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Can intelligent automation ensure the survival of the insurance industry?

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Eric Tyree, SVP of AI and Innovation, SS&C Blue Prism

 

The economic viability of the insurance industry’s current business model has been in question for a number of years. McKinsey’s 2022 Global Insurance Report shows that 52% of the industry’s global equity had a return on equity (ROE) lower than their cost of equity over the past five years. While most insurers predict premiums will continue to rise in 2022, following the 2020 pandemic-induced growth rate contraction to 1.2%, many non-pandemic obstacles remain in place, including changing consumer preferences and the rise of relevance-challenging advanced technologies.

Intelligent automation (IA) has the ability to upend this outdated model, replacing it with an effective and profitable alternative. By integrating IA into the claims, underwriting, pricing and distribution processes, insurance firms can improve margins and productivity, as well as customer and employee satisfaction.

 

Why is the insurance industry flailing?

The insurance industry is in a state of stagnation, struggling to maintain profitable operations. Fee transparency has made it easy for customers to seek out lower-cost options, while growing technology adoption has heightened price and speed pressures, fueling an increasingly competitive landscape.

Property and casualty insurers have struggled to reduce costs in recent years and the overall industry has seen an ROE slightly below cost of equity – with the exception of insurance brokers, which were the only segment to see positive economic growth. These oppositional forces are further compounded by the lack of growing demand in mature markets. The industry is increasingly dependent on price increases, rather than expanding client bases and new coverage offerings.

This changing growth model that relies on price increases is one of the industry’s greatest threats moving forward. The sector needs to unlock latent customer demand, improve value creation and cultivate growth and innovation. Advanced technologies can be leveraged to accomplish this, resulting in lowered costs, optimized customer and employee experience, as well as improved decision-making and productivity.

 

Why has digital transformation become imperative for the industry?

The changing demands of the market require insurance companies to operate at increasingly faster speeds. As McKinsey reports, “What used to take years must now be done in months or weeks.” Such rates of operation can be accomplished by leveraging the powers of intelligent automation. By integrating IA, insurers can reduce their turnaround times, take on higher volumes of applications and drastically reduce error rates, which are more common when human workers are left to conduct repetitive tasks. This gives employees time back and enables them to develop innovative strategies, focus on complex cases and offer tailored customer experiences.

This is especially important as the industry’s competitive landscape has become a “fight for the customer.” Consumers expect the convenience and ease of digital channels but still need the personalized service that only human workers can provide. This is where insurance firms can differentiate themselves – by striking the right balance between automation and tailored human service.

The rapid growth of insurtechs – entities using technological innovations to maximize savings and productivity in the insurance industry – further illustrates IA’s integrality to the industry moving forward. Their threat to traditional insurers is evidenced by global investment in them increasing from $1 billion in 2004 to $14.6 billion in 2021. Insurtechs offer digitally enhanced client experiences and tend to focus on the marketing and distribution segment of the value chain, along with property and casualty products. These behaviors signal value-adding areas to the rest of the industry.

 

How does the insurance industry leverage the power of intelligent automation?

For many insurance companies, the transition away from legacy systems and siloed functions in the face of budgetary pressures can seem daunting. However, insurers can work with an automation partner to ease the process. Such partners enable them to make the most of their existing systems, using digital workers to operate between previously siloed systems and sync data between applications. This method allows insurance firms to incrementally dismantle their legacy systems, rather than being forced into an all-at-once approach.

Using this transitional automation strategy, tasks related to onboarding, data analysis, claims fulfillment and invoicing can still be automated, unburdening human workers and, in turn, promoting innovation and new revenue streams. This automation management will help insurers streamline the customer journey, settle claims faster and ensure compliance with the latest regulations. And, as the returns from IA initiatives free up more resources, insurance companies can further automate processes and deconstruct legacy systems, creating increasing value and returns.

