A new era of smarter insurance

1. You've been in this space for nearly 40 years, long enough to witness some remarkable shifts in the way data drives decision making. How would you describe the evolution of the industry from then to now?

There's a better understanding of data [today]. Data sets were just starting to formulate about 40 years ago. There were inspection services and basic information that was being captured about the risk but it wasn't automated. Now the insurance industry ingests that intelligence, and they can make informed decisions associated with it. Today, we have a better understanding of the risk. It's constantly evolving, and obviously technology's played a huge role in that as well.

2. What does this transformation mean and how does it impact the way you lead this part of the business?

It's so easy as business today to create a solution and try to find a problem that the solution is actually addressing. We start at the other end: really understanding the problem of our customers. We don't return content by itself. We deliver decisions. Think about the difference between the two. If you're delivering raw content, it's easy to just toss it over the wall and say, "Okay, do with it what you want, embed into your process and you just let it go." We're so deeply embedded into the understanding of the problem itself. We try to make it easier for the systems of the insurance carriers to ingest it, make full use of it and apply it across their entire infrastructure in a way that they have a better understanding of the risk itself.

3. How does just viewing the industry through that consumer lens influence the way you and your team design these solutions?

4. How is AI changing the way insurers understand price and prevent risk compared to traditional approaches 10, 20 or 30 years ago?

We've had versions of AI for decades out in the marketplace, [such as] modeling data assets or predicting the likelihood of a future claim. [For example] if you think about our credit scores for the financial market, they're trying to predict an outcome over the next 12 months. We're doing the same thing, but related to insurance. We're [predicting] the likelihood of having a claim over the next 12 months to understand you as a risk and the components of how you look today based on your prior experiences. That's been fundamental to what we've been doing for years.

Now, we're [using AI] to bring more intelligence out of a traditional paper report, and to extract intelligence that's used to settle a claim and it's reported back to the insurance carrier consistently in a digital stream that the insurance carrier can actually read. But more importantly, it's the consistency associated with this. You don't have five or six or 10 or 20 or 100 claim adjusters having their own individual interpretation of what the police report is saying. Bringing the consistency is the other side of AI that is going to play a huge role going into the future as well.

5. What did the shift to electric vehicles mean for auto insurance?

Well, it was pretty significant. Anytime there's a new technology and lack of performance data, understanding that risk and how to manage it, how to price it -- you almost have to launch, learn and gather intelligence over time. Some of the challenges that have occurred because of that new technology are how you drive that vehicle. The difference in when you accelerate and how you brake is massively different with EVs opposed to the traditional ICE vehicle. What we're seeing is this training curve where it takes literally months, especially if you have the inconsistency of use within the household. We're seeing the performance of some of the garages with two separate technologies sitting within the garage being a little riskier that the insurance industry starting to take a close look at.

6. How do you collaborate with these carriers on a more basic level to help them tackle their biggest challenges, so the policy holder is better off for it?

We play a pivotal role in not only bringing the knowledge of the risk forward, but also at a speed that's satisfactory to the carrier and to the consumer. It's keeping the consumer front and center in all those decisions and thinking about the journey of a consumer as they work with an insurance company. There are points along that journey where the insurance carriers need more intelligence about the risk to ultimately price it appropriately, to ultimately get it into the infrastructure.

If you look at the insurance industry and insurance carriers, when they start to lose risk, a lot of it starts at the point of claim where the claim isn't handled properly at the right speed, where the consumer loses confidence with that carrier on the go forward. We play a pivotal role in not only bringing knowledge about the risk forward but also a speed that’s satisfactory to the carrier and to the consumer.

7. What's really driving these ballooning insurance premium costs?

It’s a complicated question. It goes back to my reference on the pandemic. Think about what was happening in March in 2020. You as a consumer were not driving your vehicle. It's parked in your garage. Consumer groups were saying, "Why are we paying all these insurance premiums out there when we're not driving the vehicle?" Insurance companies started to feel the pressure and in some cases, they were giving rebates back to consumers.

But then '21 hits and consumers started driving again. The industry really couldn't anticipate how active consumers were going to be in driving again. In '21, '22 and '23, the industry was literally losing billions and operating in the red. The rates continued to go up over a period of time to a point that we as consumers were all feeling the impact.

8. How do you see LexisNexis Risk Solutions Insurance shaping the industry, and what role will the company play in just influencing the broader space?

Well, and I think it's the constant understanding of the risk. If you look at how carriers became more competitive over time, it came through better segmentation. A number of years ago, the insurance carrier may have had somewhere between five and 10 pricing tiers. That same carrier today has 160 plus pricing tiers. With better segmentation, you can price differently so you don't have a wide bucket of risk.

9. What excites you most about the company's future in the years ahead?

The impact that we're having on society. 80 percent of the consumers in the US market are paying lower personalized insurance premiums because of what we do. How can we continue to advance that in a way that's not only helping the insurance industry, but helping just society? I think we play a critical role in helping tell that story, but it needs to be a collected effort with educating the regulators and the insurance industry, so they can tell the story as well to their customers. We're a very transparent organization. We want everybody to truly understand how data's being utilized, and so consumers do have that comfort feeling in terms of what we do and how the data is being used by the industry itself.