[Editor's Note: The following content is sponsored by MC Consultants, Inc. and Forensic Weather Consultants, LLC.]
What trends in technology will take shape in 2023? What influence is artificial intelligence having on claims operations? And finally, what is your biggest technology-related success story in the last 12 months?
As insurers focus on reducing operating costs, will 2023 be the year we see technology laggards in insurance commit to modernizing their systems, and what might such a transformation look like for a claims department?
Terence D. Kadlec, MC Consultants: No one wants to be a laggard; the days of fax machines and pagers are long gone. It is a necessity for all companies across all industries, including professionals that support insurance claims and litigation, to innovate and accept technology for what it is—an asset. It’s also the future. We need 2023 to be the year in which we align with the innovators and early adopters in our industry and make a concerted effort to adopt and utilize tools that are advantageous to everyone, from insureds to insurers. Technological advances such as drones and photogrammetry are not new but are inexpensive to adopt and utilize while being more reliable for resolving disputes. Baby steps forward will lead to virtual and augmented reality and AI being less science fiction and more everyday tools.
What is a realistic expectation for the integration of AI into claims operations over the next year? In other words, where might we see the most growth in the use of AI, and what will that look like? How about over the next five years?
Terence D. Kadlec, MC Consultants: With the investment in innovation by insurance companies and industry counterparts, the ceiling for AI impacting the industry is high. To consider where we are today, and where we’ll be in the next 12 months or five years, think back 12 months or five years. According to a December 2022 report published by McKinsey, organizations utilizing AI in at least one business area grew by 50% in 2022 and have more than doubled in the past five years. AI-driven systems being integrated and adopted by insurance professionals are exploiting their efficiency in time and quality. The idea of receiving what amounts to a terabyte of data, say a conference room full of Bankers Boxes, would formerly overwhelm a team of experts to scour the documents, whereas AI can review the same documents 24/7 with greater efficiency. As we integrate more AI systems through all areas of our lives, both work and personal, the data generated is growing exponentially. When it comes time for a claim, we will need the AI to be at our side helping to review the information. That is where I believe we will be in five years: a hybrid system of document review and information gathering.
Are there examples you saw of technology shining when it came to evaluating and resolving claims after Hurricane Ian compared to hurricanes of years past?
Howard Altschule, Forensic Weather Consultants, LLC: After Hurricane Ian did its damage, we knew we were going to be retained on many wind and storm tide claims. We were able to run a detailed storm tide modeling system in post-analysis that helped us determine the storm tide water level heights hour-by-hour at any location. The program combines storm-surge heights with the tide cycles to help determine the highest water levels. This program also uses initial high-resolution NOAA model data to help determine wind direction, sustained winds, and peak wind gusts each hour. How high the water got and when it reached each property is a crucial piece of the puzzle. Since there was little information about the timing of storm tides in many areas, being able to view the detailed wind information and storm tide water heights in an hour-by-hour table was very informative. Whether the high winds or high water came first depends on exactly where each property is located and its elevation above sea level. The hurricane claims and cases we work on have gotten so much more detailed thanks to the availability of different types of data and technology.
Terence D. Kadlec, MC Consultants: Hurricane Ian came at a time when the industry workforce was already thinner than in previous years. It’s difficult to get boots on the ground when there are fewer “boots” available than are needed. Insert the use of advanced photogrammetry systems such as drones and 360-degree cameras, coupled with the adoption of AI systems. We utilized these capabilities to complete timely and efficient evaluations of damage and distress, essentially capturing post-hurricane conditions and memorializing direct physical evidence to allow owners and insureds alike the ability to start rebuilding. The output from MC Virtual-360 allowed experts to effectively bring claims professionals into the disaster zone like never before on a computer screen and through virtual reality. Moreover, the data allows for the development of fly-through videos and animations later that make conveying a message to the trier of fact more effective than ever before.
What is your best claims-related tech success story over the past year?
Howard Altschule, Forensic Weather Consultants, LLC: One case that I frequently use as an example is a large-loss roof damage claim, which alleged that hail damaged a commercial structure in the Midwest. We were retained by a large insurance carrier to investigate whether hail occurred at the property on the reported date of loss. The claim was in litigation and the insured retained another meteorologist who opined that large hail fell that day. Besides getting many different types of weather data, we always obtain high-resolution Doppler radar images for these kinds of cases and plot the property location on the radar images themselves. It was immediately clear that there was no hail based on the very weak Doppler radar intensities over the property. The insured’s meteorologist relied more on a National Weather Service (NWS) storm report of hail nearby. Since this hail report made no sense based on the radar data, we contacted the local NWS office, and they responded back to us that an NOAA contractor inadvertently plotted the hail report 26 miles away in the wrong location. At the end of the day, the insured’s meteorologist said they had no other information to support the hail claim and dropped the case, saving the carrier in excess of $500,000.
Terence D. Kadlec, MC Consultants: To start, consider the visual of a conference room full of Bankers Boxes, stacked floor-to-ceiling, rows deep. The ways of five years ago may have been to assemble a team of professionals to go through the boxes one at a time, reviewing each and every page, taking notes, and trying to stay organized, all while remaining efficient in performing the task. It could be done, and it was done. However, in 2022, MC completed this same type of task on a project without a dozen teammates reviewing individual pieces of paper, but rather through our consulting team using an AI program to perform rapid analysis of the large volume of documentation, provided through MC Intelligence. The result of using AI to search, review, and evaluate the client’s one million pages of digital documentation yielded satisfactory results to resolve the claim. And by all accounts, this project was done exponentially quicker and at considerable financial savings to the client.
Terence D. Kadlec, PE, is vice president, engineering & specialty services, at MC Consultants.
terence.kadlec@mcconsultants.com
Howard Altschule, is CEO and certified consulting meteorologist at Forensic Weather Consultants, LLC. hga@weatherconsultants.com