Amazon Web Services at Cusp of Cybersecurity Insurance: July 2023

This News Covers

• Is usage-based insurance and its outlook in 2023 and beyond

• Digital insurance platforms and Generative AI
• How blockchain will empower insurers and insurance industry?
• Generative AI and insurance fraud softwares
• Top Companies that are doing innovation in the Insurance Industry

Amazon Web Services (AWS) is making a significant move into the cyber insurance industry with the launch of a new program that promises customers a security insurance quote within two days. This initiative is expected to bring substantial revenue opportunities for the channel. AWS' Ryan Orsi, worldwide head of cloud foundations for the AWS Partner Network, describes this as an "industry-shaping moment," highlighting the need for reinvention in the cyber insurance industry in the era of cloud.

The AWS Cyber Insurance Program aims to help AWS customers improve their security posture and get insured as quickly as possible, streamlining the often complex process of obtaining cybersecurity insurance. The program is designed to address the current challenges in cyber insurance policies, which often involve extensive paperwork, lengthy communications, and a general lack of understanding of cloud operations. This has resulted in higher-than-expected insurance premiums and lower-than-expected coverage limits, particularly affecting small to medium enterprises.

The new program leverages the AWS Security Hub to streamline the entire procedure, with partners set to reap the benefits. Justin Copie, CEO of Innovative Solutions, an AWS partner, believes that the program will be met with significant praise and excitement, especially as many small to midsize businesses are struggling to obtain and maintain their cyber insurance in 2023.

In the context of the broader trend of AI adoption in insurance, this move by AWS signifies a major step towards integrating advanced technologies to enhance security, efficiency, and customer service in the insurance industry. As we move into July 2023, we can expect to see further innovations and developments in this space, with AI playing a central role in transforming the insurance landscape.

MarketsandMarkets welcomes these developments and our editors share their views.

The insurance industry is increasingly leveraging artificial intelligence (AI) to streamline processes and enhance efficiency. However, the adoption of AI is not without its challenges and considerations.

Here are a few notable developments from recent weeks and months.

Fox Business reports that insurance companies are using AI for underwriting and due diligence, even as they face cyber threats. AI-informed automation in the underwriting workflow can accelerate processing times and yield insights that underwriters may not have been able to track down manually. However, the adoption of AI also comes with the risk of fraudsters using AI to create fictitious businesses or carry out fraud.

Meanwhile, Insurance Business highlights the call by Cloverleaf Analytics for an insurance consortium to tackle AI ethics. The company has initiated a group called the "Ethical AI for Insurance Consortium" to facilitate discussions on AI ethics. The consortium aims to develop a code of conduct around using AI and machine learning in insurance.

Post Online emphasizes the need for insurers to solve the core problem of data before immersing into generative AI. Insurers need to tackle issues related to legacy systems before implementing generative AI into their businesses.

While insurance companies are keen to explore the benefits of generative AI tools, customers may not be ready to embrace this technology. A survey commissioned by InRule Technology found that nearly 59% of respondents tend to distrust or fully distrust generative AI, and 70% still prefer to interact with a human.

What is cyber insurance and how Generative AI will impact?

• Cyber Insurance

Cyber insurance is a specialized form of insurance designed to help businesses mitigate risk exposure by offsetting costs involved with recovery after a cyber-related security breach or similar event. It covers a range of elements, including data breaches, network damage, and cyber extortion. As the digital landscape evolves, so does the nature of threats, with generative AI emerging as a significant factor in the cybersecurity arena. Generative AI, typified by large language models like OpenAI's GPT-3, uses machine learning algorithms to generate new, original content, which can range from text to visual content, music, and even complex virtual environments. This technology presents both opportunities and challenges for cybersecurity and, by extension, cyber insurance.

• Generative AI and Cybersecurity Opportunities

Generative AI offers substantial opportunities to enhance security measures. It can improve threat detection and incident response times by learning from past cyber-attacks and generating scenarios to anticipate and prevent future threats. This proactive approach reduces the risk of zero-day attacks. Generative AI can also help design more robust security systems by continuously learning from a vast array of inputs, simulating diverse attack vectors, and devising appropriate defensive strategies. Furthermore, it can automate numerous tasks in cybersecurity operations, reducing the workload of security personnel and allowing them to focus on more complex issues.

• Impact on Cyber Insurance

The emergence of generative AI impacts cyber insurance in several ways. The ability of generative AI to create deepfakes and disinformation can lead to new forms of cyber threats that may not be covered by traditional cyber insurance policies. For instance, deepfakes can ruin a company's reputation, bypass biometric controls, and convince financial agents to transfer money to offshore accounts. These new forms of threats necessitate changes in insurance policies and what it takes to qualify for one.

