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Operationalizing a New Insurance Model: Is Traditional Risk Passé?

When I started my insurance career (1983), I was impressed with insurers’ collection of data.  As my career pressed on, the shine faded, as there was little curiosity in using the data beyond specific needs. 

However, Big Data, Analytics, Machine Learning, etc., are providing new data and processes to underpin insurance with significant benefits for the insured, the insurer, and the broker.

We picked a couple of examples from the UK.  And more is to come here in Canada. 

And finally,  check out our plans for the 2018 Insurance-Canada Executive Forum.

It comes from the stars…

You know something is happening when astrophysicists get excited about insurance data.   UK based Pivigo is a data science firm which supports a number of  industries.  In its blog last October,  Emma Sampayo, marketing at Pivigo, focussed on insurance now and opportunities for the future:

The insurance market represents a huge opportunity for disruption: many of its practices are outdated; it is digitally behind the curve; hugely data-rich; and worth approximately €3.5 Trillion.

Risk is a key element. Sampayo cites a report from Aon which identifies three areas for growth:  Cyber risk, casualty catastrophe risk, and pathogen risk.  To make these accessible, “data science and analytics will help in the development of these areas.” 

And these risk tools are extensible, utilizing advanced technology.  Sampayo quotes Paul Many, Global CEO of Analytics at Aon:

The true transformation will happen as we re-imagine risk management altogether. In this new environment, collaborations, or what we call open architecture innovation, will be key to creating net new growth.

Practitioners are catching on

UK Based insurers are some ways ahead of North America.  And, so it seems, are some brokers.  

Hine Insurance Brokers Ltd. in Manchester focusses on Bridal, Business Insurance, Financial Services and more.  Hine, like Pivigo, communicates with its blog.

In January 2017, Hine covered “Connected Technology and the changing nature of risk”, which focusses the major value point to the consumer:  

Whereas traditional insurance models involve assessing customers based on variables such as the habits or the category they fit into, connected technologies are designed to assess customers on an individual level, in real time.

Moving beyond the brokerage, Hine notes that insurers “believe they could also use data collected by your everyday activities to monitor your status as a risk.”  Hine notes that there are 3 main categories, defined by the 2016 World Insurance Report:

    • Smart ecosystems / Smart homes
    • Wearable devices
    • Machine intelligence.

Hine notes that the work for insurers will be substantial (e.g., security, consent for use), however the projected results are impressive: 

Once relevant procedures have been put in place, the possibilities for assessing customers’ risk and suitability for policies via smart tech rather than traditional methods is immense.

Bringing Insurance-Canada Executive Form- ICEF2018

ICEF2018 is a full day on 28 August 2018 at the Sheraton Centre Toronto.  We are focussing on the impact of new methods and systems on risk, and on the business of insurance in Canada.  

Confirmed sessions include:

  • The 7 Deadly Sins of Insurance, Rob Galbraith, Director – Underwriting Research, USAA
  • Insurers and InsurTechs: Competitors or Collaborators?, Mark Dowds, Co-Founder & Chief Strategy Officer, Trōv
  • Panel: Innovation Drives Change In Insurance Risk
  • Insurance in the Age of Algorithms, Baiju Devani, Vice President – Enterprise Analytics, Aviva

And more are being added every week.  Check us out, and Register here.

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