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I wonder which part of the business they laid off those folks from. The article doesn't say. In general, there are 3 main parts of an insurance company that ar

I wonder which part of the business they laid off those folks from. The article doesn't say. In general, there are 3 main parts of an insurance company that are "in house": underwriting, claims, and accounting. Accounting isn't really something that can be automated or outsourced. You can't automate claims, but you can outsource. You can automate/outsource _some_ underwriting and/or parts of the underwriting process. Increasingly, I've seen independents adjusters (IAs, not to be confused with Public Adjusters [PAs]) doing underwriting inspections. Basically, when your adjusters aren't adjusting, they are inspecting new policies to ensure that they meet guidelines. So I am guessing these layoffs are probably from one or both of those areas.

tallanvor 3y ago
Some claims can certainly be automated. Not everything requires sending someone out. If, for example, there's a burglary, and a customer submits a list of items stolen and the value is within a certain range, it may be easier and cheaper overall for a company to cut a check rather than have someone spend time trying to verify the claim. There's a higher risk of fraud, but if the personnel savings outweigh it, then the company is likely to accept it.
- nvahalik 3y ago
  For car insurance, this is already happening and is fairly reasonable. A lot of car claims are handled by desk folks because you take it to a repair shop and they figure it out and negotiate it. But P&C is a different beast. > and the value is within a certain range This is called a deductible. We literally had a guy who got denied on a claim end of last week because it didn't meet his deductible. (He provided the list.) Then literally the next day he re-submits with MORE STUFF. So yeah, the human element, even in a reduced form, will always be required. Stuff that he cannot prove was actually even damaged because he had "thrown it away".
  - ethbr1 3y ago
    I was under the impression that most insurance was moving to an efficiency:cost-optimized model. I.e. Creating fraud scoring engines and auto paying claims they greenlight (usually incorporating history and total value as major signs). Essentially saying "there's not enough potential fraud value here for it to be cost effective for us to apply human review." Although someone submitting claims at an abnormal rate would be flagged. But I'm more familiar with healthcare.
    - nvahalik 3y ago
      > I was under the impression that most insurance was moving to an efficiency:cost-optimized model. Can't speak for every avenue, but I can definitely say this is not happening with property insurance. The claim amounts are sometimes big enough that it warrants additional review or subrogation.
  - tallanvor 3y ago
    Even for other things. For example, I have pet insurance for my dog. She had a cracked tooth that needed to be removed. I had receipts and documentation from the vet ready to go, but I didn't end up needing any of that. I went through their online form to choose what procedure was done and how much I paid. It then offered me the chance for automatic handling (with the ability to request that it be reviewed by a human if I wasn't happy), and it approved reimbursement minus my deductible, and the money was in my account about 3 days later. Obviously there will always be claims that require human assistance, but if even 50% of claims can be automated, that's still a significant savings for the insurer.
Phileosopher 3y ago
You're probably right. From my vantage point (in an independent agent insurance office right now), the easiest way to shrink UW is to make it ALL run by independent workers (e.g., agents). The irony of this, though, is that the quality of the underwriting risk assessment can suffer, meaning premiums will often be underpaid relative to statistical risk, and create more problems if enough of them push through. Another money-saving trick I know of in insurance is to severely downsize the claims department. It's lawfully mandatory to process claims, but I'm not sure if there's a statute on how long to process them. One of the carriers my office hates working with can take 3-6 months to process a claim, and often will find some reason or another to not pay it. If anyone wants a pain point, the insurance industry desperately needs a decent-quality rater/AMS: the tech and UX is hilariously ancient.
- ethbr1 3y ago
  Ignorant but curious questions Do insurance policies get packaged and sold as financial products, or are they re-insured on the backend but continue to be held by the originator? Related, at what point of policy origination/reinsurance are standards audited and applied? I.e. if I originate a mispriced policy, where does that get noticed/rejected?
  - Phileosopher 3y ago
    Great question! I have my own essay that tries to summarize it[1], but the entire idea of insurance is to work with pure risk: - Speculative risk is when you might gain from big events (e.g., VC) - Pure risk is when you will only lose from big events. The entire job of an insurance company is straightforward: take a little bit of premium calculated by actuarial data (historically represented as a table), then pay out large checks to the people who have an unlikely event. I have a prevailing axiom that 3-10% of the population makes it difficult for the rest of us, and insurance gets complicated for that reason: - people lie about claim damages - claims adjusters sometimes find legal ways to not pay claims - actuarial/legal framing can allow non-coverage of something that ought to be covered in good faith (e.g., driving your car out-of-state) Now, that's the POV of the insurance company, which sets some context I wish I had had. The POV of the party seeking insurance is that they're transferring pure risk, then paying rent to the insurer for it. It's possible to recurse this, and an insurer can become the insured by packaging up a bunch of risks and hand it off to other insurers for a price. I'm not THAT knowledgeable, but it wouldn't surprise me if that's what insurance orgs that took on too much risk actually do relatively often when they got a bit ambitious. The tech world could actually learn a thing or two additionally from insurance. The secret to a functional insurance company with a liquidity issue is to, effectively, do nothing and wait for customers' insurance premiums to replenish the money supply. "Do nothing" is the exact opposite mantra of "Move fast and break things", and there's a time/place for both! [1] https://notageni.us/insurance/ https://notageni.us/insurance/
InitialLastName 3y ago
I don't know anything about how their market share varies regionally, but Florida and California (states in which they are taking steps towards no longer operating) are a combined 60 million people, which is 18% of the US population; they may just be scaling down all of their operations to match the reduction in population served.

