INSURANCE MAPS THE ROAD TO ADOPTING NEW TECHNOLOGY
For every major issue and technological breakthrough — from cyber-risk to drones, autonomous vehicles, smart-wired homes and the sharing economy — chances are you’ll find insurance professionals working to address the challenge.
It’s not all about minimizing risks; it’s also about reaping the benefits. Advances in technology will ultimately reduce the overall cost of risk, claims and premiums, says Lynn Oldfield, FCIP, CRM, president and CEO of AIG Insurance Company of Canada and chair of the board of the Insurance Institute of Canada.
“A smart- wired house could alert the fire hall during a fire and alert me when there’s flooding or someone is in my home,” she says. “With water and break- ins representing some of the largest risks, technology addressing these risks should benefit policyholders.”
Increasingly, tech developers are consulting the insurance industry before going to market. That’s one reason insurance professionals have to keep pace with emerging technologies and their implications for individuals and businesses.
“We want scientific proof that the technology works, so we can offset the cost of the technology against what we perceive to be the insurance benefit and overall reduction in risk,” says Oldfield.
Often, that means partnering with experts in the field. AIG, for example, has teamed up with IBM on issues involving cyber-risk. AIG also worked with IBM to create the first multinational insurance policy featuring blockchain technology for Standard Chartered Bank.
Autonomous vehicles present another challenge — and opportunity — when it comes to insurance. Ray Arndt, CIP, president of Lyon & Butler Insurance Brokers Ltd., notes that the industry is already anticipating changes that will follow widespread adoption of autonomous vehicles. For example, driver data analytics might no longer be a factor in setting premiums.
“The visible disruptors to the automobile insurance industry are car manufactur- ers,” he says. “Why would a person buy insurance when a vehicle is responsible for an accident? Traditional manufacturers, Google, Amazon and others have expressed interest in bundling insurance with vehicle purchases, and some car insurance companies are well into the process of trying to align with manufacturers to be their affinity partner, providing claims, underwriting and capital management.”
Other insurance companies believe the traditional auto insurance model will survive.
“Even if auto insurance changes drastically, they believe people will still need risk protection,” says Arndt. “The need for advice from independent insurance experts becomes even more important when the public is bombarded with more and more options and promises around autonomous vehicles.”
Oldfield notes that the insurance industry is also working to adapt to the sharing economy. For example, user-based insurance is now routinely available for those participating in the more established and growing segment of the economy.
Underlying this evolution of the way insurance addresses technological change is a revolution in how the industry is incorporating new technology into its own products and services.
While wildfire ravaged Fort McMurray, Alta., last year, insurance professionals made extensive use of satellite imaging and drones to assess damage and relay information to clients. And in the aftermath of Hurricane Harvey this year, drones provided insurance profes- sionals with an on-the-scene view of flood damage to vehicles, which allowed a much more precise calculation of claims. Underwriters are also using drones to assess risk in facilities such as sports stadiums, by providing detailed engineering maps.
“Increasingly, the Canadian consumer is also looking to technology for a user experience that looks like Amazon,” says Mark Rouleau, FCIP, CRM, a senior vice- president with Aviva Canada. “There will always be a role for sound advice and guidance in this industry, but we have to continue to evolve how, and where, we deliver it. In some parts of insurance, we have already seen artificial intelligence help customers select the right product.”
Artificial intelligence could also create customized insurance products to suit the needs of individuals. In fact, the abundance of already available data may allow insurance companies to quote faster and pay claims faster, says Bryan Bedford, FCIP, CRM, manager, strategy and privacy officer at Peel Mutual Insurance Company.
“Instead of answering 1,600 questions online, suppose a customer was asked to supply their name and asked for permission to look up personal information to create a quote,” Bedford says. “You could price the risk more accurately, instead of throwing a group of customers in the same bucket. If you hook a car or a home to telematics, you might be able to negotiate an even better rate by offering more accurate information to the insurance company.”
Consumers and businesses seem to have a lot to gain in a world made safer and more convenient by technology. But insurance professionals will still have a big role to play, as they sharpen their skills and pursue continuing education to keep pace with the leading edge of technology.
“There will always be risk,” says Oldfield. “Even in a safer world, people may consider coverage in areas where they’re underinsured, such as earthquake insurance. We’ll continue to need the best and brightest underwriting talent to assess that risk.”
There will always be risks. We’ll continue to need the best and brightest underwriting talent to assess the risks.