with insurers so that they can quickly adapt to those changing demands, but also position themselves to retain existing [customers] and attract new customers.” He clarified that speed to market is a continuous journey. “We like to work with our customers to ensure that they’re fostering an innovative culture, making sure that they can easily collaborate around their organizations, and continuously improving, adapting, and evolving so that they can stay ahead of the competition,” he said.

Speed to Market Challenges

One challenge White has noticed with carriers achieving speed to market is the use of legacy systems and legacy processes. “The ability to be adaptive and to try and integrate new and responsive technologies within those legacy environments is pretty important,” said White. “But it can be very complex and time-consuming.”

There are also challenges with streamlining the different processes that relate to collaboration within the product and product development environment. “There are lots of stakeholders involved when you think about how an insurance product is created and moved through its lifecycle,” White stated. “The ability to accurately and effectively collaborate and communicate amongst all of the different departments within a carrier organization is a really critical part of the process.”

In addition, White has seen a lot of organizations struggling to remain compliant with regulators. “We have so many new requirements that are being established within the customer base and the policyholder base, which makes things more complicated and makes remaining compliant a little tougher,” White explained. He touched upon competitive pressures being a challenge to carriers as well. “Once you realize that somebody else has put something into market and you decide it’s a business that you want to be in, you’ve got to compete both with those traditional competitors and the big increase in insurtech startups that we’re seeing in the marketplace today,” he said.

Balancing Speed and Compliance in Product Development

White acknowledged that speed is essential, but compliance is equally, if not more, critical. “There is no sense implementing the fastest technology if you can’t ensure that you can remain compliant,” he advised. “That means reviewing and updating processes that exist to ensure that you’re aligning the processes with new and emerging regulations that are coming from the industry.” To be able to quickly adapt and make changes rapidly, White suggested standardizing. “If you are standardizing, for example, with an AAIS product group, then that means you can take some of those decision points out of your processes,” he explained. “If you leverage something that’s already compliant, then all you’ve got to do after that is ensure that you’re staying on top of it and continuing to meet all of the different obligations you have from a compliance and a regulatory perspective.”

How GhostDraft Helps Drive Speed to Market

GhostDraft offers a few unique ways to drive speed to market. One way is what White refers to as “unburdening.” “We’re taking the burden away by making all of the changes that are required to remain compliant and remain consistent and remain competitive,” he shared. “I had a customer who, essentially, after implementing our solution, was able to move from the design phase to the development phase and through to the production process in just a couple of days, which would historically have taken them about three months to do.”

GhostDraft also utilizes migration to address speed to market. “We certainly see the inclusion of AI when it comes to being able to migrate a large body of content from one environment to another body of content,” White began. “At GhostDraft, we call it our document domain model. All of the data reference points and all of the business logic that is required to produce this form live in one area within the platform that’s managed and owned by businesspeople.”

A significant amount of data mapping needs to happen with a library of documents, according to White, and GhostDraft can help with managing that. GhostDraft allows a carrier to develop those documents only once while having the ability to move the entire domain to a new administrative system without changing any of the business rules or logic that is employed to generate that form.

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

Laurence White

Executive Vice President of Sales – GhostDraft

laurence.white@ghostdraft.com

The post Webinar: From Concept to Customer: The Need for Speed to Market in Insurance first appeared on AAIS.

Overview of Orion180 & Chrp Technologies

Orion180 is a technology-based insurance company that utilizes cutting-edge technology paired with outstanding customer service to simplify the insurance experience and enhance the customer experience. They are primarily HO3 in six southeast states but are beginning to roll out other products in more states. Chrp Technologies helps home insurance companies build great relationships with their insureds through proprietary AI products that deliver loss prevention and an enhanced customer experience. Chrp has seen tremendous success with clients like Orion180.

