Claims and fraud might be easy places to start, but automation can drive pricing efficiency amid stiff competition

Automation and artificial intelligence (AI) are seen as an efficiency boon for claims and anti-fraud efforts, but a more adventurous approach to insurtech should be in driving pricing. That’s the message of Hatem Jabsheh, chief operating officer at International General Insurance (IGI), speaking to GR on the eve of this year’s Monte Carlo meeting.

“We’ve focused on trying to price policies faster and more efficiently,” said Jabsheh. “You can get better prices if you cut your operational costs. It’s all about servicing our clients. We’ve focused on that as a company.”

A lot of re/insurance firms, beset by a web of legacy systems and manual processes, tend to focus on using robotic process automation (RPA) for their claims management. Jabsheh thinks they are not being brave enough by just tinkering around the edges.

IGI’s claims team makes up only a tenth of the insurer’s staff, whereas half its employees are underwriters. On that basis, using insurtech for underwriting purposes is a bigger source of efficiency benefits.

“Claims and fraud applications, that stuff is relatively easy. Maybe for larger companies it makes sense to start with claims because their claims staffs are much larger. We haven’t tackled claims yet but we’re going to, once we’ve tackled the underwriting part,” Jabsheh said.

Underwriters’ antiquated routines mean they waste uncounted hours reading reams of policies, he stressed. Jabsheh has been narrowing down a shortlist of insurtech partners to work on scanning non-standardised paper documents, scraping hundreds of data points, to save underwriters from having to carry out these tasks.

“With multiple inclusions and exclusions on a policy, the process tends to bog down, going manually going back and forth. With automation, the underwriter can easily see the changes,” he said.

He stresses the ongoing process of automation, going beyond RPA because true AI means the machine is learning as it goes. “It’s one thing to allow the underwriter to read the policy much more quickly, with the software offering a level of accuracy, but the AI continues to learn, so that over time the computer should be able to get a lot more accurate.”

However it is pricing rather than saving underwriters time which is Jabsheh’s focus. “Pricing systems, that’s where the real savings come in,” he said. “That will easily shave off ten points in costs. Underwriters don’t need to go back and forth to actuarial and price aggregation teams. We’ve been investigating this for over a year.”

Jabsheh has spent several years overseeing IT strategy at the Dubai-based insurer. “I’m not sure people are willing to take the risk,” he said. “It’s hard to tell board they need to junk all this and start from scratch. Big players have so many old legacy systems and levels of piping around it. The problem is not in replacing the data but adjusting the piping so that it can do what it is supposed to do.”

He admitted he has not yet finished the job, but and that many technology chiefs do not stay in the same role at the same company long enough to see such projects through. “I’m still not finished, but the infrastructure will be in place by the first quarter of next year,” said Jabsheh. “It will take many firms at least ten years to and hundreds of millions of dollars to get their house in order.”

Blockchain represents a huge further opportunity for re/insurance, Jabsheh suggested, because it offers transactions at minimal cost, as well as transparent, immediate access to accurate data. However, the industry is not maximising the opportunity.

“The problem is that the applications we’re seeing now are just electronic transactions, more like PPL [the Lloyd’s market’s electronic placement project], than anything else.We haven’t seen much evidence of people thinking about using blockchain to transform the insurance process,” said Jabsheh.

“I worked on a trading floor when it was all hand signals and shouting, and within a decade it was all about high frequency trading. Why not let blockchain do the job of the subscription market? I just don’t see that happening right now in the re/insurance space,” he added.