We normally write about technology’s impact on the process of insurance. However, respected analysts and practitioners suggest that the cause / effect relationship between technology and the business of insurance is blurring. We cite examples below and are developing a program which will explore this further at the Insurance-Canada.ca Executive Forum (ICEF2015) on August 31, 2015.
PWC’s Mother of Reinvention
In its Insurance 2020 & Beyond Report, PWC examines megatrends which, it believes, will impact insurers globally. The authors find that these trends will be ‘transformational’, and advise their clients “to be looking at how to keep pace with the sweeping Social, Technological, Economic, Environmental and Political (STEEP) developments that are transforming the world.”
The authors find that data, both traditional and big data, are “exploding”. Moreover, traditional uses of data in the insurance industry does not provide insurers competitive advantage. The authors note: “The emerging game changer is the advance in analytics, from descriptive (what happened) and diagnostic (why it happened) analysis to predictive (what is likely to happen) and prescriptive (determining and ensuring the right outcome).”
The report states that established insurers are not yet following this path: “To date, the companies that have been able to make the most of these advanced analytical capabilities have been the newer enterprises, which can design information-driven business models at their inception.”
At ICEF2015, Cindy Maike from Hortonworks and Greg Purdy from Pathway Partners will share information on leading edge uses of data in their session, Distinctive Analytics Supporting Data-First Enterprises.
Willis – Turning IT Investments Inside Out
Regulation continues to impact priorities in operations, including IT. For example, in its Financial Institutions Risk Index 2025, Willis notes that regulation, such as Dodd Frank in the US and Basel III in Europe, have placed significant demands on insurers’s reporting.
However, Willis finds that there can be upsides. A number of insurers have responded to regulation in a manner which transforms their data and reporting structures such that there are now single points of reference for finance and risk data.
This has borne fruit with new customer centric strategies. According to the report authors: “As these solutions are put in place over the next 24 months, banks and insurers expect to see a plateauing of investment in compliance, which may allow them to focus on technology to support revenue generation.”
In the Automotive Technology, Transformation and Risk session at ICEF2015 participants, including Jessica Mahon from the Ontario Ministry of Transportation, will articulate factors, including regulation, that are shaping the new technology driven direction of transportation.
Swiss Re and Industry Wide Impacts
In its 2015 SONAR Risk Report, Swiss Re examines a number of trends it sees disrupting insurance. These cross technical, organizational, and busienss segment lines:
- Redistribution of risk along the re/insurance value chain
- Insourcing of reinsurance risks by primary insurers
- Increasing supply of alternative capital for reinsurance solutions
- Market entrance of non-insurance companies in primary market — “Primary Attackers“
- Cognitive computing
- Regional champions going global
The report pays special attention to the Internet of Things (IoT):
The IoT has significant potential to challenge entire lines of insurance business. There will be many more ways to avoid losses while risk assessment can be improved thanks to the availability of additional data. This could make the physical world safer, reducing the need for risk management and risk transfer. … In addition, other players such as large technology companies may consider entering the insurance market to capitalise on their enormous amount of data.
Clearly, the demarcation between business and technology becomes quite blurry in this future.
At the ICEF2015, a cross-disciplinary panel will look at The Looming Componentization of Insurance, based, in part, on the blockchain technology used in the bitcoin model.
How to get there from here….
The 2015 Insurance-Canada.ca Executive Forum will provide senior leaders in the industry with actionable information on mid- to long-term threats and opportunities in technology and insurance. Details and registration information are available at the ICEF2015 site.