Insurance and insurtech in 2021: full steam ahead?
2020 was a year dominated by a global pandemic. While it has not left the news, particularly in places such as the UK, insurance has much to gain. Patrick Brusnahan asks the experts on what to expect in 2021
Executive Vice President, EMEA
Munich RE Automation Solutions
The insurance industry can expect promising emerging technology trends. Recent years have seen greater implementation of AI, machine learning and automation to speed up and improve businesses processes, such as claims and new business acquisition.
We can expect to see continued focus on the end customer. Insurers will continue leveraging data such as electronic GP reports to enhance their practice. As a result, this will lead to greater individualisation of insurance products which are more personalised and on-demand. This increasingly tailored approach will be key in meeting evolving consumer needs.
Interestingly, we also anticipate more joint ventures between traditional players and insurtech firms. Insurers that previously invested in data and analytics will reap the rewards, as such technology that streamlines the life insurance application process, which will be key to maintaining consumer satisfaction. Application programming interfaces (APIs) will allow emerging technology to easily integrate into all existing systems, allowing insurers to deliver a platform for cocreation of services.
Willis Towers Watson
There’s a magical ‘alternative universe’ out there somewhere, in which the word Covid is unknown even to Scrabble players and lexicographers, where entering a bank with a facemask will get you arrested, and where life insurers are sitting together in large office meeting rooms, discussing the challenges and priorities of 2021.
It’s remarkable to think that such discussions would not be much different from what we are thinking about now in this not-so-magical, mid-pandemic dystopia. Absent the pandemic, UK life insurers would be working on operational efficiencies, optimising financial reporting – so that IFRS 17 isn’t so much another obstacle, as an opportunity to rethink and redesign processes – and moving towards ESG-oriented balance sheets.
The pandemic hasn’t changed any of those objectives, but it has certainly put them in a new light. One of the main topics earlier in the year was operational resilience: insurers devoted enormous efforts, largely successfully, to adjusting to the ‘new normal’ of working from home – at the same time as regulators and Boards were requiring much more frequent solvency updates. This highlighted the need for slick financial reporting processes that combine reliable automation with robust governance, and don’t fall apart if particular individuals are absent. As financial reporting grows more complex with IFRS 17, this idea becomes more important.
At the same time, as an ever-smaller number of insurers jostle together in a finite market place, the efficiency savings from such automation will be one of the factors that will determine the winners. The same principle applies to other parts of the business: underwriting and pricing, for instance. The pandemic highlighted the importance of being able to change these at the push of a button. These processes should be backed up by good analytics, and our recent survey of predictive analytics across life insurers showed the majority are looking to accelerate such activities, and see the pandemic as a catalyst for change rather than an excuse to slow down.
Finally, there’s growing attention to ‘Environmental, Social and Governance’ factors. The pandemic has made us more aware of how intertwined our life is with the unpredictable forces of nature, and one silver lining of the lockdown has been an appreciation of cleaner air as pollution levels fell. Many insurers have ESG at the top of their agendas, not as a compliance burden but with a real desire to do the right thing. Asset allocation becomes more complex, with further criteria to weigh, but the rewards are there – both financial and ‘moral’. Related concerns around climate change are also feeding through into areas such as demographic risk.
We all hope that 2021 will be a year of recovery, in so many ways, but for life insurers, it can also be a year of reinvention across several parts of the business. Hopefully with staff reaping the benefit of a happier work-life balance with more working from home, and less time commuting!
Head of Sales and Sector Strategy, FSI
While resilience was the imperative for the insurance industry in 2020, the ability to scale data-driven automation and industry expertise will be the main watchword in the challenging times ahead. No better partner than AI to internalise these capabilities.
Insurance companies have always worked with data and continue to work with an increasing amount of data; the pandemic has further accelerated the need for a clearer data strategy as effectively analysing the wealth of information at the heart of the insurance business processes still remains one of the industry greatest challenges.
More than 80% of documents insurers rely on to do business is classified as unstructured data. Examples of these documents include medical and risk reports, claims, policies, contracts, legal correspondence, requests for quotes, emails, and any other unstructured data – it’s all documents that depend on language, typically read, and managed by human experts. How can you effectively improve the process of reading and analysing these unstructured documents? How do you scale your operations when your teams are already at capacity?
This is exactly where artificial intelligence comes in – more precisely, natural language understanding, a subset of artificial intelligence that mimics the human ability to understand language to intelligently automate business processes and augment all the expertise – strategic knowledge and critical insights within the organisation. We expect that advanced NLU capabilities such as those offered by expert.ai will continue to demonstrate clearly measurable benefits within 2021 from loss avoidance and unintended risk exposure reduction to operational efficiency and processing time reduction, with consequent drastic savings – we were able to help a worldwide leading carrier greatly augment its property risk engineering capabilities, saving $450 per risk report with high accuracy in seconds.