Finding Solutions by Utilizing AI Tools

Orion180 as a company focuses on three areas: efficiency, accuracy, and customer experience. “Our challenge was timely identification of risk and issues,” Wyrick shared. “Specifically, having inspections completed, allowing us time to review them, and giving the insured time to repair anything that we found had adverse conditions. So, we really needed to streamline that process to make it more efficient.” Accuracy is also extremely important to Orion180 because they base their outcome on the data that’s provided back to them from inspections. And, overall, the inspection process is a customer experience. What attracted Orion180 to Chrp Technologies was the ease of use and that it hit all three of the company’s focal points. “From an efficiency standpoint, it’s an automatic process,” said Wyrick. “You don’t have to manually order inspections, follow up, track, and keep all that data together. [The] AI built into the platform is accurate. We’ve gone from months of training time down to weeks. And if we have an issue, I know Chin and his team will be there on the customer experience side.”

Impact on Retention Rate & Policy Holder Engagement

Since partnering with Chrp, Orion180 has been able to retain its policies. “When we launched Chrp, our average date of a completed inspection returned was around 16 days,” Wyrick reported. “With all of the updates, we went from 16 days to now nine days completed and it’s still dropping. We’ve got drastically increased policy retention because we’re able to review those risks and provide those solutions and keep that policy.” Wyrick believes this process with Chrp has made policyholders more aware of their risk and its impact on insurance.

Overcoming Challenges

Being a company born out of Florida, Ma admits one of the biggest challenges for Chrp is that a lot of its customers are of an older demographic and do not feel they are tech-savvy enough to use the service. “So, one thing that we’ve put into place right away is a seven-day-a-week, 365 customer service model,” said Ma. “In our company, you go through a rite of passage called the legendary conversation.” This is essentially walking a customer through the inspection process and guiding them through the app. These conversations with customers influence the way that Chrp designed its application. “Those are the types of conversations and experiences that give us the opportunity to make improvements.”

Insight on How Chrp Works

Chrp complies with two mission statements: Eliminate Non-Cat Claims and Help People Have Healthy Homes. “Conducting inspections is [not] a new thing for the insurance industry,” Ma confessed. “But doing so the right way is incredibly important. Right now, the ‘right way’ also necessitates an economic model that works with an underwriting.” Being able to leverage self-inspections in concert with physical inspections, in a cost-effective way, is a huge plus in driving volume, according to Ma. Then, the correct symptoms that lead to claims need to be analyzed. “If you get those two things right, you should see a high inspection conversion, roughly between 75% to 85%, on the self-inspection side. Blended cost-wise, that can actually reduce your overall inspection cost,” he stated. Chrp delivers highly accurate AI to streamline what symptoms require underwriting action and also offer a solution to customers so they can prioritize their time. This leads to the end result, which is how to eliminate non-cat claims to ultimately improve profitability.

When the inspection report comes through to the customer, any adverse conditions that the AI has found are listed first. “We’re looking at those first before we even get through the rest of the inspection,” Wyrick shared. “That’s the efficiency aspect of [Chrp]; we can see right off the bat what’s wrong. If it’s bad enough, we’ll already know how this risk is going to end up.” But the best function of the Chrp platform in Wyrick’s opinion is the ability to escalate inspections. “If we have a reviewer that’s kind of guessing at something or if they have a question, they can escalate that inspection to a new cue, and myself or another senior member can go in to look and write our notes. Then it goes right back to that inspector.”

To view the webinar in its entirety, click on the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Werner Kruck
President & CEO – AAIS
wernerk@aaisonline.com

Chin Ma
President – Chrp Technologies
cma@chrptech.com

Brandi Wyrick
AVP of Experience – Orion180

bwyrick@orion180.com

The post Webinar: Leveraging Today’s Underwriting Technologies to Modernize Homeowners Insurance first appeared on AAIS.

What Is Cyber Insurance and Why Does It Matter?

Data is a commodity because of its value to businesses and unfortunately, also to thieves. Information is considered the new oil, with some saying it is the most valuable commodity on Earth. “Businesses and organizations collect, store, analyze, use, and share all kinds of data on a regular basis,” said Tischler. “But if that data gets in the wrong hands, it can cause havoc for business… and data thieves no longer limit their activities to Wall Street. Instead, they find that many small businesses are easier targets.” Few businesses can afford the costs involved in losing crucial data, recreating that data, or perhaps needing an entirely new system due to a computer attack. “Small businesses are at a huge risk by underestimating the big impact a cyber-attack can have on their reputation,” Tischler stressed. “Without adequate protection, they are risking their future business growth and development.”

