< Previous78BEST’S REVIEW • NOVEMBER 2022 Industry Updates CONNECT WITH AM BEST The Twitter, LinkedIn, YouTube & Facebook logos are trademarks of Twitter, Inc., LinkedIn Corporation, Google & Facebook, Inc. www.ambest.com On Twitter @AMBestCo @AMBestRatings On LinkedIn ambest.com/corplinkedin ambest.com/ratingslinkedin ambest.com/infoserviceslinkedin On YouTube www.ambest.com/ AMBestYouTube/ On Facebook www.facebook.com/ ambestcompany/ Via Multimedia Channels 21.MK011JA New Orleans Saints Sue Insurers Over Unpaid Ida Claim The team said the insurers had breached their contract and is seeking unspecified damages. T he New Orleans Saints football club is suing Markel Corp. and subsidiaries of Chubb and Munich Re over losses the team sustained when it was forced to move a home game out of town after Hurricane Ida damaged the roof of its home field, the Superdome. The massive, slow-moving Ida came ashore south of New Orleans Aug. 29, 2021, with 150 mph winds, the lawsuit said. The wind and rain damaged the Superdome’s fresh air intake louvers, rendering the air conditioning system inoperable, it said. The louvers had to be custom-made and were not ready for the Saints’ opening game Sept. 12, forcing the team to move the game to Jacksonville, Florida, and causing it to sustain lost business income and extra expenses. Also named in the suit are the Princeton Excess and Surplus Lines Insurance Co. and the Westchester Surplus Lines Co. A spokeswoman for Munich Re, the parent to Princeton, declined comment. Attempts to obtain comment from the others were not immediately successful. According to the lawsuit, Markel Chief Claims Officer Nick Conca said he reviewed the claim and said the building sustained “superficial” damages. The root cause of the lost income, he said, was the Saints’ inability to bring enough staff and security personnel to hold the game, the lawsuit said. Conca cited articles published by NFL.com and NOLA. com as evidence for denying the claim, it said. “The insurers were clearly looking for any way to deny coverage, including hearsay in the form of two online news articles—one of which did not even concern hurricane damage—rather than conducting a meaningful adjustment of the (Saints’) claim,” the Saints’ complaint said. The team said the insurers had breached their contract and is seeking unspecified damages. Reserve funds and losses from Hurricane Ida grew by $1 billion in Louisiana in the second quarter of 2022, the Louisiana Department of Insurance said. In the approximately 10 months since the storm struck Louisiana on Aug. 29, 2021, insurers of all types have reserved or paid out $13.11 billion in claims, it said. 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To learn more about The Nelson Collection at Lloyd’s, visit www.ambest.com/nelson80BEST’S REVIEW • NOVEMBER 2022 The Last Word I n the days leading up to Russia’s invasion of Ukraine, Ukrainian President Volodymyr Zelenskyy appeared on video telling Ukrainian soldiers to surrender to the Russian invaders. But various news agencies as well as the Internet debunking site Snopes said the video was a fake— and an obvious one at that. It didn’t work, but Cyber Cube, a cyber analytics firm with a focus on the insurance world, is warning insurers that the danger of what it calls“deep fake video mimicry” is very real. “Deep fake video mimicry” occurs when hackers use artificial intelligence and machine learning to create realistic images of people interacting with a video camera, using source data such as video, pictures and audio samples of the deepfaker’s targets, Cyber Cube says in its report Social Engineering: Blurring reality and fake: A guide for the insurance professional . Because of the increasing use of social media in society, “source data is rarely a problem for the deep faker,” Cyber Cube said in the report. But Cyber Cube says carriers and underwriters can protect themselves by understanding how the companies they work with identify risks and protect against them. For example, some researchers are already identifying artificial intelligence that will help spot deepfake videos. Electrical and Computer Engineering Professor Amit K. Roy-Chowdhury and graduate students at the University of California, Riverside conducted a study that looked into detecting changes in facial expressions, in addition to changes in identity. The results were released in a paper titled Detection and Localization of Facial Expression Manipulations . The system they developed would use a two- stream approach. The first is a facial expression recognition system that extracts “expression-relevant features” from the face. The second is an encoder- decoder architecture that studies those features to detect the presence of manipulation. The research was done using real-world data sets of entire faces. The detection for facial expression manipulation has an accuracy rate of 90% or above, Roy-Chowdhury said. In addition to protecting themselves, insurers should explore how to respond to, and limit exposure against, attacks once they happen, according to Cyber Cube. “Additionally, underwriters need to adequately charge for this cover to balance out the loss potential, not only on an individual risk basis, but for a portfolio of risk affording the coverage,” Cyber Cube said. Roy-Chowdhury said it is important to understand what AI can and can’t do. “A lot of these AI-based methods are very, very hyped, especially when people read about them in the media,” he said. “I think that this hype is a real issue in understanding what AI can and cannot do. This is a function of the data set. When the data changes and the quality of the data changes, I am absolutely sure performance will fall off.” BR Putting a New Face on Reality: Deepfakes Raise Novel Challenges for Insurers Artificially manipulated audio and video could soon present risks to insurers. Researchers are creating tools to better segregate real from artificial. by Anthony Bellano Anthony Bellano is an associate editor. He can be reached at anthony.bellano@ambest.com.Saint Joseph’s University’s TUVEFOUT DPOUJOVFUPQFSGPSNXFMMJOJOEVTUSZ DPNQFUJUJPOTBEEJOHGJSTUQMBDFJOUIF ".#FTUTUVEFOUDPNQFUJUJPOUPBO BMSFBEZJNQSFTTJWFMJTU The students and their fellow insurance majors follow a rigorous CPCU-aligned curriculum that’s infused with analytics and supported by the prestigious Maguire Academy of Insurance and Risk Management. 5IF.BHVJSF"DBEFNZJTQMFBTFEUPBOOPVODFUIFMBVODIPGUIF4QFODFS%JHJUBM *OTJHIUT-BCUPGVSUIFSFOIBODFUIFTUVEFOUFYQFSJFODFUISPVHIJOTVSBODF BOBMZUJDT JOOPWBUJPO UIPVHIUMFBEFSTIJQBOEJOEVTUSZQBSUOFSTIJQT 5PMFBSONPSF WJTJUTKVFEVJOTVSBODFPSDPOUBDUUIF"DBEFNZT&YFDVUJWFJO3FTJEFODF .JDIBFM&"OHFMJOBBU 3JTJOHUP UIF5PQ Maguire Academy of Insurance and Risk ManagementWorkers’ Compensation • Transportation – Liability & Physical Damage • Fine Art & Collections • Structured Insurance Construction – Including New York and Project-Based Primary & Excess Liability • Financial Lines • Aviation & Space Homeowners – Including California Wildfire & Gulf Region Hurricane • Environmental & Pollution Liability • Public Entity Shared & Layered Property • Warranty & Contractual Liability • Reinsurance • Infrastructure • Surety • Entertainment & Sports ...And More To Come. 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