From regulation, to emerging risk, to the rapid pace of technological change, you’d be forgiven for being overwhelmed by the number of factors impacting the insurance industry at any given moment.
What do they all mean in practice, and how will the industry evolve in 2018? Guidewire Software’s Keith Stonell, managing director for EMEA, gives
Insurance Business his top four predictions for the year ahead.
- Insurtech will become boring but more meaningful
“2018 will see insurtech having to prove itself more and more. We have seen a shake-up already with the peer-to-peer insurer Guevara shutting shop recently. There must be question marks also over whether those many insurtechs that seek to be alternative distribution networks for insurance can justify the huge amount of investment and media interest they have attracted in the last couple of years.
“The future for insurtech and other expressions of industry innovation, will lie in how well they are plugged into the mainstream. So, making it through 2018 will require increasingly having old world insurer funding – like FRIDAY has from Baloise – or ensuring your insurtech app comes with an open API to become part of a bigger player’s ecosystem, as Octo or Pypestream are doing with their telematics and chatbot messaging platforms, respectively.
“Undoubtedly, insurtech is generating some great ideas and business models, many of which are going to change the industry, but I see that more through assimilation than outright disruption.”
- Data listening will help insurers monetize managing 21st century risks for their clients
“Protecting people and businesses from cyber risk seems an obvious insurance opportunity, especially with cyberattacks becoming commonplace. Analyzing non-traditional data, crucial to underwriting new cyber risks, has been a dark magic act. Insurers are working overtime to mine data that delivers personalized experiences and products, like Amazon and Facebook do every day, but the industry will mature in 2018 around how it formalises data listening of external sources to evaluate and price new kinds of risks.”
- Dynamic Data Analytics will gain ground with insurers
“Insurance has been a data analysis business since the first actuaries scratched on their parchments. So, to say data analytics will matter in 2018 is no surprise. But what is going to become a differentiator is how insurers will rely on live analytics to support more personalized engagements in line with individual customer needs. Typically, digital transformation has been about faster transactions. From 2018, the goal and the norm will be to make core insurance systems smarter. Smart core is all about data analytics happening right at the centre of operations rather than in an isolated silo.”
- Augmented Intelligence rather than just AI will become key
“At the start of 2017, Japanese insurer Fukoku Mutual Life Insurance made headlines when employees became redundant with IBM’s Watson Explorer AI. Almost a year later, while the settled view is that AI will play a critical role, it is more about how AI will automate tasks and elevate insurance work, rather than automating human judgement and eliminating personnel. In freeing up staff from menial tasks, they can become better engaged with solving their customers’ needs. I also see a clear benefit in how AI could help staff be more empathetic.
“There are new developments that combine predictive data analytics with machine learning around behavioural analysis, resulting in some interesting new technologies. One example is Cogito. This insurtech continually monitors a human agent’s conversation with a client and autonomously spots where the conversation is flagging. It then recommends to the agent how they can exhibit more positive emotional intelligence. This is a natural fit for the insurance sector and customer management.”
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