Cyber insurance is an insurance product that is used to protect businesses and individual users from internet-based risk and more generally, from risk relating to information technology, infrastructure, and activities. “Cyber insurance provides coverage to repair damages to the insurance, computer data, and their systems,” Ducker explained. “So, it provides a collection of coverages that enable an insured entity to actually respond effectively to either restore their data or their systems and get back to business when there’s been a breach of personal information or a breach of their computer systems.”

Elements of Cyber Insurance Coverage

There are a lot of moving parts to a cyber insurance policy, made up of first-party and third-party coverages. One of the more important first-party coverages is data compromised response. Many people often receive a notification in the mail saying that their information might have been compromised by a business. “This happens all the time and is really where a lot of the information is taken,” Ducker shared. Another first-party coverage is computer attacks. This coverage is triggered by the damage an organization is going to suffer as a result of a computer attack that involves their own data or their operational systems. Cyber extortion is a real growing threat to businesses right now. “Cyber extortion coverage is first-party coverage that is designed to help an insured organization respond to a cyber extortion threat, including ransomware and denial of service attacks,” Tischler stated. Cyber extortion covers the cost of the negotiator or investigator retained by the business in connection with a cyber extortion threat. Another piece of cyber insurance coverage is misdirected payment fraud, which is commonly referred to as social engineering coverage. This coverage is triggered when an insurer or their financial institution is intentionally and criminally deceived into transferring funds fraudulently. The coverage pays for direct financial loss resulting from deception. The next coverage element is computer fraud. This coverage actually responds to the direct financial loss through an insurer when an amount is fraudulently obtained from the insured as a result of unauthorized access to the insurance’s actual computer system. Identity recovery is first-party coverage that is designed to provide owners of the insured business with case management service and expense reimbursements to actually recover control of their identities after identity theft. “It combines identity theft insurance with services that help these victims restore their credit history and identity records to pre-theft status,” Ducker explained.

Moving on to third-party coverages, there are three that make up a cyber insurance policy. First is data compromised liability. This pays for defense and settlement costs associated with lawsuits arising from a data breach. Then there is electronic media liability, which pays for the cost that’s associated with suits alleging that information posted on a company’s website either violated privacy, infringed on a patent, or defamed another company or individual. The last piece of third-party coverage is network security liability. This coverage pays to defend the insured against claims that their negligent failure of their computer security caused damage to a third party.

Reducing the Risk of Data Breaches and Computer System Attacks

Cyber risks do not discriminate. Even businesses with the best security systems will not prevent all breaches and attacks; if cyber criminals want to get in, they’re going to find a way. So, while there may not be a physical way to reduce these risks, proper planning is essential. “You’re going to need some best practices in place, including creating an incident response plan, conducting cybersecurity assessments, training employees, and obtaining meaningful cyber risk insurance,” Tischler advised. “Remember, cyber coverage continually evolves. So, you’ll need to look for comprehensive cyber insurance coverages that include both the third-party and first-party elements that we have discussed.”

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Stephanie Vasey

Product Manager of Commercial Lines and Inland Marine (AAIS)

stephaniev@aaisonline.com

Beth Ducker

Product Education Manager (HSB)

elizabeth.ducker@hsb.com

Mike Tischler

Client Engagement & Education Specialist (HSB)

statecehsb@hsb.com

The post Webinar: Commercial Cyber Insurance first appeared on AAIS.

