Ahead of the GR Innovation & Insurtech event in Bermuda, Adrian Morgan, head of AdvantageGo, talks about the latest trends shaping the future of the industry
We know everyone is talking about technology, but from your perspective, is the industry where it says it is when it comes to transformation?
It’s certainly true that InsurTech and indeed ReinsurTech have been on everyone’s agenda for several years now. However, the industry is to some extent hampered by an historic view of how to use technology and needs to look at how emerging technologies can pave the way for essential transformation.
What do you view to be the key opportunities, driven by the technology out there?
This is a great time to be in technology and we are seeing a real surge of innovation with the intention of driving change in the market. The proliferation and availability of data have opened up some exciting new possibilities for carriers and I believe we will see a move from the more traditional indemnification model to one where risk mitigation plays an important role.
Technology has enabled the interrogation of massive data sets including IoT and social media. Carriers who can understand how to utilise that data combined with their wealth of internal transactional data will gain a tangible advantage allowing them to predict and minimise the impact and severity of loss. Through our microservice strategy, we at AdvantageGo are partnering with our clients to explore and open up that opportunity.
We are also witnessing some significant advances in the area of artificial intelligence (AI) over the past couple of years and we’re seeing it applied in our industry to not only improve operational efficiency and automate processes, but to interrogate large data sets predicting trends and providing insight to help with underwriting decision support.
Blockchain is also an interesting opportunity for the market. Whilst we are seeing some compelling use cases for Blockchain and we are talking to customers and prospects about it, it´s not a technology that the majority of our customers see as a priority for them today. Most of our customers are telling us that AI and IoT will have more impact and immediate traction in their business.
What are the key challenges for the industry when it comes to adopting new technology and how should these be overcome?
One of the largest challenges is the significant historic investment in core systems, which can mean it’s difficult to justify changing them. In fact, the appetite for core system change is lower than it has been for a long while. Perversely, the case for change is now stronger than ever and ignoring the wave of new technology could see some carriers marginalised. To some extent, this is beginning to open the door to non-traditional disruptors with no legacy technology. There are things that carriers should consider around their existing estate, for example defining a predictive data strategy and a cloud based, microservice architecture strategy to enable IT agility and insight to support automation and new business models.
Re/insurers have traditionally not had to be led by a tech savvy C-suite panel. How do you see the skill sets at C-suite level evolving?
I guess it’s true to say that many in today’s C suite are not that tech savvy and are perhaps looking after the here and now rather than the future. That is changing though especially in the CIO, CTO and, more recently, Chief Digital Officer (CDO) roles where we’re seeing not only younger and more tech native leaders rising to the top, but also more tech savvy silver C-level executives realising the pace of change is accelerating and they need to come up to speed. The challenge for these traditional roles, however, is their span of control. When you consider the potential for new business models to be formed with the use of disruptive technologies, it is important that the CEO is at the heart of driving change and that Innovation leadership roles have the teeth required to make change happen.
Harnessing data and turning this data into a usable format will be key to the future of re/insurance. What do you think will be the significance of better risk selection and pricing in this industry and all its stakeholders?
It is estimated that there are over 20 billion IoT devices on the planet today and that is expected to double by 2020. Making sense of that vast amount of data will be key to the future of (re)insurance. This proliferation of data will be the trigger for new insurance business models and new digitally enabled products. The ability to predict and prevent losses will dramatically change pricing which for the insured is a good thing. However, for reinsurers, the impact will potentially be more dramatic, potentially forcing diversification and further market consolidation