Thomas Miller, a leading international insurance services provider covering 80% of the world’s containers, worked with SS&C Blue Prism to integrate intelligent automation into its operations. It was looking for solutions that worked with its “low-volume, high-value” model and didn’t require implementing costly new IT infrastructures. As a result, the company was able to see significant ROI, increase agility and resilience, process renewal applications 24 hours a day/ seven days a week, improve accuracy while reducing turnaround times, and give underwriters more time to focus on value-promoting work. This ultimately served to improve the customer experience, a key competitive differentiator in the industry today.

Although the demand for insurance is expected to continue to rise this year, especially in emerging markets, the industry’s long-term longevity will depend on its ability to adapt quickly. Advanced digital technologies have the ability to either boost insurers’ competitive edge or render them obsolete. The future relevance of the insurance industry will depend on its willingness and commitment to adapting to this changing environment.

 

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Fractional NFTs- A Positive Impact on the Market

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Non-Fungible Tokens (NFTs) have been making headlines for quite some time now. The phenomenon is getting a lot of attention from people across the world. NFTs generally cost a fortune but thanks to Fractional NFT(https://www.mesha.club/fractional-nft/) (F-NFT), people can acquire expensive assets for a few bucks.

 

What Are Fractional NFTs?

In simple words, Fractional NFT is a non-fungible token that has been divided into smaller fragments. Hence, different people can claim partial ownership of the same NFT. To understand this concept of NFT investing(https://www.mesha.club/nft-investing/), take an example of a cake that is sliced to serve several people. Considering that NFTs are unique and can’t be duplicated, fractional NFTs go beyond these restrictions by enabling people to divide their ownership.

 

Difference Between F-NFT(Fractional NFT) and Traditional NFT

A fractional NFT or segmented NFT represents a certain percentage of ownership or portion of an NFT. A traditional NFT is a whole while F-NFT is a part of it. Moreover, the segmentation process can be reversed to convert fractional NFT into a complete NFT. A single NFT with a buyback option allows the investor to purchase all the shards and acquire the original NFT.

To convert fractional NFT ownership into a single NFT ownership, the holder must initiate a buyback option by transferring a certain amount of ERC-20 tokens to the smart contract. This triggers a buyback auction which will happen in a fixed period. Therefore, allowing some time for NFT holders to make a decision. In case a purchase takes place during that period, fractions of the NFT are returned automatically to the smart contract and the buyer will have complete ownership.

 

Advantages of Fractional NFT

Democratization

The NFT market restricts small and medium investors as the assets are mostly high valued. So, only a few of them can afford to buy these NFTs. However, fractional NFT benefits newcomers and small investors by reducing the cost of the assets and opening up more opportunities for them.

Greater Liquidity

For a high-priced NFT, you have to wait for a wealthy investor who can afford it. F-NFTs are more accessible and easy to sell as you can split the ownership of an ERC-721 token into multiple ERC-20 tokens and sell each of them individually.

Price Discovery

With no or limited transaction history, it is difficult to find the right price for a whole NFT. However, splitting it into smaller tokens make it affordable and more people can trade the asset. Hence, making it easier for investors to assess its true value.

Increased Visibility for Creators

A fractional NFT has a more liquid market that lets digital creators go online and reach a wider audience.

 

Industries F-NFTs Can Potentially Disrupt

Art

Digital artists along with NFT owners will have the option to divide their assets into smaller segments and sell each F-NFT portion individually to investors. Thus, emerging artists can also easily sell their digital artworks in the market easily.

Gaming

Games that involve trading cards can also seek the benefits of the NFT market. People can sell their cards for impressive amounts. Also, they can auction their in-game items, such as guns, rare skins, and armor through F-NFT and sell rare gaming products to multiple buyers by fractionalizing them.

Collectibles

One of the popular fractional NFT use cases is collectibles that have great potential with crypto being sold for over $1 million. Recently, a collection of 50 CryptoPunks was offered for sale after being fractionalized. This allowed small investors to acquire the asset and get a share in the collection.

Domain Names

With the evolution of the crypto market, the domain names like .crypto and .rth are in demand. So, rare and popular domain names can be fragmented and sold to different buyers.