tallanvor 3y ago

Some claims can certainly be automated. Not everything requires sending someone out. If, for example, there's a burglary, and a customer submits a list of items stolen and the value is within a certain range, it may be easier and cheaper overall for a company to cut a check rather than have someone spend time trying to verify the claim. There's a higher risk of fraud, but if the personnel savings outweigh it, then the company is likely to accept it.

nvahalik 3y ago
For car insurance, this is already happening and is fairly reasonable. A lot of car claims are handled by desk folks because you take it to a repair shop and they figure it out and negotiate it. But P&C is a different beast. > and the value is within a certain range This is called a deductible. We literally had a guy who got denied on a claim end of last week because it didn't meet his deductible. (He provided the list.) Then literally the next day he re-submits with MORE STUFF. So yeah, the human element, even in a reduced form, will always be required. Stuff that he cannot prove was actually even damaged because he had "thrown it away".
- ethbr1 3y ago
  I was under the impression that most insurance was moving to an efficiency:cost-optimized model. I.e. Creating fraud scoring engines and auto paying claims they greenlight (usually incorporating history and total value as major signs). Essentially saying "there's not enough potential fraud value here for it to be cost effective for us to apply human review." Although someone submitting claims at an abnormal rate would be flagged. But I'm more familiar with healthcare.
  - nvahalik 3y ago
    > I was under the impression that most insurance was moving to an efficiency:cost-optimized model. Can't speak for every avenue, but I can definitely say this is not happening with property insurance. The claim amounts are sometimes big enough that it warrants additional review or subrogation.
- tallanvor 3y ago
  Even for other things. For example, I have pet insurance for my dog. She had a cracked tooth that needed to be removed. I had receipts and documentation from the vet ready to go, but I didn't end up needing any of that. I went through their online form to choose what procedure was done and how much I paid. It then offered me the chance for automatic handling (with the ability to request that it be reviewed by a human if I wasn't happy), and it approved reimbursement minus my deductible, and the money was in my account about 3 days later. Obviously there will always be claims that require human assistance, but if even 50% of claims can be automated, that's still a significant savings for the insurer.

Phileosopher 3y ago

You're probably right. From my vantage point (in an independent agent insurance office right now), the easiest way to shrink UW is to make it ALL run by independent workers (e.g., agents). The irony of this, though, is that the quality of the underwriting risk assessment can suffer, meaning premiums will often be underpaid relative to statistical risk, and create more problems if enough of them push through. Another money-saving trick I know of in insurance is to severely downsize the claims department. It's lawfully mandatory to process claims, but I'm not sure if there's a statute on how long to process them. One of the carriers my office hates working with can take 3-6 months to process a claim, and often will find some reason or another to not pay it. If anyone wants a pain point, the insurance industry desperately needs a decent-quality rater/AMS: the tech and UX is hilariously ancient.

ethbr1 3y ago
Ignorant but curious questions Do insurance policies get packaged and sold as financial products, or are they re-insured on the backend but continue to be held by the originator? Related, at what point of policy origination/reinsurance are standards audited and applied? I.e. if I originate a mispriced policy, where does that get noticed/rejected?
- Phileosopher 3y ago
  Great question! I have my own essay that tries to summarize it[1], but the entire idea of insurance is to work with pure risk: - Speculative risk is when you might gain from big events (e.g., VC) - Pure risk is when you will only lose from big events. The entire job of an insurance company is straightforward: take a little bit of premium calculated by actuarial data (historically represented as a table), then pay out large checks to the people who have an unlikely event. I have a prevailing axiom that 3-10% of the population makes it difficult for the rest of us, and insurance gets complicated for that reason: - people lie about claim damages - claims adjusters sometimes find legal ways to not pay claims - actuarial/legal framing can allow non-coverage of something that ought to be covered in good faith (e.g., driving your car out-of-state) Now, that's the POV of the insurance company, which sets some context I wish I had had. The POV of the party seeking insurance is that they're transferring pure risk, then paying rent to the insurer for it. It's possible to recurse this, and an insurer can become the insured by packaging up a bunch of risks and hand it off to other insurers for a price. I'm not THAT knowledgeable, but it wouldn't surprise me if that's what insurance orgs that took on too much risk actually do relatively often when they got a bit ambitious. The tech world could actually learn a thing or two additionally from insurance. The secret to a functional insurance company with a liquidity issue is to, effectively, do nothing and wait for customers' insurance premiums to replenish the money supply. "Do nothing" is the exact opposite mantra of "Move fast and break things", and there's a time/place for both! [1] https://notageni.us/insurance/ https://notageni.us/insurance/

InitialLastName 3y ago

I don't know anything about how their market share varies regionally, but Florida and California (states in which they are taking steps towards no longer operating) are a combined 60 million people, which is 18% of the US population; they may just be scaling down all of their operations to match the reduction in population served.