Moreover, the potential for generative AI to be weaponized for more sophisticated cyber attacks raises the stakes for cyber insurance. Policies will need to evolve to cover the increased risk and potential damage caused by these advanced threats. This could lead to higher premiums or more stringent requirements for coverage.

• The Road Ahead

The intersection of generative AI and cybersecurity is a rapidly evolving field. It necessitates a balanced approach in harnessing the benefits while mitigating the potential threats. Organizations must create robust ethical guidelines for AI use to prevent misuse and preserve user trust. Regulatory bodies should oversee the use of generative AI, especially regarding deepfakes and disinformation. More investment is needed in research that focuses on countering AI-powered threats. Techniques like adversarial machine learning can be leveraged to design defenses against generative AI-based attacks.

Analysis of insurance analytics and how it will evolve in 2023

1. Enhanced Risk Data Analytics: Moody's and Microsoft have collaborated to develop enhanced risk data analytics, research, and collaboration solutions powered by generative AI. This partnership aims to provide insurers with more accurate and comprehensive risk assessments, enabling them to make better-informed decisions. The use of generative AI in risk data analytics is expected to revolutionize the way insurers assess and manage risk, leading to more efficient underwriting processes and improved risk management strategies.
2. Expanding Commercial P&C's Market Relevance: According to a report by McKinsey, the global insurance industry is set to expand its commercial property and casualty (P&C) market relevance in 2023. The report highlights the need for insurers to adapt to the changing market dynamics and leverage technology to meet the evolving needs of their customers. The integration of technology in the insurance sector is expected to play a crucial role in this expansion, enabling insurers to offer more personalized and efficient services.
3. Customer Behavior and Loyalty in Insurance: A report by Bain & Company reveals that consumers are increasingly looking for insurers to reduce and even prevent the risks that pervade their lives. The report suggests a shift in the industry’s central purpose from loss reimbursement to risk solutions over the next decade. This shift is expected to be facilitated by the integration of technology in the insurance sector, enabling insurers to identify, prevent, and mitigate each risk event more effectively.
4. Integration of Technology in the Insurance Sector: The integration of technology in the insurance sector is reshaping the industry in numerous ways. New technologies such as cloud computing, AI, ML, advanced analytics, and the GPS are providing new ways to measure and control risk, connect with consumers, and broaden insurability. The ongoing digitization phenomena have made insurance more affordable and accessible to customers, leading to increased sales and improved risk assessment.
5. Future Evolution of the Insurance Industry: The insurance industry is expected to continue evolving in the coming years, with technology playing a central role in this transformation. Rapid economic expansion and a focused regulatory push are expected to help India become the sixth-largest insurance market in the world within the next ten years. As technology adoption continues to rise across all industries, insurance companies are expected to leverage these technologies to facilitate data-driven, secure, and automated services, helping them stand out in a crowded and increasingly competitive market.

The integration of technology in the insurance sector is reshaping the industry, driving advancements in risk data analytics, expanding the commercial P&C market, influencing customer behavior and loyalty, and paving the way for the future evolution of the industry. As we move into 2023, these trends are expected to accelerate, bringing about new opportunities and challenges for insurers worldwide.

Is usage-based insurance and its outlook in 2023 and beyond

1. Growth of the Usage-Based Insurance Market: According to a report by MarketsandMarkets.com, the global Usage-Based Insurance (UBI) market is projected to reach USD 66.8 billion by 2026, growing at a CAGR of 27.7% during the forecast period. This growth is driven by the expansion of the automobile industry and the increasing interest of car owners in telematics-driven usage-based insurance, which provides low premiums for low-risk driving and high premiums for high-risk driving.
2. Technological Advancements in UBI: Technological advancements are shaping the usage-based insurance market. Major companies operating in the UBI sector are focused on developing technological solutions for usage-based insurance to strengthen their position in the market. The different technologies include OBD-II-based UBI programs, smartphone-based UBI programs, hybrid-based UBI programs, and black-box-based UBI programs. These technologies are used in various types of packages such as pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), manage-how-you-drive (MHYD).
3. Regional Market Analysis: North America was the largest region in the usage-based insurance (UBI) market in 2022. However, rapid economic expansion and a focused regulatory push are expected to help India become the sixth-largest insurance market in the world within the next ten years. As technology adoption continues to rise across all industries, insurance companies are expected to leverage these technologies to facilitate data-driven, secure, and automated services.
4. Impact of Global Events on UBI: The global insurance market is no stranger to significant unanticipated events, including the catastrophic effects of natural disasters, the COVID-19 pandemic, and geopolitical conflicts. These events have a profound impact on the insurance sector, requiring it to adapt by reviewing the scope of cover it provides, the manner in which it approaches risk assessment, and how it prices its products to remain relevant and thrive in a global marketplace.
5. Future Outlook of UBI: Looking ahead, the usage-based insurance market is expected to continue its growth trajectory, driven by technological advancements, the expansion of the automobile industry, and changing consumer preferences. Insurers are expected to leverage these technologies to offer more personalized and efficient services, helping them stand out in a crowded and increasingly competitive market. Furthermore, the integration of ESG (Environmental, Social, and Governance) factors into insurance practices is expected to become increasingly important, impacting every aspect of an insurer’s business from their own investments and levels of claims to the treatment of their customers and employees.

