Six Things Newsletter | May 18, 2021

In this week's Six Things, Paul Carroll looks at the big problem with 'noise.' Plus, why open insurance is the future; time for the next phase of innovation; intersection of AI and cyber insurance; and more.

In this week's Six Things, Paul Carroll looks at the big problem with 'noise.' Plus, why open insurance is the future; time for the next phase of innovation; intersection of AI and cyber insurance; and more.

Our Big Problem With ‘Noise’

Paul Carroll, Editor-in-Chief of ITL

A new book co-written by behavioral economist extraordinaire Daniel Kahneman points out a major problem that numerous industries, including insurance, only sort of know they have and is surely worse than they recognize. He calls the problem “noise.”

He says insurers are very aware of potential bias based on age, race, gender, etc., especially as they evaluate algorithms driven by artificial intelligence — insurers know to look for consistent favoritism toward, say, white men. But, he says, insurers tend to gloss over the problem of inconsistency, or “noise” — the fact that people come to very different conclusions based on the same set of facts, even when bias is removed from the equation.

Kahneman, who won the Nobel Prize in Economics in 2002 and who has driven so much of the progress on behavioral economics for decades, cites a study he did in 2015 that presented a series of cases to 48 underwriters at a large insurance company. Executives predicted that there would be roughly a 10% variance between the high and low prices that the underwriters provided after assessing the risks — but the typical variance was 55%. Many variances were even more extreme. One underwriter might set an annual premium at $9,500 and another at $16,700... continue reading >

Capgemini and Majesco Roundtable

Seth Rachlin and Denise Garth bring together a powerful panel of insurance industry leaders to discuss the evolving opportunities in the commercial and specialty insurance segment.

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Why Open Insurance Is the Future
by Gil Maletski

More are turning to "open insurance" solutions, under which insurers leverage open APIs to share data and services with third parties.

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It’s Time for Next Phase of Innovation
by Veer Gidwaney

It’s time to break through the first phase of technology adoption and move into a new phase of tech-enabled innovation.

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The Alarming Surge in Ransomware Attacks
sponsored by Tokio Marine HCC - Cyber & Professional Lines Group

Join Michael Palotay, Chief Underwriting Officer for Tokio Marine HCC - Cyber & Professional Lines, and Paul Carroll as they continue their discussion on ransomware, cyber attacks, and how businesses can protect themselves.

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Intersection of AI and Cyber Insurance
by Ben Branda

While AI is sure to benefit society when wielded properly, cyber carriers remain conscious that AI’s proliferation is a double-edged sword.

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Achieving a ‘Logical Data Fabric’
by Saptarshi Sengupta

A logical data fabric has the capacity to knit together disparate data sources in insurers' broad, hybrid universe of data platforms.

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Managing Risks for Hydrogen Industry
by Chris Van Gend

There is, rightly, enthusiasm around hydrogen solutions for a low-carbon economy, but projects involve complex industrial and energy risks.

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The Broad Reality of Diversity
by Laura Beckmann

As people return to the workforce, candidates with the potential to revolutionize our industry may present themselves.

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May's Topic: Cyber

In high school, a friend of mine had a poster on his wall that read, “Just because you’re paranoid doesn’t mean they aren’t out to get you.”

That pretty well summarizes how the world of cybersecurity and insurance works. Companies may feel paranoid for looking over their shoulder all the time, expecting something bad to happen, but we all know that there are plenty of bad guys out to find all the victims they can.

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Blockchain has incredible potential to impact traditional business functions and inspire new innovative opportunities – and a key benefit of the technology, providing a single source of truth kept up to date in real time and accessible through permissions by all stakeholders, has huge implications for the insurance and risk management industries.

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Insurance Thought Leadership

Insurance Thought Leadership (ITL) delivers engaging, informative articles from our global network of thought leaders and decision makers. Their insights are transforming the insurance and risk management marketplace through knowledge sharing, big ideas on a wide variety of topics, and lessons learned through real-life applications of innovative technology.

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