Category Archives: Technology

Technology

Data Analytics Comes to the Legal Profession

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there are insights in there somewhere

Did “data analytics” ruin baseball? Depends on whom you ask: the cranky old man in a Staten Island bar or the nerd busy calculating Manny Machado’s wRC+ (it was 141 in 2018, if you cared to know).  

What is indisputable, though, is that the so-called “Sabermetrics revolution” rapidly and fundamentally changed how the game is played – this is not your grandpa’s outfield! 

And data is eating the whole world, not just baseball. Now it’s coming for the legal profession, of all places. The Financial Times recently published an article on how law analytics companies are using statistics on judges and courts to weigh how a lawsuit might play out in the real world. One such company does the following (per the article):  

The sort of information that might be analysed includes how many times the opposing lawyer has filed certain types of lawsuit, in which court, with what success rate, who they have represented, and which attorneys they have faced. Once a judge has been assigned to the case, legal research companies can provide statistics on his or her record as well.  

Another law analytics firm “shows the litigation history of judges, lawyers and law firms, including win/loss rates for trials that are benchmarked to competitors, the success rates of different types of motion in individual courts and a database of who sues and gets sued most often.” 

Proponents reportedly argue that this is a) a more efficient way to go about the business of law and b) a way to identify where the legal system is inconsistent.  

That being said, it’s not yet all sunshine and roses for legal system Sabermetricians. As the FT notes, most litigation is dropped or settled, which means there are no public court documents for those cases. Which means no data to be mined. How many cases get dropped or settled? Perhaps as many as 90 percent. Big data is hard when most of the data don’t exist.  

So that means doing things the old-fashioned way. One law firm identified by the FT supplements data gaps by using (quel horreur!) real human lawyers to assess how a case might fare during the legal process.  

Another issue is whether anything useful can be gleaned from what little data there are. One gentleman quoted in the article put it thus: “The judge analytics demonstrations I have seen to date oscillate between the blindingly obvious and the statistically irrelevant.”  

Nonetheless, as the datasets grow, it doesn’t seem impossible that the ability to assess lawsuits will only improve. Which leads me to wonder: will judges change their behavior in response? The baseball data revolution didn’t just reveal information – it changed how players actually played in response to that information. Data isn’t passive, turns out. It remains to be seen how shining the light of data on the court system could change the court system itself.

Insurance Industry, Technology

Much Ado About AI at I.I.I. Joint Industry Forum

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By Lucian McMahon

You’re familiar with the buzzwords by now. Internet of things. Blockchain. Artificial intelligence.

At the 2019 I.I.I. Joint Industry Forum, a panel on artificial intelligence and insurance cut through the buzz. How can AI be used to help build resilient communities? And how can the insurance industry leverage AI to better help customers address risk?

Pictured left to right: Andrew Robinson, Sean Ringsted, Ahmad Wani, Kyle Schmitt, James Roche

New products, more resilience

Regarding resilience, Ahmad Wani, CEO and co-founder of One Concern, said that AI is being used to harness vast troves of data to identify, on a “hyperlocal level,” the impact of a whole range of hazards. His company is already doing just that, partnering with local governments and insurance companies to better plan for future losses. “We don’t need to wait for disasters to happen to prioritize the response, we need to make changes and to act now before the disaster,” Wani said.

Sean Ringsted, executive vice president, chief digital officer and chief risk officer at the Chubb Group, also pointed out that insurers are already expanding their product offerings thanks to AI and big data. Contingent business interruption, for example: the sheer volume of data can now allow insurers to effectively analyze supply chain risks and price them accordingly.

Transparency and fairness are top of mind

But as Ringsted said, “it’s not all good news and roses.” What sorts of concerns should insurers and the public have about using AI?

Kyle Schmitt, managing direct of the global insurance practice at J.D. Power cited consumer concerns with the data and algorithms used for AI-enabled products. Consumers are deeply concerned with the security and privacy of any data they share with insurers. Per Schmitt, consumers also worry about the fairness of AI products, when algorithms instead of people are making decisions in an opaque way.

