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Insurance Technology: Through the Generations

I am periodically amazed by the progress I’ve seen – spanning more decades than I’d like to admit. For the following, I am using notes and memory for the First Gen. And would be interested in how you are seeing Insurance and Technology.

First Generation

Insurance carriers live and die by data and processing.  Prior to technologies, large companies would have hundreds and, in some cases, thousands of clerks coding and sequencing data. Insureds, distributors, underwriters, claims managers, and accounting provided information, typically with differing data sets.

So, when technology suppliers – IBM, Univac, and others – began selling and installing large computing systems (known as ‘mainframes), insurers were among the first buyers.

The mainframes were very large and somewhat particular.  Since most of the technology suppliers knew little about insurance, company staff were seconded to the ‘computer project’ to help develop programs and convert paper data to the computers.

And the 1960s and 1970s sped by. There were two results:

  1. Most of the installations were much more expensive than expected; and
  2. The insurance executives were disappointed, but still determined to get a return on investment.

Second Generation

Through the 1970s, smaller, ancillary machines were developed.  Some of these were smaller, less expensive computers, others were ‘smart’ consoles, providing faster coding and searching

But there were new approaches as well. It was the beginning of the something very big, but most insurance practitioners and techies had little interest in ‘Those Silly Toys’.

That changed radically in the early 1980s.  Other manufacturers were looking for business computers and applications.  In August 1981, IBM introduced its own Personal Computer (IBM 5150), and business changed radically.

There was little interest from many executives and IT managers.   The bumps and crashes from the First Generation were getting stabilized and the C-suites had no interest in taking another run at an un-tested application and technology.

However, some younger staff hadn’t lived through the Bad-Old-Days.  And some also had a budget!  I was working for a Life and P&C company.

On the Life side, we had a clean path.  The Agents needed tools for maintaining prospect information and faster quotations. We built some quote applications for some complex products.

Our company was purchased. The consolidation from a business perspective worked well.

I would offer the Second Generation high marks for a balance of technology and business.

Third Generation

Getting information within companies was a coup in the 1980s. Electronic Mail applications by-passed inter-office paper delivery, allowing delivery by desk-top / laptop.

But that was only the beginning.  I was managing a IT department and got to see some of the new stuff.  And one day, at a supplier’s office, one of the hyper geeks brought in a Sun console, which showed the path of one satellite or another.

Half way through, the console had a ‘ping’ sound.  It was incoming mail from another company.  I asked how many organizations did they have to set up to receive the mail.

The geek replied: “None.  Our mail system is linked to the Internet.”

I was taken aback. And, because I had a wise executive, he had heard about the Internet  Good thing: one of the admin managers tried to nix the reach.  “What happens if the outsider sends it to someone else?” she asked.

Fortunately, my executive nodded wisely, and told me to do what I wanted to do.

Is the Fourth Generation circling to the First? What do you think?

There are so many things that are changing in this generation.  From my perspective, there are big opportunities, but with one catch: I am hearing that the technicians (versus business folk) are taking most of, or all, the decisions. And some go so far as to say that we don’t need underwriters.

I’m down with AI, Blockchain, etc., but I don’t want the analog to disappear entirely.  I had the opportunity of sitting in on a presentation by an InsurTech recently.

There was a tricky set of questions. I asked how this would get sorted. One of the presenters said, “That’s what our underwriter is working on now.”

What do you think?

Let me know what you see. Better still, we would welcome your coming to the 2019 Insurance-Canada.ca Technology Conference, Feb. 26-27 in Toronto.

See you there!