IAG deploys AI to slash total vehicle loss assessment times; launches ‘first of its kind’ cybersecurity rating tool for SMEs

AI Motor claims IAG

IAG’s newly deployed artificial intelligence (AI) capability has reportedly slashed total loss processing times for motor claims by up to two and a half weeks, the insurer has revealed.

Developed in-house by the AI Centre of Excellence, IAG’s own innovation incubator, the technology, which combines AI and business process automation, predicts the likelihood of a vehicle ‘write-off’ following a collision.

The AI uses data captured during the customer claims process, either online or over the phone with a consultant, in its decisioning algorithm.

From this, the insurer can preemptively determine whether a vehicle needs to be towed to a repairer prior to a total loss assessment.

A total loss or ‘write-off’ is defined by motor insurers as one where costs to repair a damaged vehicle exceed its actual cash value.

Speaking at FST’s Future of Financial Services conference last month, IAG’s chief analytics officer Bora Arslan said the insurer is leveraging natural language processing (NLP) to examine details of claim lodgements and expedite assessments.

“We’re looking at the [dialogue] going on between the customer and our agents. We’re collecting a lot of additional information… at a lot of additional reports, and we’re using a lot of insights to determine the likelihood of that claim turning into a total loss.”

By automating the ‘total loss’ assessment process, the system effectively eliminates the vast majority of the “tens of thousands of manual processes” conducted by human claims teams each month, IAG said in a statement.

“This frees up time for our claims teams to focus more on helping customers and has improved overall efficiencies of the claims teams,” it added.

IAG director of analytics Hannah Sakai, said the predictive total loss solution – which spans IAG’s motor insurance brands, including NRMA and SGIC – currently achieves “more than 90 per cent accuracy”.

“A car accident can be a traumatic and challenging time for our customers, so we turned to artificial intelligence to help improve this experience,” she said.

IAG has spruiked its Predictive Total Loss system as key to improving customer transparency across the motor claims process, “keeping customers informed at each stage of the motor total loss experience”.

According to Sakai, customers are notified of the outcome of a potential total loss via text message the day after a claim is lodged.

As a result, she said, IAG brands have “seen a significant uplift in customer advocacy as measured through total loss customer experience surveys”.

The Centre of Excellence is expected to keep refining the AI model, including making use of customer photos of vehicle damage. The insurer said it hopes to extend the methodology to predict motor claim liability, supporting automatic validation of claims during claims lodgement.

Arslan said that the total loss prediction use case is among a number “scaled AI” initiatives being applied across IAG’s operations.

“We’re trying to use AI capabilities to optimise our core business operations, but also… to create new customer experiences and potentially new businesses with the use of AI,” he said.

IAG said the development of the predictive AI system was framed around the Federal Government’s AI Ethics Framework, released at the end of 2019. While voluntary, the AI Ethics principles seek to ensure the technology is developed with a public benefit firmly in mind, delivering beneficial outcomes for individuals, society and the environment.

IAG deploys cybersecurity assessment tool for SMEs

IAG subsidiary, NZI, New Zealand’s largest general insurer, has also announced it has deployed a new rating tool to help SMEs expose cybersecurity vulnerabilities.

The “first-of-its-kind” tool rates NZ-based small and medium businesses on their cyber postures, determining, in real-time and continuously, “how secure – or not secure – their operations are”.

A subsidiary of Australian insurance giant IAG, NZI developed the tool in partnership with UpGuard, a strategic partner of Firemark Ventures, IAG’s own insurtech incubator and investment arm.

Once activated, UpGuard continually scans the customer’s internet presence for vulnerabilities, delivering an automated and “accurate reading of [an organisation’s] overall cyber risk”.

Crucially, the assessment tool provides businesses with a cyber risk vulnerability score, identifying potential risks and vulnerabilities, as well as providing insights and steps to help business customers mitigate these risks, IAG said in a statement.

“Being able to generate a score at any point gives greater transparency over the likely risks, and therefore makes cover decisions much clearer and in line with those risks,” said NZI cyber insurance specialist Andrew Beven.

According to Peter Bailey, Information Security General Manager at fellow NZ-based data security consultant Aura, in a story reported just a few months prior to the pandemic, nearly one in three New Zealand businesses had yet to assess the impact a significant breach would have on their organisation.

SMEs have faced unprecedented strain on their cyber defences over the last year, as pandemic-ravaged businesses made a hasty pivot to digital delivery, online trading, and often untested remote working operations.

The Covid-triggered shift has left businesses increasing “susceptible” to cyber-attacks, Beven said.

Research from InPhySec, a Wellington-based cybersecurity consultancy, revealed a 161 per cent increase in traffic to high-risk apps following a 148 per cent increase in remote workforces.

Small businesses with under 50 employees pay out on average US$14,000 (AU$18,960/NZ$19,930) per cyber breach event, according to a 2019 Hiscox Cyber Readiness report; insurers often foot the bill. For businesses with 250 employees, this jumps to $184,000 per breach event.

In 2019, Business News Australia reported that 91 per cent of Australian and New Zealand SMEs suffered ransomware attacks between 2017 and 2019, with an average cost of $208,000 per attack.

Beven said the new cyber assessment tool will ensure SMEs are “not padlocking their cyber front doors, while accidentally leaving their back doors unlocked and wide open”.

“It’s imperative SMEs treat their cybersecurity with the same seriousness as they would their shopfront security. It is not an option for businesses to do nothing and gamble on being safe. It’s important they get on the phone to their broker as soon as possible to gain access to this tool.”

“Insurance isn’t just about remedying after the fact – we actively invest in tools that help our customers to better protect themselves before cyber-attacks become an issue, which is always preferable to remedying after the fact,” Beven said.

In 2020 analysis of the New Zealand market, UpGuard revealed that the finance, retail, and logistics industries maintain the lowest security ratings, making them most susceptible to security incidents such as data leaks.

“The silver lining is that, when a company is made aware of a vulnerability, most of the time it will take immediate action to address that,” said UpGuard’s vice president of cyber research, Greg Pollock.

“That tells us that the gap between cyber protection and vulnerability is whether or not the business is aware – and that’s where we step in.”