While there was an abundance of interesting and exciting discussions at Insurtech Insights 2022, which were the ones that insurers should be most aware of?
In this blog, Earnix’s Andrew Collins evaluates some of those key trends shaping the future of insurance.
You won’t want to miss this one.Could it be a coincidence that the recent Insurtech Insights occurred on March 15? This date is significant because it’s the Ides of March, a milestone that signaled the beginning of a new year for the Romans. Courts would officially re-open, and all citizens were expected to settle their debts to start the new year fresh, and of course, avoid being sued. The entire process was extremely laborious, which is important to note as we fast forward to today and realize just how relevant it is to the insurance market.
Since I was just at the conference, I thought of this history, and pondered how this would apply today. For example, what would we need to settle and what is considered “fresh?” We need to come to agreement on how companies perceive the quality of their data and its actual usefulness (but more on this topic in my next blog). For now, I want to focus on “what’s fresh” from the Insurtech Insights conference.
This year’s conference covered a few common themes:
- Insurance 3.0 (the idea of embedded insurance)
- Preventative insurance and claims handling
- General process improvement with automation
For insurers, there is a backdrop of encouraging performance results from 2021. At the same time, unstable market conditions and volatile inflationary measures raised new questions from conference attendees. These included concerns such as “How can we write business better and more accurately reflect the risk that is being transferred to us?” and “How can we process claims in a better way to provide world-class service to our customers but also control the costs?”
When you think of these questions in the context of underwriting performance, it’s clear that the industry is looking to better understand the features that drive true underwriting costs at a much more granular level to reflect specific needs of each customer.
This includes considering new data sources, such as telematics for motor vehicles and image data and unstructured data for property. All of these require new technologies, which were well represented at the conference, both in conference sessions and with various software vendor demos and offerings.
IoT, Automation, and other Topics of InterestAlso, many speakers and vendors highlighted new insurance technology trends in the Internet of Things (IoT), especially how it is bringing us a further wave of data that we’ll all be able to use to enhance the way we lead our lives as well as help predict and prevent future risks. This data is making a fundamental shift in how insurance (especially the transfer of risk) will be priced in the future—and will help us identify even more risks that will need covering.
There was also a lot of interest in automation and how it could improve complex underwriting processes. Swiss Re spoke about the future of underwriting where they predicted that humans would not be replaced but would still play a vital role in overseeing automated processes and reviewing and reacting to exceptions-based workflows and outcomes.
Currently, highly manual – and expensive – commercial underwriting is trending to more digitalization and commoditization. These trends will allow an insurer to write a wider array of risks and use their underwriter to do what they are good at and automate the rest. (This is analogous to many other industries, such as the medical profession, where automation enables more of the standard cases to be quickly managed by technology while leaving the more complex cases to the human specialists.)
Striking the Balance is Key to Future SuccessClearly for us at Earnix, the role in automating and refining underwriting software comes down to improved and dynamic pricing. Conference attendees told us that they feel new pressures from regulators and supervisors to make sure they charge a fair price from their services, while also doing all they can to keep margins high.
As preventative insurance starts to gain traction, those insurers that can provide the appropriate risk covering at a relevant and fair price will position themselves to become a trusted advocate and lifetime partner for their customers (individuals and institutions alike).
Hopefully, your Ides of March brings you financial prosperity.
Head of Business Solutions, Insurance