The insurance industry needs to work faster and share more in order to keep up with the pace of digital change – but we are making headway, executives suggest.
The fourth industrial revolution is driving an “unprecedented” pace of change, the nature of which “seems to be exponential,” Axco managing director Tim Yeates told Insurance Business.
“I think all companies are struggling with that amount and speed of change,” he said. “Does it mean that all the ones not keeping up with that pace of change are going to fail? No, I think we can be fairly optimistic that in our experience, there’s a far greater awareness of what we broadly call insurtech issues than there would have been even a couple of years ago.”
In order to keep up, the insurance industry needs to be willing to share information, even with its competitors, the MD said.
“The nature of insurance itself is starting to be questioned in the new social context that we’re entering into in this global and digital world. Sharing information and sharing risk is clearly an integral part of that world,” he explained.
With technologies such as AI and machine learning coming to the forefront, the industry needs to share more internally to avoid duplication or misunderstanding, he said: “A lot of that information will be shared digitally without human intervention, so the ability to share, to collaborate and work in communities is going to be central to the way an insurance organisation will work.”
However, there are “significant barriers,” from regulatory issues to language hurdles – and of course there is a business instinct against sharing information with rivals.
“It’s hard to share information with your competitors, but the insurance industry does have quite a long history, and I think it’s overlooked sometimes, of sharing critical info with co-insurers and reinsurers,” Yeates said.
“There is a tradition of sharing, but the amount of sharing will have to be significantly larger than we have seen before.”
Speaking at the Brokerslink conference in Marrakech last week, Ed’s group head of broking, Jonathan Prinn, echoed Yeates’ sentiments, warning that AI and other technologies are set to change the industry.
While some reports have suggested that underwriting could be completely replaced by machines in just five years, Prinn cast doubt over whether the pace of change will be that fast. “AI is coming,” he admitted, but said a total replacement of the human element of underwriting is more likely to take 20 years than five.
Nevertheless, the industry could do better, he said: “Twitter processes 500 million tweets per day, Alibaba deals with 360 million sales a day. So I think probably the insurance industry could do a better job when it comes to technology and digitising.”
He urged insurance companies to think beyond “just having a guy who goes out and does a survey,” and to instead look at emerging technologies such as the Internet of Things or drones.
“That’s what we’ve got to get really good at… that’s where we should be focusing,” he said.
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