Insurtech ‘is a long-term bet’
The impact of insurtech on the reinsurance industry could be limited in the short term—but that does not mean that investments made now will not bear fruit in the future, Jean-Paul Conoscente, chief executive officer of P&C’s US operation and P&C’s reinsurance business unit, SCOR, told PCI Today.
He stressed that SCOR has been very active in the space for this reason. It has made major investments, most notably in creating one single IT platform across the entire company, called Omega. Two years ago, it also formed SCOR P&C Ventures, a team to partner with insurtech companies.
“The impact of insurtech on the reinsurance industry is likely to be negligible in the short term, since most insurtech carriers and managing general agents (MGAs) are small, and most technologies are still in the development phase,” Conoscente said.
“Over the medium term, reinsurers are hoping that investments made today will pay off, whether through building more loyal clients, generating returns on early-stage equity investments in startups, or finding a sustainable technological edge in their own operations.”
Equally, he said, for all its hype, artificial intelligence (AI) has a long way to go before it can be seriously deployed in reinsurance.
“We must improve the data quality coming in, which goes all the way back to the source. The most obvious applications of AI are for primary insurers and MGAs. Projects such as the B3i blockchain initiative will reduce frictional costs for insurers, reinsurers, and brokers in transacting business,” he said.
He added that SCOR expects data and technology to transform all internal processes, from claims handling to underwriting decisions, as well as affecting distribution. He noted that, while a number of companies have created new products such as on-demand insurance, the issue is whether a consumer is willing to buy a product if they don’t believe they need to be protected against the risk.
“This type of product remains a niche offering, and premium volume is not developing rapidly,” Conoscente said. “Although we don’t think technology has a large influence on new products, it enables companies to be more intelligent about the risk, and more efficient about the processes, and to better access data and understand the risk.
“It’s an enabler rather than a source of new products.”
Conoscente also commented on the importance of reducing the global protection gap. SCOR has hosted a conference on the subject which highlighted the work being done by the Insurance Development Forum, Blue Marble, Oasis, and various regional initiatives.
“As a reinsurer, we see risk as our raw material: addressing the protection gap is an opportunity for the insurance market in general and reinsurers in particular,” he said.
“The challenge is to create a product that consumers will want to buy, while harnessing enough information to be able to form an educated opinion of the risk.”
Part of the solution, Conoscente noted, is the development of micro insurance products. He noted that nearly a decade ago, SCOR made an investment in LeapFrog, the world's first investment fund focused on microinsurance.
“We strongly believed then, as we do now, that insurance underpins the functioning of societies through resilience in health and wealth,” he said.
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