Technology presents some exciting opportunities to the speciality insurance sector and can play a critical role in addressing the challenges we outlined in this article.
We see the future role of technology within insurance not being driven by what the technology can do, but the mindset that is applied to embrace technology innovation in a way that can positively transform.
Forbes Technology Council wrote back in 2017 that every company needs to be a technology company. Whereas the essence of this is correct, we feel a better phrase is that every company needs to be a technology- driven company. We see four fundamental trends that will define the technology-driven future of insurance and if embraced, will help the industry to accelerate transformation.
1. Democratisation of skills
There is much talk of a technology skills shortage. According to the Harvey Nash Group, two-thirds (66%) of digital leaders in the UK state a lack of talent is responsible for slower digital transformation in their organisation. However, any organisations that have Millennials or Gen Z employees inherently have a tech- savvy workforce with an appetite to embrace change.
This is where a mind shift is required to stop thinking of IT as the function to deliver technology, but as the enabler for employees to embrace new technology. The democratisation of skills empowers people to do more, leveraging their capabilities to learn new skills quickly and to accelerate the pace of change in every function.
Progressive digital organisations do just this with marketers programming websites, accountants interrogating data sets and analysts utilising tools like Python to build business models can enable this change.
2. Platforms vs products
To gain the full potential of democratisation of skills requires the second mind shift and this is to stop thinking in terms of rigid systems and to focus on building flexible platforms. This is a subtle difference that
will deliver transformational benefits. Traditionally, software has been developed as a set of features and functionality against a set of predefined requirements; the reality is that today’s world moves far too fast to
be supported by such a rigid approach. What is required is a progressive framework that delivers inherent agility - platforms that enable end-users to adapt and evolve their solution as they learn more and as the world around them changes.
Moving autonomy to the end-user of these platforms not only generates greater alignment of needs and capability, but also enables them to move at speed. This is further enhanced by the adoption of open- source technologies that are redefining the pace and scale of innovation.
Rather than being locked into a single vendor restricted by their ability to develop new features, you gain the benefits of a much broader pool of talent and innovation which moves at pace and offers greater choice and flexibility.
3. Agility and acceleration via automation
An area of technology that has advanced greatly over recent years is automation. Cognitive technologies such as machine learning, robotic process automation, natural language processing and artificial intelligence is transforming what is possible. We all dream of automating the boring parts of our role and having more time to spend on the interesting aspects, and this is where automation can play a significant role.
We’re previously outlined the explosion of data available to actuaries when building their models, however, at what point does the scale of data prohibit our ability to use it? This is where technology can play a significant role in automating the ingestion of data and intelligently processing this to turn data points into data assets.
Today, actuaries spend far too much of their time collating data and this is only set to increase unless something changes. By embracing cognitive technologies there is a real opportunity to recruit less data administrators and more data scientists and focus not on collating and manipulating data but extracting the real value that helps you make better decisions. These smart tools can also benefit underwriters. By automating manual tasks and removing the need for rekeying, underwriters can focus their time on commercial analysis where they deliver true business value-add.
Automation should not just be thought of as solely removing manual tasks; it plays a critical role in accelerating processes and enabling scale. The fact that vast quantities of data can be processed in seconds not only reduces the time to build new models but allows these models to leverage far larger data sets to drive better decisions.
4. Business-owned procurement
Technology must add value to those who use it and deliver on the wider objectives and desired outcomes of the business. There is a growing trend, driven by the world of Software-as-a-Service (SaaS), for business applications to be procured and owned by the business. This does not mean that IT are circumvented but they are able to take a much lighter touch which in turn accelerates technology adoption.
The explosion of SaaS-based solutions is enabling lines of business to adopt applications that can add significant value to how they work and solve the problems that they face quickly. The business can take ownership of defining their requirements and adopting the solution to meet their specific needs which significantly reduces time to value.
The pressures on IT are lowered with the solution being consumed as a fully managed platform. No additional work is required to secure data, ensure redundancy, and meticulously perform back-ups; this is all taken care of.
Data and technology are key to our future
To thrive tomorrow, insurers need to act today to establish the necessary technical infrastructure for digitalizing processes, handling massive amounts of data, and facilitating seamless collaboration. Leveraging cognitive tools like machine learning, robotic process automation, AI, and natural language processing can revolutionize the ability to ingest, process, and analyze large data sets.
Implementing business-centric applications will expedite digitalization efforts and empower actuarial teams to swiftly develop and adapt new models capable of addressing the complex risks of the 21st century. While the rapid advancement of technology poses challenges for insurers, it also presents a significant opportunity to transform our work processes and embrace a more agile future.