Intelligent Insurer asked decision-makers in reinsurers and brokers which breakthroughs had the potential to revolutionise their companies. Here’s what they said…
1. Blockchain is seen as the next big thing
“Blockchain will boost networking between brokers, companies, primary insurers and the reinsurance business,” says Michael Rohde, member of Deutsche Rück’s board of executive officers.
“By using smart contracts, the industry will eventually be able to handle primary and reinsurance contracts in a fully automated way. Claims handling could profit from efficiency gains. It may lead to lower premiums, and faster underwriting decisions and claims management.”
Paul Lobo, deputy general manager of Indian reinsurer GIC Re, says that it is thanks to blockchain technology that cryptocurrencies such as Bitcoin are possible. It can apply to the risk chain in reinsurance, helping maintain transparency in the chain from insurer to reinsurer to retrocessionaire including intermediaries, and potentially managing quotation, placement, endorsement, claims intimation, processing, accounting and settlement.
“As soon as data input is made at the point of origin for a transaction, every participant associated with the transactions maintains a copy of the same ledger,” says Lobo, “and the need for third party involvement to confirm a piece of the transaction is eliminated.”
2. Data is everything – but only AI can truly leverage it
Neil McGeachie, managing director of Barbican Group Operations Services, points out that the industry is awash with data, but that the next great challenge is how to manage and make sense of it for commercial gain and greater efficiencies.
“Technologies such as machine-learning and AI will become vital enablers to support our analytical capabilities and enable us to accurately and effectively grapple with large and granular datasets,” McGeachie says. “The successful adoption and integration of such rapidly evolving technologies will allow us to seamlessly join internal and external datasets to fully harness the power of big data analytics and revolutionise our entire industry.”
Nasser Zagha, chief technology officer of IGI, says: “Reinsurers can gain a competitive advantage by looking at the data science and trying to appreciate how to leverage and utilise the data.
“Data science takes data reasoning, algorithm development and technology in order to solve analytically complex problems. If invested in properly, it could be a game-changer. Business intelligence can also help us to identify profitable opportunities more swiftly.”
3. Indexes and trading platforms would be the true revolution
The reinsurance industry has long pondered packaging risk in a way that could allow it to be freely traded in the same way as equities and bonds.
“Almost every financial market in the world has an index that tracks the performance of the market,” says Jonathan Prinn, group head of broking at Ed Broking. “These indices provide instant overviews of market trends and allow investors to trade the actual index, or benchmark other investments. For the reinsurance market this type of technology is coming, and it will revolutionise the insurance part of my company and also the industry itself.”
“Indices lead to ‘market trackers’ allowing, for example, individual underwriters to have their own performance benchmarked, in terms of combined ratio and from a client perspective in respect of rate,” Prinn continues. “As these indices appear, our market will be turned upside down by other investors looking to hedge their own investments.”
4. Technology has revolutionised communication
Ryan Jones, head of innovation at BMS, a wholesale insurance and reinsurance broker in specialty commercial lines, believes one approach which could revolutionise his company over the next five years is a change in the way it communicates. “Email enabled the fastest economic growth since the industrial revolution, but it now feels inefficient, slow, and distant,” Jones says.
“Social media platforms are more experimental – sometimes you get unicorns such as Twitter and Instagram, and then our lives and expectations change.”
Now, collaboration platforms such as Slack have found traction as they bridge the divide between email, messaging, and document-sharing. “That open structure means you need to learn how the platform works, but also how you want to use it,” explains Jones. “The next communication technology which changes our game may not even have been invented yet.”
5. Cloud software should be the future
“Cloud software as a service, which has been in use for more than seven years, will continue to revolutionise insurance,” says Bart Patrick, managing director of Duck Creek Technologies Europe. “But systems must not be closed boxes, which are vulnerable to becoming out of date and out of maintenance.”
Patrick argues that a revolutionary system is one that allows insurers to rapidly release new products, analyse customer data and harness insights to make better underwriting decisions.
“It will move with the times, interoperating with other emerging technology such as big data sources,” he points out. “Almost all new insurtech platforms are hosted in the cloud.”
Access the full whitepaper here.