The future of insurance : AI, Digitisation and climate change

Our key take-aways for insurers from ITC Vegas 2021

The world’s largest insurtech event, ITC Vegas, returned to Las Vegas in early October with 5,000 attendees and some thought-provoking and inspiring content. What was top of the agenda for insurers, and what does this mean for the future of the industry?

Use of Artificial Intelligence is maturing

Across all areas of the industry, one clear theme this year is that the maturity of AI in insurtech solutions is growing fast.

We’re seeing an increasing range of use cases, from developing more sophisticated chatbots right through to using AI for damage evaluation in insurance claims. One intriguing application that we saw at ITC Vegas is the use of AI by Verisk to detect whether a caller may be a smoker through voice analytics. This helps with fraud and nondisclosure, reducing the number of ‘hidden smokers’ driving up premiums for non-smokers, and speeding up the underwriting process.

However, this topic raises the urgent question of data sharing. Insurers must now focus on their data strategy to make sure they are exchanging and protecting data in the most effective way, and ensuring there is clear ownership.

Looking to the banking sector for inspiration may be useful in this case, as the industry is further ahead with data sharing thanks to the Open Banking concept. Insurers could get ahead of the game by working with an experienced partner that has expertise in helping financial organisations develop the right strategy and technology model.

Digitisation is a high priority

The Covid-19 pandemic has placed digitisation firmly at the top of the strategic agenda. According to KPMG, 85% of insurance CEOs say the pandemic has accelerated the digitisation of their operations and the creation of next-generation operating models[1].

Many insurers are looking at finding the tools, technologies, and partners for this crucial project, which affects the entirety of the insurance business. Contact centres and claims are a particular focus, as these have been hit especially hard by the lack of face-to-face capability during the pandemic.

Consumer expectations of the way they interact with businesses are becoming more demanding, so it is particularly important that insurers create a straightforward, seamless and rewarding digital experience. This is another area where insurers should look to technology providers with proven experience in achieving digitisation across complex financial businesses.

 

Climate change demands action

With deadly heatwaves in Canada, wildfires in California and catastrophic flooding in Europe and China throughout 2021, climate change is naturally high on the agenda for insurers.

As the unpredictable events caused by climate change increase, so do insurers’ losses. The ability to predict and react to disasters such as wildfires, storms and floods is vital, as it affects pricing and underwriting as well as profitability. 

Increasingly sophisticated AI and advanced analytics enable insurers to gain insight from large data sets. This helps catastrophic events to be predicted more accurately, allowing insurers to prepare financially and proactively help customers to take appropriate preparatory action to reduce risk and mitigate damage to their property.

If you’d like to discuss how GFT could help your business thrive in turbulent times, we’d be delighted to hear from you. Contact the team at the GFT Insurance Centre of Excellence at insurance.COE@gft.com.

[1] The COVID-19 catalyst: Insurers race to digitize, KMPG, Nov 2020

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