John Racher reports back from the GR Innovation & Insurtech event in Bermuda where attendees explored the challenges and opportunities of new technology and discussed their vision of the future and its changing lexicon.
The discussions around the theme of technology and disruption in the global reinsurance sector continue, but the challenge for the industry is that the pace of change is much slower, far subtler and certainly less dramatic than some of the new models we’ve seen in the personal lines space.
This is largely due to the complexity and regulation surrounding the industry, which presents a significant barrier to a digital revolution.
Bermuda as a jurisdiction is doing its best to buck this trend by enticing InsurTech start-ups and setting up an innovation hub and ‘sandbox’ to enable InsurTech innovation and experimentation and to help these fledgling companies flourish.
The island’s government, regulators and development agency are all backing this trend - for example, Bermuda passed the Insurance Amendment Act 2018 in June to allow companies to test solutions before they invest in operational deployment.
The conference session on regulation developed this theme and expanded on Bermuda’s commitment to innovation, endorsed earlier by the Premier The Hon. E. David Burt.
There is currently no reinsurance equivalent of an Uber, Air BnB or Amazon on the horizon yet, but the opportunity is there for those who can spot it. Disruptive digital technologies, such as AI, IoT and Blockchain are all making their mark on the industry and I found Rob High’s (President and CTO of IBM Watson) key note speech on the journey with IBM Watson and the advances in AI fascinating. With some great vision supported by some staggering facts Rob illustrated that with the scale and speed of data growth we need ‘AI systems to amplify human cognition’.
I believe machine learning and AI will become more mainstream over the next couple of years, not least because it is critical in harnessing the enormous amounts of data we now harvest. It is estimated that by 2020 world knowledge will double every 12 hours! A truly mind-boggling statistic but one that validates the need for AI if we are to derive value from that data. It’s an area that we at AdvantageGo have been investing in with the release of digital assistant ‘Aniita’, which has the ability to interrogate insurance data from multiple sources and provide text and voice conversational feedback to users.
There is no doubt that the explosion of data associated with commercial assets will open the door for new business models such as risk mitigation and dynamic pricing, but the adoption of these models will take time.
The sheer scale of the data, as it increases much faster than we can manage it, and the issue of privacy, are some of the challenges that the industry must address before it can truly harness the power of that data.
In the ‘Analytics for Insurance’ panel Michael Brett Managing Director of QBranch made the heartening comment that ‘…most companies underestimate how ready they are for data analytics’, with the recommendation to ‘just get started!’
The panel discussing the ‘injection of inspiration’ and the sharing of their ‘secret sauce’ was fascinating with the three panellists giving their insight into how to transform an innovation vision into a reality. Ann Petley-Jones summed up the criticality of this with the comment that ‘innovation is the new word for survival.’
Carriers now have a much better understanding of the potential of technology – in fact the results from a survey we commissioned in the spring showed that every one of the 30 executives interviewed saw InsurTech as an opportunity. The industry is now reaping the benefits of hiring tech savvy individuals and integrating them into their businesses.
They are the leaders of tomorrow and will have a corporate vision that has tech solutions at its core. As a tech provider, we love this approach and our parent company, NIIT Technologies, has ‘centres of competence’ and research teams looking at the latest innovations to establish a use in our industry.
Partnering with tech companies is not new and has been embraced by the likes of Munich Re, Aviva, Beazley and others and we see the partnering model growing. This seems to be the best way to tackle the challenges and exploit the opportunities – to partner with the traditional (re)insurance markets and assist them in future-proofing their businesses.
Panelist Giles Harlow from Aon in the discussion on the growing Cyber market highlighted two major changes; firstly, the massive uptick in Cyber limits being purchased and secondly the type of buyer that is now requiring policies. This market has been rapidly changing since the ‘NotPetya’ and ‘Wannacry’ losses and the hidden silent Cyber risk is becoming better understood.
The Insurtech Startups Live! session was one of the most entertaining and indeed beneficial panels to us last year and we now have relationships with two of the companies that presented last year’.
There are some truly dynamic and brilliantly innovative companies out there, but these new start-ups sometimes lack the depth of industry knowledge necessary to capitalise on their ideas which is where the carriers step in. This year, seven start-ups took five minutes to pitch their business to a small panel of judges, who in turn asked some questions in a format very like BBC’s “Dragon’s Den”.
The audience voted for their favourite start-up using a phone app. A fabulous group of seven start-ups this year and the voting was pretty tight but, in the end, the winner this year was Stable Insurance with their insurance offering for the ride share sector.
As a footnote to this, I believe that a number of the terms we use today and used throughout the conference will very soon become obsolete. How long will we keep using the word ‘digital’ to preface anything modern? Everything we are doing in the tech space is digital, after all what’s the alternative, Analogue?
We’re using the term to draw a comparison to something that really only exists in legacy. ‘Big data’ is another one – big doesn’t really do justice to the size of data and the diverse sources available. The lexicon is changing, and so is the industry – now is the time to embrace it!