Welcome to the future, says Equisoft

The world we live in today is not at all the same as our parents’ world was. We are experiencing global changes which are radically reshaping human behaviour and the ways in which we interact, Mauricio Monroy, vice president for Latin America at business solutions provider Equisoft, told FIDES Today.

“Take for example, the common conversations we used to have with insurers and agents—you remember those people with the briefcases, luxury cars and nice pens who sketched policy illustrations on sheets of paper.

“Now we’re talking about 24/7, access anywhere digital customer experience, algorithms, and artificial intelligence,” he says.

These changes have disrupted the risk side of the equation, in both positive and negative ways, says Monroy, adding that, depending on the lens through which you view these risks, they might be good for humanity but troublesome for insurance companies.

He explains: “Each one of those disruptors could generate significant change—bringing about organisation-threatening risks, or equally significant opportunities.”

Automation is changing labour around the world in many industries, and insurance is no exception.

“Automation reduces corporate need for staff so workers whose tasks are heavily focused on manual activities become redundant. At the same time, the market is hungry for more technically skilled employees, like programmers and designers.

“In this way structural unemployment creates an ever-widening prosperity gap,” adds Monroy.

This gap presents great challenges for insurers, who might face a two-pronged assault on their bottom-line, according to the vice president.

The first attack comes from the lack of skilled workers in an increasingly tech-savvy market, and the second, from the reality that an increasing amount of people have no available income to buy insurance, and are becoming increasingly reliant on unemployment insurance.

He adds: “Changes in the job market also cause depopulation of rural areas which in turn causes insurers to focus on cities. Rural areas are not only emptying, but those who are left behind must increasingly rely on canned products and microinsurance.”

As strides are made in medical care and awareness around life-promoting activities, life expectancy is continually expanding, to the point where many insurers are now rethinking their mortality tables, says Monroy.

Finally, climate change must not be forgotten. Currently, the G7 is setting up a $22 billion budget to help the Amazon. He asks: “How far away are the days when these forests—the ‘lungs’ of planet Earth—need to be insured or reinsured by governments?”

Adapting to change
According to Monroy, there are many technologies that can help us adapt to and thrive in our constantly changing future.

“Many insurers are now using predictive models to manage risk. They are leveraging the power of big data and artificial intelligence to generate business insights, and to identify at earlier and earlier stages the developing risks that will impact their business and the entire industry,” he adds.

Insurers have now become data-driven enterprises, harnessing the power of their historical client data integrated with external data such as census information to “fuel their analytics engines”.

Monroy believes that the end result may be, depending on privacy regulations, the ability for customers to use social media to get an instant insurance quote—without ever having to fill out a questionnaire. The future of the insurance industry, says Monroy, will be very different. He concludes: “A lot of the changes now being seen were first experienced in the property and casualty industry. It all started with auto and its usage-based insurance. The same types of evolutions could happen in life insurance.

“Now, you can buy travel insurance with your flight ticket. In the future, you will be able to activate your personal accident insurance when you are leaving home for a ride on your bicycle.”