Restoring Profitability in Commercial Automobile Insurance with Artificial Intelligence

We have started to resume a sense of normalcy while fighting the Covid 19 Pandemic and its new variant.Ā  In a recent Insurance Journal article,[1] the author stated that the commercial automobile insurance market posted its best underwriting results in a decade due to significant rate increases and a drop in driving due to the pandemic. However, future profitability will be challenging as driving activity increases, combined with an increase in severity, which will drive up costs. In addition, the higher costs from rising litigation activity and more significant jury verdicts and settlements will weigh in on future profits.

However, even amid these factors, there is a way to more profitability, and it is with artificial intelligence leveraged into your Claims and Underwriting processes. Artificial intelligence, machine learning, and natural language processing are crucial to reducing the severity and allocated loss adjustment expense and avoiding litigation.

The best A.I. solution must address severity, litigation, and expenses. Therefore, we are introducing CHARLEE.AI – the first Insurance Insights Engine.

Commercial automobile insurance has unique challenges compared to the personal lines automobile sector. For example, the common denominators for high severity in commercial claims can be large delivery and cargo haulers, the size and number of vehicles operating 24 hours a day, seven days a week. As a result, commercial vehicles are prime targets for organized crime rings[2] due to the high volume of ā€œtargets.ā€ In addition, small businesses displaying company logos on their vehicles are also preyed upon by fraudsters. The recent investigations and legal proceedings in Louisiana and other states have exposed some of these groups[3], and, unfortunately, this type of fraudulent activity will continue to grow, affecting your companyā€™s bottom line.

Artificial Intelligence, Machine Learning, and Natural Language Processing

The CHARLEE.AI Team consists of data scientists, engineers, technical architects, and insurance domain experts.Ā  This multidisciplinary team created Charleeā„¢, the first Insurance Insights Engine for most lines of business[4].Ā  Charleeā„¢ leverages artificial intelligence-generated insights (over 40,000) into cost savings by quickly revealing patterns within claims leading to high severity and litigation. For example, imagine the possibility of identifying an organized ring preying on your company by staging automobile collisions.Ā  Commercial vehicles are a prime target, and your customers readily identify themselves with their logos on their vehicles.Ā  Medium and large size trucks and tractor-trailers are a favorite target of these groups.Ā  Charleeā„¢ acts as an A.I. early warning system, identifying entities and topics within claim notes and third-party data (unstructured text) used in your business process throughout the life of a claim.

Entities, Topics, and Litigation Prediction Leading to High Severity

The Charleeā„¢ Insurance Insights Engine extracts topics and entities with natural language processing.Ā  These topics (loss types, injuries, etc.) and entities (businesses, attorneys, healthcare providers, vehicle repair facilities, etc.) reveal patterns leading to high severity and litigation. Charleeā„¢ analyzes and sorts the data with natural language processing so the Examiner can create an action plan for cost savings, a reduction of severity, and potential litigation. In addition, Charleeā„¢ analyzes the unstructured text in a claim file for patterns leading to litigation.Ā  The Claims Supervisor or Examiner thereby can take the appropriate steps to manage workflows cost-effectively and mitigate litigation.

Underwriting, Product, and Actuary

Charleeā„¢ can be utilized for risk management in portfolios and reserves (IBNR) and develop endorsements and exclusions based on prior risk patterns.

Getting Started

Increasing claims severity has been a significant factor in the last decade for the commercial automobile insurance line. Higher costs from rising litigation activity and more substantial jury verdicts and settlement costs will weigh in on future profits. Artificial intelligence with machine learning and natural language processing are force multipliers for lowering the severity in commercial automobile claims. The underwriting team and risk portfolio managers also benefit from the insights Charleeā„¢ brings into your business process.

Contact the CHARLEE.AI Team and learn how Charleeā„¢ can help your claims and underwriting teams.




[4] Personal and Commercial Automobile, General Liability, Commercial Property, Homeowner and Cyber


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