Although PWC partner believes reinsurance is ‘a little bit behind’ the primary market in terms of digital transformation, Acord vice-president thinks the sector is ‘on the edge of insurtech’
The reinsurance sector is “still a little bit behind” the primary insurance market when it comes to digital transformation, but the industry must invest more into data analytics powered by cloud technology, according to Jim Bichard, partner and global insurance leader at professional services firm PricewaterhouseCoopers (PWC).
Speaking exclusively to Global Reinsurance at this month’s Rendez-Vous de Septembre conference in Monte Carlo, Bichard explained that digitalisation in the reinsurance market has so far differed from the acceleration of technology adoption in the primary insurance sector because of its B2B business models and different customer set.
This means that “the automation piece is more people-based [and] less about [the] number of policies and [processes]”.
However, Bichard believes that “where the reinsurance industry really needs to invest is analytics” that is powered by cloud technology.
He continued: “Cloud [technology] gives [reinsurers] the ability to process so much faster [and with] so much more depth.
“The digitalisation push is coming much more from the ability to [complete] larger volumes of data analysis [faster] to give insights - whether [that is around] better pricing, better advice for clients, whatever it may be.”
Mark Bennett, vice-president of business development, global at Acord – who also spoke exclusively with Global Reinsurance at Rendez-Vous de Septembre – agreed that the reinsurance industry takes a slightly different approach to digital transformation.
He believes that the “reinsurance market has actually been more on the edge of insurtech” compared with its primary counterpart, with large firms such as Swiss Re and Munich Re “at the forefront of new, pioneering technologies to try and innovate”.
He explained: “[Reinsurance] is a mature marketplace, but it is not one that has pushed away from innovation – quite the opposite. [It has] always embraced innovation, but it’s always been in a very thought through [manner].
“[Reinsurance organisation are] very focused on making sure that what they invest in is right for the business. So, they will take their time, they will invest properly, they won’t fire off and invest in things that aren’t right.
“Some people would, therefore wrongly, say it’s slow to move and actually no – it’s not slow to move. [The market is just] very mature and [looks] at the longevity and full impact of said innovation on the business.”
As an example, Bennett noted that digitalising front end processes is all well and good, but this will not benefit reinsurers if back office processes are not also aligned technologically.
He continued: “Let’s say you modernise placement, so you fast track placement and then it just piles business into the back end processes and that causes a problem in the back end because [it] can’t sustain this data flow. That’s a problem.
“Due to [a reinsurer’s] maturity, [it] would look at what is the impact of that innovation on [its] full end-to-end lifecycle.”
‘Massive digitalisation journey’
For Bichard, the primary insurance market has been on a “massive digitalisation journey” post-pandemic, which has been driven by three main factors.
Firstly, the sector has been seeking to tap into technology to use automation to improve process and cost efficiency, as well as reduce its reliance on people and the risk of human error.
Secondly, the primary sector has looked to improve its customer experience by providing a more digital journey – something consumers became heavily used to during the Covid-19 pandemic.
“The digital insurance experience took a massive upswing because virtual was the only way you could interact,” Bichard noted.
The final contributing component is that “cloud technology is just so much more mainstream now”.
Bichard said: “Everyone is somewhere on a cloud journey and concerns about data security have gone away a little bit.
“So, those three things have come together, which means that the primary insurance market is on a massive digitalisation journey.”