Advanced tech driving range of global trends

As the insurance industry gets to grips with innovation, customer demands coupled with advanced technology are driving a range of different trends.

1. The rise of reinsurance

Reinsurers are adopting insurtech propositions more rapidly than insurers, says Naoise Harnett, partner at Pinsent Masons. She says this has arisen from reinsurers identifying that the traditional value chain of the consumer, the agent, the insurance company and the reinsurance are being replaced by new models driven by customer needs and behaviour.

“In the global context, one of the impacts of the insurance industry not embracing digital innovation has been that the reinsurance industry has taken up the reins,” Harnett explains.

“As the primary insurers which undertake distribution on behalf of the reinsurers become less connected to their markets, the reinsurers, which are subject to less regulation, feel cut off. This explains why the reinsurers have invested so heavily in insurtech as a means to get closer to the primary insurance market.”

This is a model, which has been adopted by Greenlight Re, an Irish-based reinsurer, while SCOR, another Irish-based reinsurer, is engaging in collaborative strategies with insurance clients and technology companies to provide solutions for end insurance consumers.

2. Risky business

Harnett believes that the role of insurers and reinsurers will expand, moving beyond merely underwriting risks and settling claims to include partnering with the end consumer to engage in risk prevention or minimisation.

“The obvious example of this is the life or health reinsurer providing a wearable device to the insurance policyholder which monitors steps and activity and reducing premium based on the number of steps taken each day,” she says. “The insurer and the reinsurer partner with the end consumer through technology in a mutually beneficial way. The consumer’s health improves and its premium payments fall while the insurer is less likely to have to pay out an insurance claim.”

3. Personalised insurance

No more one-size-fits-all plans. According to Harnett, personalisation benefits the consumer by providing a product tailored to the customer’s specific needs based on their personal data.

“The customer benefits by avoiding the need to undertake research of a large number of products and the underlying documentation,” she says. However, the biggest benefit will be seen in the customer’s pocket.

“Rather than the antiquated methods of assessing risk which apply a one size fits all mentality to certain categories of insureds, personalised insurance uses non-traditional sources of data which are unique and specific to the particular risk to identify a personalised perspective on each and every risk.”

4. Data miners needed

There is a long history of data being at the centre of insurance, but unfortunately much of this is paper-based and unusable by modern technologies such as AI and machine learning. “Cleaning up” this data is where much of the work currently is, explains Cal Muckley, professor of operational risk in banking and finance at the UCD College of Business.

“Data analysts are in very high demand, and demand far outstrips supply in this area because of the impact they can have on a business’s bottom line and the compliance requirements,” he says.

“Once the data is clean and in order, insurers can use various software packages to deploy this technology and those technologies will become increasingly open source and accessible. But right now there is a scarcity of human capital as this is very time-consuming and labour-intensive. However as legacy systems improve, there will be less need for such hands-on data work.”

5. New products

Unsurprisingly, the insurance sector is embracing technology by broadening its focus and introducing new products. Within the Irish market, Irish Life has recently introduced two life and health innovations, explains Harnett.

"The first is its MyLife health and wellness app, which is powered by Dacadoo, a Swiss company operating a mobile-first digital health engagement platform considered to be a leading company in this area. Irish Life also recently launched a wellness DNA test in partnership with Prenetics, an Asian genetic testing and digital health services company backed by Ping An and Alibaba."

In addition, New Ireland has replaced its corporate pension platform with a technology solution called “Smart Pension”.