Creation of Hurricane Models

According to Fanoe, hurricane models are generally a merge of meteorological expertise, engineering expertise, and insurance expertise. “Most models will start with the [meteorological] portion of the model, which is projecting out potential hurricanes, determining the frequency with which they’ll occur, and the path they’ll take if they do occur,” said Fanoe. “Then, we project the path [a hurricane] will take, including where it will make landfall, what will happen once it makes landfall, and how much the wind speed will slow down.” Then, there is the wind field assessment, which determines what areas are being affected and by how much wind. “This allows you to map out all of the homes and buildings that are impacted by wind and how much wind there is,” said Fanoe. “Wind fields feed directly into the [engineering] component of the model.” The combination of the meteorological and engineering components produces an estimate of how much damage is done to every home within the wind field of the model, which leads to insurance expertise. “This component looks at what homes are written by an insurer, what the limits are on those homes, and what the deductibles are on those homes,” Fanoe explained. “What the overall limits are is how reinsurance comes into play. That is used to project the loss that a particular insurance company is going to take related to that storm.” While this is a very simplified take on how hurricane models work, it is important to understand that since they utilize meteorological, engineering, and insurance expertise, it takes multiple different experts to create them. There also can be a lot of different versions of these models. That being said, almost every model will have a long-term and short-term version of that model. “The only difference between the long and short-term versions of the model is in the frequency assessment of the hazard model,” Fanoe shared. “A long-term model will use usually 100-year or more averages of the actual landfall rates of hurricanes in the U.S. to project that frequency. A short-term model will be based on shorter-term averages.”

How Insurance Companies Use Hurricane Models

Since hurricane models are very complicated, Darby revealed that the Maine Bureau of Insurance requests information on each CAT model in the filings as well as the version number that they’re using for their CAT load. Then, they look down to the Florida Commission of Hurricanes to see if they’ve approved that model. If Florida has approved it for use in Florida, then Maine allows it for use in their rate filings. “We follow this process because I do not have the expertise to review the CAT model as it is,” Darby explained. “That being said, we do have 3,500 miles of coastline here in Maine, and even though our hurricanes are usually category one or two, we’re still concerned about having a large coastline in the future.” With this in mind, it is important that insurance companies are building in enough load in their rates so that they maintain solvency.

Education & Regulation of Hurricane Models

While some states, like Maine, do not have a coastline that is much impacted by severe hurricanes, Gupta believes it has become increasingly important for regulators to build knowledge and understanding of CAT models. “[Regulators] are key stakeholders when it comes to managing the insurance marketplace within their states,” she said. “They need to ensure that their markets are healthy and solvent with increased catastrophic and climate risk and that there is availability and affordability of insurance.” Historically, the knowledge and understanding of CAT models have been limited in the regulatory community for many reasons. “One is simply the lack of access to model documentation due to the proprietary nature of these commercial CAT models,” Gupta shared. “So, the documentation or the knowledge doesn’t exist in a public state that is readily available for regulators.” The other, she explained, is the fact that these are complex models. “There are not enough standard resources that exist within individual state DOIs and within the NAIC around these CAT models,” Gupta stated. She is currently trying to change this with her work at the NAIC. Gupta’s role focuses on bridging the educational gap and building knowledge within the regulatory community. “We have actually developed a foundational course around these CAT models that is peril agnostic,” she revealed. “The course focuses on different components of the CAT model framework, the input-output, and the application of CAT models.” The NAIC plans to expand this training program to specific perils, which will go more in-depth depending upon individual states’ needs.

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Linda Jancik
Product Manager – Personal Lines (AAIS)
lindaj@aaisonline.com

Greg Fanoe, FCAS, MAAA
Director & Consulting Actuary (Davies)
gfanoe@merlinosinc.com

Sandra Darby
Property & Casualty Division Actuary (Maine Bureau of Insurance)
sandra.c.darby@maine.gov

Shaveta Gupta, CPCU, ARM, ARe, CCM, CCRMP
Catastrophe Risk & Modeling Advisor (NAIC)
sgupta3@naic.org

The post Webinar: Hurricane Models – Creation, Usage, and Regulation first appeared on AAIS.

Overview of the Regulation

In October 2022, the California DOI passed the regulation requiring an insurer to offer specific mitigation factors. Westcott explained that the determination for whether this applied to consumers’ currently filed rate was whether they used the wildfire risk model, or the rating plan segmented a policyholder’s rate based upon the policyholder’s wildfire risk. “The regulation addresses two types of mandatory mitigation factors as well as the community level and property level mandatory mitigation factors,” Westcott described. “The property level factors cover mitigation measures addressing both the immediate surroundings at the structure, often referred to as ‘defensible space,’ as well as the buildings hardening measures performed on the structure itself.” The regulation further identifies some optional factors relating to wildfire loss that an insurer may incorporate into the rating plans as long as the resulting rate is not excessive, inadequate, or unfairly discriminatory. Westcott shared that throughout the regulation, there are administrative requirements an insurer must follow. “Many of the requirements are around transparency and providing information regarding the mitigation credits to your policyholders,” she said. In addition, each company is still required to make a filing even if your advisory organization has filed with the department.