Digital insurance platforms and Generative AI

1. Pioneering Generative AI for the Insurance Sector: Sapiens International Corporation, a global software solution provider, and Microsoft have announced a strategic partnership aimed at harnessing the power of generative AI in the insurance industry. The integration of Microsoft Azure OpenAI and Azure Power Virtual Agents into Sapiens’ offering will enable insurers to easily navigate complex documents. The inclusion of generative AI solutions will enhance customer interactions across various domains and languages, significantly reducing the call volume for live agents. Additionally, AI can support underwriters in their daily operations and expedite the processes of claims handling and fraud detection.
2. Wisedocs' AI Medical Summary Platform: Wisedocs, an artificial intelligence software platform for the insurance industry, has launched a new AI Medical Summary Platform. This platform builds off their existing medical record review software and further supports companies in the insurance ecosystem by allowing them to quickly summarize thousands of pages of medical records while gaining insights across documents. This enables fast and inexpensive reviews of and decisions on medical records. The platform includes features such as an interactive timeline view, summary templates, keyword and date filtering, and an interactive summary annotator.
3. Impact on Insurance Ecosystem: The integration of generative AI into digital insurance platforms is reshaping the insurance ecosystem. It allows insurance carriers, legal firms, as well as third-party medical examiners and clinical staff to extract key clinical information in real-time and build meaningful customizable medical summaries from complex medical records. This not only saves time and money but also improves the review process of medical records and the ability to take on more cases.
4. Future Innovations: Wisedocs plans to add more innovative features to the new AI Medical Summary Platform in the coming months to improve the claims review process for all parties involved in a medical review. These features include allowing users to create and share custom summaries and find answers on a claimant’s medical care and history in a question and answer format. These innovations are expected to further streamline the insurance process and move the insurance ecosystem towards automation.
5. Outlook for 2023 and Beyond: As we move into 2023 and beyond, the integration of generative AI in digital insurance platforms is expected to accelerate. This will bring about new opportunities and challenges for the insurance industry. The use of generative AI will not only enhance the efficiency of insurance processes but also improve the customer experience. As more insurance companies adopt this technology, we can expect to see a significant transformation in the insurance industry.

How blockchain will empower insurers and insurance industry?

1. Fraud Detection and Prevention: One of the significant challenges the insurance industry faces is fraudulent claims, leading to annual losses worth billions of dollars. Blockchain technology can help mitigate this issue. Its inherent feature of capturing time-stamped transactions with complete audit trials makes it difficult for fraudsters to commit fraud. Blockchain replaces authenticity certificates and stops duplicate claims, artificial replacements, and fake insurance claims, thereby saving insurance companies significant amounts of money.
2. Enhanced Customer Experience: Blockchain technology can significantly enhance the customer experience in the insurance sector. It enables automated processing using smart contracts, where business agreements are built into the blockchain, and payments are auto-triggered when certain conditions are fulfilled. This way, customers can have a seamless experience while enjoying the benefits of automation.
3. Improved Trustworthiness: Blockchain technology can create trust between different entities in the insurance sector. Consensus algorithms built into blockchain allow immutability and audits, making creating smart contracts on the blockchain easier. Moreover, smart contracts enable timely, transparent, and trustworthy transactions, reducing fraud and making auditing more seamless.
4. Empowering Automation: Smart contracts streamline the insurance process and enable transparent transactions. The entire insurance claims process works smoothly as the blockchain executes on the smart contract terms. Automation is a massive benefit for insurance companies, as blockchain saves time, effort, and money by lowering administrative costs.
5. Data Collection and Storage: Blockchain technology can help collect and store useful data using artificial intelligence (AI) and Internet of Things (IoT) technologies. This data can be used to make informed decisions on insurance premiums and help monitor vehicles to qualify insureds for safe driver discounts.

