Authored by John Bowers, Actuarial Product Director, RNA Analytics
As a new year approaches, and we consider what 2024 has in store for the global insurance industry, it is clear that some of the most exciting developments are taking place across the technology space.
The levels of innovation seen across the industry as a result of the Covid-19 crisis continues apace post-pandemic. Digital transformations and the organisational changes that they have underpinned have opened up new ways of working, collaborating and operating that in 2019 some may never have thought possible. And this is just the beginning.
The implementation of artificial intelligence and machine learning across the insurance ecosystem has the potential to transform the way the industry interacts with customers, detects fraud and manages risks. Blockchain technology offers increased efficiency, transparency and security through auditable governance mechanisms, which could have profound benefits in reducing disputes and enhancing fraud prevention.
Insurtech, specifically, continues to drive innovation throughout the entire global insurance industry ecosystem, providing digital solutions, and automating processes throughout the insurance value chain. Some of the greatest innovations have been seen in this past year, and we believe 2024 will be no different.
The advanced data analytics capabilities of Big Data, meanwhile, could create enormous opportunities for insurers to better personalise products and services, cross-sell, optimise risk, and improve pricing accuracy.
Cloud computing has undergone a never-before-seen surge in popularity in recent years. The storage and processing of data in the cloud offers several benefits to companies, including flexibility of infrastructure and increased efficiency. As the compute demand on insurers increases, so too does the case for cloud computing.
And in the developing Web3, novel markets, and perhaps even industries may emerge. Just as the opportunities and risks will change, many of the traditional approaches to insurance may need to be completely rethought so that they are fit to respond to new models and exposures.
As a recent report from AM Best points out [*] the most successful insurers as we move into a new year will likely to be those that can grapple with the challenges inherent when developing new products, processes, services and business models that embrace these novel and exciting technological developments.
The report, entitled Insurer Innovation Accelerated by COVID-19 Continues Post-Pandemic, shows that reinsurers are using knowledge gained from predictive modelling and artificial intelligence to develop novel products to clients manage risk.
Advanced forms of visual computing, it adds, are playing a greater role in property claims management, underwriting and catastrophe modelling, whilst the more homogeneous lines of business (including personal auto and home insurance) are the furthest ahead in automated claims management, perhaps unsurprisingly. Health insurers are meanwhile placing the greatest emphasis on shifting to more economical and efficient care delivery through plan design.
Whether in personal or commercial lines, new technologies hold a great deal of promise, if the challenges of their regulation, and the wider issue of ethics and data privacy and security can be grappled with to produce tools and models that are both safe and sustainable, enabling insurers to draw value from the opportunities they undoubtedly present.