Wildfire Mitigation in AAIS Manual

Linda Jancik explained that this regulation affected the homeowners by peril (HOBP) and homeowners by composite (HOC) programs at AAIS the most. Filings* were also done for agricultural output, commercial output, and inland marine guide-motor truck cargo. Wildfire risk mitigation credits are available in both California HOBP and HOC programs in the AAIS rule manual as separate rules. “The reason [for this] is that there are different ways of premium determination for these two programs,” Jancik explained. “Because in HOBP, wildfire can be isolated, whereas in HOC, their combined loss costs do not allow it to split up into individual programs.”

There are three categories of wildfire risk mitigation credits available: community coordination, property hardening, and defensible space. “Whereas the community coordination credit applies to the community you live in, property hardening measures, as well as defensible space measures, can be influenced by the policyholder,” said Jancik. “So, we can’t suppress our way out of wildfire.” She believes that communities that are coordinated, collaborative, and consistent in their wildfire mitigation efforts are likely to have lower losses and better outcomes. Property hardening measures relate to all building characteristics that help reduce wildfire risk. The risk of wildfire damage to buildings is also dependent on preventative measures such as ensuring that the area surrounding the building is clear of excessive flammable material and debris.

Rating Impact

For the community coordination credit, AAIS is proposing a 4% wildfire credit for being recognized in a FirewiseUSA site in good standing. “This 4% is larger than most of our other credits,” Mike Payne relayed. “We wanted to recognize that they have a lot of activities going on; they’re really committed. So, it was a little bit more robust.” In a California fire risk reduction community, AAIS is proposing a 1% credit. It’s a relatively new program, according to Payne, which is why it is different from the FirewiseUSA sites. “But these two pieces are technically mutually exclusive,” he added. “So, you could be in one or both of those types of communities [and] your maximum wildfire credit for community coordination would be 5%.” AAIS is proposing a 1% credit for each of the property hardening credit type activities (Class-A fire-rated roof, enclosed eaves, etc.) “It might seem small, but we really wanted to try and emphasize the fact that when you do more of these, they add up and you’ll get more of a benefit,” Payne explained. The same applies for the defensible space credit. “Again, assuming all five activities are met, you would get the 5% compounding impact and you add those together to get a total of 10% for maximum wildfire credit for defensible spaces,” said Payne. “If you add up those three components together, we are proposing a maximum of a 25% credit to the wildfire portion of the loss costs.”

Rethinking Consumer Notices & the AAIS Consumer Notice Tool

When discussing wildfire mitigation, one of the key factors that comes up is how to incentivize homeowners to take action. “The regulation that’s been put forth by CDI goes a long way to start driving change and homeowner behavior,” said Matt Hinds-Aldrich. “But we still need to instill a sense of urgency. [AAIS] discovered the importance of the consumer notice.” Because this regulation puts a lot of focus on actuarial analyses and being compliant with the law, the consumer notice tends to become an afterthought. “[AAIS] started realizing that there’s a real missed opportunity here,” Hinds-Aldrich claimed. “So, we spent time developing a consumer notice model.” In doing so, AAIS identified three key issues that needed to be addressed: comprehension, accessibility, and motivation aspects.

When creating the consumer notice sample, AAIS believed that if it was kept short, succinct, and relevant, homeowners would take full advantage of it. Information can either be put in manually through drop-down menus or in an automated fashion at scale. “Whatever the reading is, or variables that are selected, [the form] will automate all of the remaining information,” Hinds-Aldrich explained. The other component worth noting is that this form is entirely customizable by any AAIS member. “Everything can be changed from the colors to the verbiage,” Hinds-Aldrich shared. “[We] recognize that carriers are going to have to make their own choices and may have different variations when they do their own filing.” AAIS has also created a separate version of the consumer notice tool that allows companies that use catastrophic wildfire risk models to disclose the model that was used and how it operates.