Blockchain technology has the potential to bring about significant positive changes in the insurance industry. From fraud detection and prevention to enhanced customer experience, blockchain technology can revolutionize the insurance industry. As the industry continues to evolve and adapt to the digital era, the adoption of blockchain technology will play a critical role in shaping its future landscape.

Generative AI and insurance fraud softwares

1. Sapiens and Microsoft's Generative AI Integration: Global software solution provider Sapiens International Corporation and Microsoft have announced a strategic partnership aimed at harnessing the power of generative AI in the insurance industry. The integration of Microsoft Azure OpenAI and Azure Power Virtual Agents into Sapiens’ offering will enable insurers to easily navigate complex documents. The inclusion of generative AI solutions will enhance customer interactions across various domains and languages, significantly reducing the call volume for live agents. Additionally, AI can support underwriters in their daily operations and expedite the processes of claims handling and fraud detection.
2. AI in Fraud Detection: AI has emerged as a powerful tool for detecting and preventing fraud in the insurance sector. Machine learning algorithms can be used to automatically identify patterns of fraud in historical data. Natural language processing (NLP) can be used to analyze large amounts of data to identify fraud patterns. Predictive analytics uses historical data to predict future fraud trends. AI-powered engines can perform authorization rather than depending on obsolete security measures like passwords and OTPs that are susceptible. Biometrics-based authentication like voice, fingerprint, face scan can be set up for authentication thus preventing identity theft.
3. Generative AI in Claims Landscape: Generative AI is rapidly transforming the claims landscape. Tactics like double extortion and targeted attacks are becoming more common. Cybercriminals spend time researching companies and impersonating senior leadership personnel in phishing attacks to obtain login credentials. It is essential for insureds to partner with carriers who offer real risk management solutions and provide cybersecurity training and consulting services to improve defenses.
4. Real Risk Management Solutions: Insureds need to conduct cybersecurity training and tabletop exercises to address evolving risks. Partnering with carriers that offer cybersecurity consulting services can help improve defenses and response strategies in the event of a cyberattack.
5. Rapid Response: Rapid response is crucial in preventing major losses associated with ransomware claims. Insurance companies like AXA XL provide hotline services and assemble teams promptly to prevent intrusions from escalating into full-blown attacks.

Generative AI and insurance fraud detection software are playing a crucial role in transforming the insurance industry. As these technologies continue to evolve, they will provide more efficient and effective ways to detect and prevent fraud, ultimately saving insurance companies significant amounts of money and resources.

Top Companies that are doing innovation in the Insurance Industry

1. Zego: Zego is a commercial motor insurance provider that powers opportunities for businesses, from fleets of just one vehicle to entire sharing economy platforms.
2. QuanTemplate: QuanTemplate provides an end-to-end solution for managing insurance data. They offer data transformation and analytics tools designed specifically for the insurance industry.
3. Wrisk: Wrisk is a consumer-facing app that enables customers to buy and manage multiple types of insurance in a single plan.
4. Shift Technology: Shift Technology leverages the best of data science to automatically detect networks of fraudsters in insurance and e-commerce.
5. Neos: Neos is the UK's first smart home insurance provider, combining smart home technology, 24/7 monitoring, and assistance plus comprehensive home insurance in one.
6. Next Insurance: Next Insurance is transforming small business insurance with simple, digital, and affordable coverage tailored to the self-employed.
7. MetroMile: MetroMile is a pay-per-mile insurance company that uses data science and machine learning to offer a more accurate and affordable insurance rate.
8. Corvus Insurance: Corvus Insurance uses novel data and artificial intelligence/machine learning to better predict and prevent loss.
9. Policygenius: Policygenius is an online insurance marketplace helping people get the coverage they need and feel good about it.
10. Clearcover: Clearcover is a digital car insurance provider offering more affordable coverage in an easy-to-understand way.

These companies are leveraging technology and innovative business models to transform the insurance industry, offering more personalized, efficient, and affordable services to their customers.

References

1. AWS’ New Cyber Insurance ‘Industry-Shaping’ Program: 5 Big Things To Know
2. Insurance companies using AI for underwriting and due diligence amid cyber threats
3. Tech firm calls for insurance consortium to tackle AI ethics
4. Is blockchain finally coming for the insurance industry?