Real Estate

Luxury properties that were too expensive to afford earlier are now accessible to more people. These high-valued properties can be fractionalized into F-NFT so multiple investors can acquire them. Also, there will be no need for mortgages as tenants could hold different parts of the property together.

Music

The music industry is making the best of fractional NFTs as music artists can fractionalize their albums and sell them to fans without involving third parties. This also resolves the problem of the direct artist-to-fan relationship.

The concept of fractional NFT is still in its initial phase but we can expect it to grow rapidly and become the next trend in the crypto market. F-NFTs open more opportunities for small and medium investors to acquire digital assets at affordable prices. They can easily invest in valuable assets that have the potential to offer many-fold returns in the future. Also, it will encourage people to start their NFT journey without delay as they need not have millions of dollars to buy popular NFT pieces.

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Four tech IPOs you haven’t heard of that are likely to go public

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With the tech sector expanding drastically, Maxim Manturov, Head of Investment Advice at Freedom Finance Europe, explores four unfamiliar IPOs likely to go public that investors should watch.  

The technology sector is constantly evolving and making ground-breaking advancements that are shaping life as we know it. Helping with education, user experience, information storage, communication, and many more areas, technology is designed with what it can bring the user in terms of convenience.

With a sector of immeasurable popularity, comes a colossal number of companies investors must shuffle through. It is important to remember that name popularity does not always equal a good return on investment. All public companies begin from the same starting point and have tofile for an IPO. With media attention usually focusing on a few set names, we wanted to bring something new to the table for investors.

What are the new tech IPO investors can watch out for?

Trax Image Recognition was founded in 2010 and is currently headquartered in Singapore. Trax focuses on delivering technology that carries out merchandise scanning using a mobile app and specialised high-tech cameras. Operating in more than 90 countries, Trax delivers sale control and efficiency for some of the most well-known brands in the world including Coca-Cola, Unilever, Shell, and Heineken. Currently, Trax is a leader in its sector, holding 23 patents, and is included in Deloitte’s Technology Fast 500. Recently, Trax announced the acquisition of Qopius, a Paris-based company that provides in-store technology solutions using artificial intelligence in Europe. This new acquisition helped the company come to a valuation of more than £1.6bn($2bn).

Cohesity is a ‘secondary data storage’ company located in San Jose, California. Founded in 2013, Cohesity provides its customers a sanctuary to store non-critical data, such as backups, development copies, and analytics. Their primary customers include Cisco Systems Inc. and NASA whereby they provide data management services. Cohesity has filed with the U.S. Securities and Exchange Commission (SEC) for an IPO with a preliminary market valuation of £2.9bn ($3.7bn), a significant increase from its £2.2bn ($2.5bn) valuation last year. Cohesity’s total funding is £340m ($420m), and investors may see the IPO take place in the next couple of months.

Byju’s is an Indian startup company that has developed an educational app with a focus on the Indian and U.S markets. As of December 2021, it has more than 115 million registered users. Byju’s founders Bew Ravindran and Divya Gokulnath said the company could have had a revenue of £1bn ($1.3bn) in 2021. As of December 2021, the startup was valued at $21 billion($21bn), making it India’s most expensive startup and one of the most expensive EdTech projects globally. Byju’s expects a valuation of more than £36.4bn ($45bn) according to TechCrunch. The total investment over time has been £3.6bn ($4.5bn) and is due to go public at the end of 2022.

Rubrik is a technology startup company founded in 2014, based in Palo Alto, California. Rubrik specializes in cloud-based data management software and is the fourth biggest player in the data management and storage market. They have recently acquired a Seattle-based data management company called Igneous Software Systems. With this new acquisition, and as of the last funding round, Rubrik has a valuation of £2.7bn ($3.3bn). With total funding of £444m($553bn), Rubrik is one of the industry’s largest privately-held data protection software providers and is a company investors should keep their eyes on over the coming months.

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