This is the so-called “black box problem” of AI, in which complex algorithms will arrive at answers or decisions without anyone being able to explain how they did so. Ringsted stressed that, for AI to be a viable tool, its mechanisms will need to be explainable to regulators and the public.

James Roche, vice president, personal lines product development at ISO, echoed this sentiment: social responsibility requires both robust data stewardship and strict control over AI outputs to ensure that outcomes are fair and within ethical standards.

From a consumer perspective, ensuring ethical use of AI is critical. Schmitt said that at the end of the day consumers are open-minded, “but they just want some ground rules.”

Cyber Risk, Technology

Reminder: your smart home security system is hackable

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Doors that can be locked remotely with a smartphone app. Facial recognition cameras that alert you when certain people arrive at your front door. Motion sensors that trigger video recordings when someone steals your Amazon packages.

If we’re being honest, smart home security systems sound extremely creepy to me.

But I understand the sell: smart home security devices can keep people safe and offer peace of mind – did I remember to lock the door? Doesn’t matter, my phone can lock it.

Nothing in this world is perfect, though. Unlike smart home security systems, you can’t use a computer to hack into and unlock a standard deadbolt.

The Insurance Journal recently ran a piece describing yet another experiment where researchers easily hacked into someone’s smart home security system. In one scenario, a researcher hacked into a person’s phone using a coffee shop’s free WiFi. Once inside, he accessed their smart light switch app, and then jumped from there into the smart home’s security devices. Voila, smart door unlocked. All that’s missing is a red carpet to welcome thieves as they waltz in the front door.

This shouldn’t be news. Here’s a video from 2016 of researchers hacking into a smart lock:

Everything is a trade-off. As informed consumers, we can’t assume that a solution to one security problem (forgetting to lock our doors) will solve every other security problem – or that it won’t create new ones (hacking into our front doors). It’s important to weigh the risks and benefits of smart home security, and to conduct due diligence in researching the cybersecurity protections of each system. It’s also important to consider additional protections, like purchasing cybersecurity insurance coverage, just in case.

If that sounds onerous, it’s nothing compared to dealing with a robbed house.

Homeowners Insurance, Technology

Water damage is costing homeowners billions. Could IoT help?

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Pop quiz: what’s one of the most common types of homeowners insurance claims? (Hint: it’s not fire.)

It’s water damage. Maybe that’s not surprising – it rains a lot in many places. But what may surprise you is that things like pipe bursts and broken appliances are increasingly the main causes of water damage in homes.  

In insurance-speak, these are called “non-weather water damage claims.” Worryingly, these claims are happening more often and are getting a lot more expensive. A Best’s Review article reports that the average homeowners water damage claim is now over $6,700. Large losses (over $500,000) have doubled in number over the past three years. Non-weather water damage is now costing insurers (and their policyholders) billions in losses every year.

This is happening for several reasons. Our housing stock is aging, as is our infrastructure. More houses are being built and they’re getting bigger – many houses now have extra bathrooms and second-floor laundry rooms, which means more piping. (The story is probably different in Florida. You can read why that is here.)

But the worst part is that many – if not most – water damage claims are preventable. Inspecting pipes or conducting routine maintenance can go a long way. That’s where the internet of things (IoT) comes in. Smart devices and connected sensors installed on piping can detect leaks before they occur or before they cause too much damage. They’re basically smoke detectors, but for water.

And they work. Best’s Review noted that installing IoT devices can reduce water losses by up to 93 percent.

The Review quoted an IoT company CEO who claimed that leak detection devices could save insurers and their customers $10 billion every year.

Homeowners have admittedly been slow to install IoT to help detect leaks. But insurers are hopeful that raising awareness about the issue, offering policyholder incentives like premium discounts, and encouraging IoT installation during home construction will begin to turn the tide.

 Update: Of interest, Washington state adopted a rule in 2018 that specifically mentions water monitors and water shut-off systems as permissible tools for an insurer’s risk reduction program.