It is no secret that the traditional (re)insurance firms have a reputation of reluctance to adopt and adapt to new technologies. However, here we are, in the 21st century and technology is shaping as well as transforming our whole world and fast, and it does not intend to slow down for anyone.
Some of the most progressive (re)insurers are starting to pay attention to ‘InsurTech’ and in doing so are securing their seats at the tables of Artificial Intelligence, Blockchain and Deep Learning. In this blog I shall highlight 3 key topics that don't go a day unmentioned.
Firstly, Artificial Intelligence (AI): Can I get Lemonade? Lemonade Insurance Company that is. A property and casualty insurance company at the forefront of transforming the very business model of insurance. They are affordable (flat fees) and hassle free as they inject a strong dose of technology into everything they do, making them fast paced and transparent; did I mention sustainable too? They have a "Give Back" culture, one of their many unique features that aims to distribute the majority of its profit to causes that its policyholders care about. Last year in the first 6 claims processed one was fully handled by AI Claims Bot (Jim) and it only took 3 seconds. That particular claim, executed solely by AI went - from triage, through fraud mitigation and down to actual payment by wire in 3 seconds. In essence, they broke a world record without breaking a sweat. No human was involved.
In the words of Horace: Carpe Diem! And rest assured, some firms are reaping the rewards by doing just that. Carpe Data seized the opportunity to develop the “Next Generation Data” to assist Commercial Lines in Insurance by developing Risk Score. Risk Score is a solution designed to meet the unique challenges that help business risk assessment. Its technology is tailored to analyse risk based on insurance underwriting standards, business operations, SIC codes, and more. Carpe Data’s social media and online unique data sources, allow insurers to transmit discoveries to the areas that need it most, apply custom analytics and create risk-oriented insights.
Secondly, we seem to be in this Deep Learning phase for the long haul. It is no surprise that Google is viewed as a real leader when it comes to Deep Learning. The concept of having a subset of machine learning in AI that has networks capable of learning unsupervised from data that is unstructured unlabelled - insurers could benefit massively from Deep Learning as the algorithms are trained not just to create patterns from all transactions, but also to know when a pattern is signalling the need for action such as fraudulent investigation. The final layer relays a signal to an analyst who may freeze the user’s account until all pending investigations are finalised.
This drives me to the 3rd and final point on Blockchain in (re)insurance: What's new this year? According to, Gary Nuttall MD of The Fintech Times, “The insurance sector is embracing both the InsurTech sector in general, and blockchain in particular, with alliances such as B3I (Blockchain Insurance Industry Initiative – with 15 insurance/reinsurance members) and R3 (which includes insurance companies from Asia and the USA). The establishment of consortia, along with industry standards bodies such as ACORD (a Global Insurance Standards organisation), will enable interoperability between blockchains. Customers experience in the insurance sector still lags way behind. Blockchain allows insurers to start developing models that reduce the burden on customers such as less data re-entry, one touch buying. This can be supported with greater control over digital identity using hash functions and will allow multiple platforms to be developed that can interact with each other. The FinTech community seems to be filled with challenger banks and alternative payment providers, all of whom are competing against existing banks and service providers. The InsurTech community seems to be more collaborative with startups working with existing insurers and we’re likely to see this trend grow as blockchain startups aligns with organisations that already have a major foothold in insurance.”
In conclusion, from an optimistic perspective – the technology revolution is one of the best things that has ever happened for progressive (re)insurance companies. The ones that put customers at the core of their business, we are talking about those that truly have a customer centric approach, as it seems at times some businesses tend to get lost in the corporate process and neglecting what really is the driving force. Whilst it’s certain there shall always be disruptions, the ingredient that make some the most lucrative businesses more successful than others is ultimately an old classic rule - how well they know and treat their customers and most importantly how fast they respond to market changes. There needs to be a genuine drive for innovation to retain as well as gain new customers. In an age where everyone is connected 24/7 and we have self-driving cars, information is widely available to anyone, anytime, anywhere. Availability from connected devices is key, making consumers likely to go with who is offering the best deal. So a question for you, Traditional (re)insurance market: I am curious to know about two things:
- How do you plan to remain relevant?
- What processes are you implementing to get closer to your “digital” customers?
The tables have turned and the seat you previously had might just need some adjustments.
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