Insurers must gain ground on other industries quicker to embrace technology
Insurers need to catch up with other industries in the use of technology as the market becomes more competitive – but smaller players might fail to succeed.
How to take advantage of new technology was a key discussion point at the Intelligent InsurTech Europe conference in London, which took place on Wednesday November 16, with several delegates also making this point in live interviews with Intelligent Insurer.
“We are behind the curve in terms of other sectors such as retail,” said Steven Hales, Generali’s global head of connected insurance.
The digitisation of the insurance business offers potential for automation of processes and efficiency gains. Lower costs may help carriers to navigate a challenging operating environment and develop new products.
“The economic cycle has changed, lower interest rates are pushing down margins, people are coming into insurance for margins they can’t find elsewhere. Insurance is challenged and technology is a way to fight the challenge,” said Yannis Korgialos, Munich Re’s partner development manager.
The insurance sector is seizing the opportunities offered by technology later than for example the banking industry, which has cut costs by closing branches, digitising processes and moving the customer interaction to internet and mobile.
“The key element is the sense of urgency which was brought to the insurance and reinsurance industry by actually acknowledging the need to implement new technology solutions across the value chain of the insurance companies and in order to respond to client needs,” said Giorgi Pachov, global practice group leader cyber at Allianz.
The implementation of new technology such as telematics in motor or sensors in property/casualty insurance is improving the carrier’s risk assessment which is also creating new opportunities to diversify the business model.
“We have moved from a sector relying on statistical, historical analysis to a sector analysing in real time a really large amount of data,” said Cécile Wendling, head of foresight at AXA. This data is producing knowledge that allows firms to better anticipate risk, she noted.
While enabling a more accurate risk assessment, data from different sources is allowing insurers to work together with clients to further reduce the risks and prevent future losses.
There are two major areas where technology has had a very powerful impact on the insurance industry, said Oliver Brew, executive vice president at Aspen Insurance.
“One is in the area of data analytics where we are able to obtain far more powerful insights from the data that we are gathering and how we can analyse it and provide better outcomes for our customers in terms of pricing, in terms of claims management and in terms of customer service,” Brew said.
“The second area is in processes. The entire workflow process chain has been dramatically improved by the power of technology whether it is in terms of scanning technologies to improve the ways we manage our back office, or connectivity technology, how we interact with our customers online.”
But the implementation of new technology can be expensive and it also comes with risks attached as some innovations may disappoint. Larger insurers may be in a better position to face the challenge.
“In many markets there are still many small and medium-sized insurers, some of them will find niche markets to service,” Hales said. But “many of them will struggle to keep up with technology” also because they lack the balance sheet to be able to invest and “therefore I expect to see some consolidation across several markets.”
