COMMENTARY: LEGACY TO PROPHECY As a critical part of the financial system, insurers couldn’t but rise to the digital challenge posed by the pandemic. The crisis busted myths around ways of working, but where does the industry go from here? We put that question to three experts in the field: Hélène Stanway, Global Head of Technology Innovation at AXA XL, Deloitte partner Nigel Walsh, who leads on insurtech, and Tim Hardcastle, Co-founder and CEO of insurance SaaS provider Instanda
Many would argue that the insurance industry has been fashionably late making its entrance to the innovation party – daunted by legacy systems and, until recently, content to fulfil its role as a ‘necessary evil’ with a captive audience it only really needs to engage with at onboarding and in the event of a claim. However, that’s rapidly changing, with COVID-19 forcing a re-evaluation of the possible, and the realisation that a more customer-centric approach will be essential to maintaining margins and market share in this industry, as in others.
A year of historic turmoil has, perhaps surprisingly, also been a transformational one for insurtech, with startup launches, game-changing innovation and impressive fundraisings that signal a seismic shift in the way insurance is done. Key to this turnaround is automation, with McKinsey predicting that, by 2025, 25 per cent of the industry will be using automation to overcome the bottlenecks and manual processes around claims processing, underwriting, policy administration and customer service that have weighed it down for decades. Tools such as artificial intelligence (AI) and automatic data extraction to validate claims and identify fraud are emerging at pace. More omnichannel services are also helping to improve customer experience through self-service portals where insurers and customers alike can find answers, execute transactions or make their claims. Smart contracts, powered by blockchain data sharing, are enabling quicker, more accurate risk decisions, and fairer pricing. And risk prediction and mitigation is an increasing focus, using Internet of Things (IoT) devices and apps to monitor, among other things, personal behaviour with an inventive combination of data gathering and gamification to reward healthy living, which has the meritorious effect of offsetting life and health insurance payouts. When it comes to specific innovations over the past tumultuous year Ki is notable for being the first fully-digital, algorithmically-driven, follow-only Lloyds of London syndicate, developed by UK insurer Brit in collaboration with Google Cloud innovations, to enable brokers to place their follow capacity more quickly. The global Chubb Studio platform, launched last autumn, is another. It gives
the Swiss insurer’s partners digital access to its consumer finance products, streamlining how it distributes them worldwide while enabling its retail, ecommerce, airline, telecommunications, banking and fintech partners to tag its insurances onto their own products and services. Among the top five global insurers, AXA used 2020 to bring its new Construction Ecosystem (CE) to market. It aims to simplify risk management in a highly complex industry, where projects can be affected by anything from the weather to supply chain and site safety issues. Taking its lead from mapping apps showing satellite views, traffic volumes and nearby businesses, CE aims to offer a ‘digital ecosystem’ to deliver risk insights in real time, using data from its own collaborators, as well as developing technologies for monitoring site conditions, worker behaviour and other factors. AXA’s Digital Risk Engineer (DRE), another debut last year, enables companies to monitor the health of their buildings and assets using IoT devices to capture information from connected systems such as energy, water (including sprinklers), heating, ventilation and air conditioning (HVAC), detecting anomalies in real time in order to intervene early and avoid or limit the severity of incidents and thereby claims, too. Meanwhile, startups like American renter and homeowner insurance company, Lemonade, notched up phenomenal growth in 2020 – it hit the one-million-customer milestone after just four years in business. Meanwhile, US small business commercial insurance provider and unicorn Next, and homeowner insurance vendor Hippo, raised hundreds of millions of dollars to be valued at between $1.5billion and
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TheInsurtechMagazine | Issue 5
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