How Can Technology Benefit Captive Insurers?

Like all insurance firms, captive insurers are primarily concerned with mitigating risk. But whereas the previous focus was mainly on traditional data gathering and analysis methods, more and more captive insurance firms are looking into how technology can make risk management and claims handling more effective and efficient.

One company that has used technology to great effect is the Cook-Illinois Corporation, which is one of the largest private school bus operators in the U.S. The company has grown considerably from fairly modest beginnings and now has more than 2,200 buses, shuttles, and vans, servicing communities in Illinois and Missouri.

Like many large firms, Cook-Illinois realized the need to have its own insurer. To that end, the company also formed Five Families Insurance, Ltd. The Vermont-based captive insurance firm provides auto/general liability and workers compensation insurance to Cook-Illinois exclusively.

Five Families is headed by general counsel Anthony Benish, a key speaker at the Vermont Captive Insurance Association (VCIA) Annual Conference held in 2017. Other panelists at the conference were Shelter Island Risk Services president Richard Denning, and Tall Pines Insurance Company and EWI Re, Inc. president Steve McElhiney.

How captive insurance firms benefit from technology

Like its parent firm, Cook-Illinois, Five Families is at the forefront of technological innovation in the insurance arena. The company is especially focused on the use of the latest technology in developing bid specifications for the Vermont-based school districts that Cook-Illinois services.

Five Families Insurance, Ltd. is especially keen on utilizing tracking and data gathering technologies in its risk management and claims handling operations. In particular, the company applies innovative systems and methods such as:

Zonar GPS tracking system. Zonar technology allows companies to track vehicles and equipment and pinpoint their exact locations. It also provides valuable data, such as when specific vehicles need repair and where drivers get on or off the road. The system even allows for accurate monitoring of driving habits.

Video recording. Five Families employs video technology for monitoring interactions between bus drivers, students, and external factors. Although the technology has some drawbacks, the objective overview of bus interactions that it provides has proven essential for resolving disputes and conflicts on the company’s vehicles.

GreenRoad driving feedback system. This system has proven useful for developing safe driving practices among company drivers. It provides instant feedback on driving habits and encourages safer and more efficient vehicle operation.

Among the most notable features of the GreenRoad system are in-vehicle coaching, contextual safety information, and real-time driver data. It also speeds up fleet deployment and streamlines fleet management tasks with various tracking and mapping tools.

The GreenRoad is a particularly good example of technology in the captive insurance sphere. Besides utilizing contextual and predictive methods, it also relies heavily on smart algorithms and deep learning behavior.

The value of deep learning algorithms for the insurance industry

Deep learning algorithms are particularly useful tools for captive insurers. The nonprofit technology forum VLAB highlights its value for analyzing a wide array of data and information, even images. Essential for identifying patterns and formulating conclusions, this particular tool can even be used for speech transcription and incorporating metadata with images.

Deep learning algorithms are especially useful for making sense of varied and disorganized data from several sources. Although some guidance is initially required to work, it soon becomes an autonomous system that requires minimal user input or intervention.

The way that deep learning algorithms work is fairly straightforward. Operators first provide the necessary data for the system to analyze and then train it to evaluate the information. With the use of penalizing and reinforcing evaluative weights, the system soon learns to differentiate between correct and wrong tags, eventually producing reliable results.

At present, deep learning processes are already widely utilized in industries such as robotics, manufacturing, and even agriculture. More applications are expected to use this technology in the near future, and even the insurance industry is beginning to adopt it for various processes.

As the technology matures and becomes ubiquitous in the insurance agency, we can expect to see more precise applications, particularly among captive insurance firms. Over the next few years, there will likely be a gradual shift away from comparisons between insurance companies based on statistical group data toward in-depth and more precise personalized quotes for the unique risks and risk exposures of client firms.

About Caitlin Morgan Captive Services

Caitlin Morgan Captive Services provides clients with captive insurance solutions supported by years of experience in establishing the successful formation and implementation of a wide range of captives. To learn more about how we can help you, please contact us at (855) 975-4949.