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Linda Jancik
Product Manager – Personal Lines
lindaj@aaisonline.com

Mike Payne, FCAS, MAAA
Chief Pricing Actuary
michaelpa@aaisonline.com

Matt Hinds-Aldrich, PhD
Senior Risk Strategy Lead
matth@aaisonline.com

*Note that filings for these programs have not yet been approved.

The post Webinar: Making Wildfire Mitigation Meaningful: Addressing California’s Mandatory Wildfire Mitigation Credits Regulation first appeared on AAIS.

Matching the Needs of An Organization to the Wants of the Next Generation of Insurance Professionals

According to Morgan, culture is one of the key decision metrics that people use when they’re either looking for work or starting at a new company. “I think what employees are really looking for has shifted,” he surmised. “Work-life balance is really high up on the list now. COVID really motivated that to become something important. People sat back and started reevaluating what was important to them during the pandemic.” Another common need for the next generation of insurance professionals is career advancement. “It can be a real challenge for employers to ensure their employees can advance in their careers if they work remotely or even hybrid,” said Morgan. “So, I think it’s incumbent on managers to make sure that when they’re getting a new employee, they vocalize what their career path will look like.” Meaningful work is also key. “I don’t think employees want to just show up [to work],” Morgan explained. “They want to be giving back and contributing.”

Elements of a People-First Company Culture

Newman believes a people-first company culture starts with establishing strong values, shared values, and a compelling vision and mission. “A lot of companies that I’ve worked with do this as an annual exercise or they have motivational posters on the walls,” he said. “But it’s really got to be something that’s lived and talked about and brought into your [organization’s] daily, weekly, or monthly meetings.” In addition, Newman recommends investing in technology to enable teams within a company. “You’ve got to enable that team to have an effective experience, especially if you’re in a hybrid environment,” he urged. “But even if you’re not [hybrid], you need the technology that gives you the ability to have a quality experience in your meetings.” Establishing a regular cadence of in-person meetings is also critical for remote or hybrid organizations. “WSRB started doing this in 2020 alongside even more frequent Zoom and Microsoft Teams meetings,” Newman shared. “We established a strong culture by scheduling quarterly in-person meetings and monthly virtual meetings. Our business units meet monthly in person and our executives and leadership team meet weekly virtually. These frequent meetings revealed a ton of opportunities for us to improve the virtual and hybrid environment for us.”

There are great opportunities to build company culture by improving the processes and procedures that were in place pre-COVID. For example, Morgan described how WAHVE now makes performance reviews more personal, asking questions like what the employee did over the weekend, what their hobbies are, etc. He also suggests management teams create videos for new hires talking about the company and its culture. “Doing so will help new employees understand what to expect, what they’re going to be faced with in their role, and what the company is like before they even start the job,” Morgan explained.

How to Keep Remote Workers Happy, Motivated, and Productive

The key to having a happy, motivated, and productive team is to simply hire motivated positive people. “You can’t motivate the unmotivated,” Newman stated. “Give new employees a clear vision, mission, and goals to rally around. Remove any obstacles and make sure they have the tools, training, and resources they need to be successful, and then reward them when they are.” Companies that neglect to build up their people are companies that are not as effective as they can be. “At WSRB, we’re working on building the whole person to be a better person at work and outside of work,” Newman revealed. Through an anonymous all-employee survey that measured organizational effectiveness, WSRB found that it is, indeed, possible for companies to value people and get results at the same time.

For Morgan, constant communication is critical in keeping remote employees content. “In this new work environment, there’s a new layer of complexity and responsibility for management teams to make sure that there’s clear and consistent communication with focus and intent for the people that are in the office,” he said. Simultaneously, it’s important for employees who work remotely to be part of these in-office communications. “There are different ways managers can do that, whether it’s having weekly meetings, monthly meetings, or scheduling consistent check-ins.”

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Karl Newman

President/CEO (WSRB/BuildingMetrix, Inc.)

Karl.Newman@wsrb.com

Rick Morgan

Chief Marketing Officer (WAHVE)

Rick.Morgan@wahve.com

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