Insurers must prepare to cope with impact of technology
Insurers need to develop a better understanding of the way that technology is impacting the market at the moment and its potential to change the way the market operates, Ed Kelly, chief executive officer of the American Association of Insurance Services (AAIS), told PCI Today.
“The pain point for them is not the dollars they spend—and they spend a lot of dollars on legacy systems—it is the impediment of speed to market,” Kelly said.
He explained that any change between systems can be frustrating and disruptive for insurers, which can put companies off making important changes. He said the key can be matching the pace of change and adoption with individual clients.
“When you have a legacy system and you want to upgrade your programmes or launch a new one, you have to get into the IT queue. Every company has a long list of things they want to do so when something new comes along, it gets added to the list, which gets longer and longer,” he said.
“We’ve been working with our technology partners to address technical specifications. We look at different levels of technological specifications for our clients and also look at differing levels of comfort for some with new technology. Some clients adopt new technology more quickly the more comfortable they become with it.”
Kelly said that technology was increasingly creeping into all areas of insurance, and that insurers had to be prepared to cope with this.
One example was in the previously stable world of farm/agricultural insurance in the US, which is now dealing with the increasing usage of drone technology as farmers realise the advantages they bring in observing fields for disease, spraying fertiliser, or watching over livestock.
Kelly stressed a big issue for the market in the future as companies look at new technology will be finding the delicate balance between reacting to new technology and understanding the ramifications of it—and potential opportunities.
One example of new technology that could have a major impact on the insurance market was in driverless cars, Kelly suggested.
“More people look at it as more of a risk than an opportunity from an insurance perspective,” he said.
“It’s going to have an impact and it’s going to change, and most folks say that this impact is only going to be negative.
“Actually we don’t know—that might be the case, but eventually that product is going to be changing as a result of technology and we’ll be in a position to cope with it faster than the carriers themselves.”
