- Where Insurance & Technology Meet

When a Keynote Lasts All Day: Sharon Ludlow @ ICEF2015

A keynote address is intended to set the tone for a conference. This was exactly the case at the 2015 Insurance-Canada Executive Forum (ICEF2015). Sharon Ludlow’s remarks to kick off the day became the outline for the expert faculty to follow.

We’ll provide samples here and will add further notes from ICEF2015 on another day.

It starts with an embrace

Ludlow, President of Aviva Insurance Company of Canada, has a vision when it comes to digital: “The insurance industry can’t sit idle; we need to embrace this reality,” she said early in her presentation, “Disruption, Consumers & Technology.”

What’s the shape of the reality? Ludlow cited some important data:

  • 6 internet devices per user globally
  • 73% of insurance consumers prefer to go on-line for basic information on insurance,
  • 43% of millennials prefer email contact with insurers

More significant than any metric, Ludlow stressed that the reality is not static. “Statistic after statistic reinforces that today’s customers are digital customers with evolving needs and preferences.”

Ludlow emphasized that insurance has been late to the digital game and must respond quickly and effectively to avoid being uberized’. Ludlow believes that “the Uber of insurance is around the corner.”

Will components be insulation from Uberization?

Ludlow provided several examples of disruptive technology.. One was bitcoin, the first decentralized peer-to-peer payment network. She concluded, “The impact that Bitcoins will have on traditional money exchange is unknown, but certainly already seen as disruptive.”

Several presentations provided examples of how the fundamental technology of Bitcoin – known as the blockchain – could be used in insurance.

In his presentation on ‘Componentization’, Scott Bielby from CGI noted that consumer requirements are driving the need for smaller, more flexible insurance product elements – which would be assembled in virtual marketplaces. Blockchain technology is integral to this approach.

If it’s intelligent, should we worry it’s artificial?

Citing the example of Viv – a soon-to-be-launched global intelligence platform from the developers of SIRI – Ludlow indicated consumers are embracing artificial intelligence.

In insurance, Mike Fitzgerald, Senior Analyst at Celent, feels that important strides can be made with intelligent machines supporting insurance professionals.

The intelligent machine is a platform, which can ‘learn’, based on feedback from the results of previous decisions. There are experiments underway that involve massive amounts of information and require large numbers of permutations and combinations.

According to Fitzgerald, these address problems that insurers face, including: shortage of experts (lawyers, underwriters, engineers), and situations where we don’t exactly know what question we need to ask.

The changing shape of cyber security

Ludlow emphasized that cyber security is critical in a digital strategy. As with all things digital, cyber risk and security is constantly evolving. Equally challenging, insurers and brokers have had an uphill battle driving understanding and acceptance by clients.

Andrew Bourne, a forensic accountant at BDO and Eileen Greene, vice president and partner at Hub International addressed the nature of cyber risk and the strategies for marketing and sales.

Bourne noted that the majority of large cyber claims have involved indemnification for expenses incurred in notification and other financial losses. This is changing, however, as cyber attacks are now getting deeper into operational aspects.

For example, Bourne noted that in the past year, ten major utilities have purchased cyber cover. Utilities are increasingly being seen as targets with extensive downstream losses – including physical damage and personal injury – which make them opportunities for terrorist groups.

Bourne said, “This type of an incident leads to a very different type of risk than typical hurricane and earthquake risks as it can impact a much larger geographical expanse, and can span many different types of companies and regions.”

Greene provided insight in the sales process. While most business owners and managers are aware of cyber risks, few understand how cyber insurance would respond in specific instances. And, fewer still understand the cost/benefit equation of cyber insurance.

Bourne said that he is increasingly being brought in to the sales process to apply his knowledge and experience to help clients understand the risk and covereage at a detailed level.

What will take the industry forward?

All in, Ludlow is cautiously optimistic about the ability of the Canadian industry to adapt to the changes and continue to offer important product and service offerings through existing and evolving channels.

The caveat Ludlow provided echoed her opening: “Let’s not sit back and allow us to be ‘uberized’ as an industry. … We have the opportunity to modernize the insurance industry through digital opportunities…embracing it…being part of it….leading it.”