Technology and disruptors are forcing the industry to shrug off its image of being conservative and a technology laggard by Kate Tilley
Disruption is on the way, says Jane Pochon, Sydney-based Head of Financial Lines, Claims, APAC, for AIG.
Jane was guest speaker at an AILA Queensland event, exploring the topic: Tomorrow's leaders today.
Her broad-reaching, well-researched presentation covered her own career path and segued into the industry's future.
She highlighted nine significant changes or 'disruptors' on the horizon that will impact markedly on the industry.
• Cyber business interruption
Jane said business interruption, including supply chain interruption, ranked consistently as one of the top perils in risk surveys. "Companies increasingly operate in a complex environment of inter-connectivity and interdependencies. The failure of plant or equipment due to a computer malfunction or the malicious activities of a cyber hacker or malware can be just as disruptive as a fire or a flood."
As companies increasingly outsourced data handling, software services, website hosting and processing to third party providers, business continuity was in the hands of external vendors and the risk of a breakdown in the cyber supply chain was significant. An AIG poll of global risk managers ranked disruptive technology and cyber security as the two key things keeping them up at night.
A decade or more ago, hackers were just "smart young people proving a point", Jane told Resolve. Today hacking was used to conduct sophisticated crimes.
• Autonomous vehicles
Driverless, self-driving and robotic cars are capable of sensing their environment and navigating without human input. "The implications for auto insurance are significant," Jane said.
• Sensors, the internet of things (IoT) and big data
The low cost of sensors, improved communication methods, the explosion of computing storage enabling the accumulation of extremely large amounts of data, and increased data processing power, mean insurers can leverage the IoT and big data for various purposes, including identifying customers' needs and risks.
IoT refers to the network of physical objects or devices that contain embedded technology to gather and transmit information. Big data is extremely large data sets analysed through computer analytics to reveal patterns, trends, insights and associations, especially relating to human behaviour and interactions.
• Biotechnology and telemedicine
Today we have a means of evaluating, diagnosing and treating patients from remote locations through telemedicine. The next advances are nanotechnology and embedded sensors in the human body, which have the potential to transform the life, retirement and health insurance industries.
• Drones/unmanned aerial vehicles
AIG is using drones to help assess claims faster, more safely and far more accurately. Obtaining footage of property, crop or building damage is now far simpler and faster. Adjusters no longer need to expose themselves to hazardous or toxic sites, and even the most inaccessible environments are within visual reach. Many claims can be processed in significantly reduced timeframes.
• 3D printing
It is possible to print automotive and aerospace components; medical devices; and even bionic ears.
• Robotics, artificial intelligence and robo-advice
Automated, "non personal" direct advice can be provided to consumers, particularly in motor and life insurance, based on artificial intelligence. With evolving technologies, big data, consumer expectations and an industry drive to add value and growth, it is now accepted that, if it is managed correctly within the right regulatory framework, robo-advice can offer a consumer-centric solution to providing insurance advice.
• Non-traditional insurance market entrants
Large companies are leveraging their data mining power, huge customer bases and capital availability to enter the insurance industry through partnerships, JVs and acquisitions. Eg, Google and Walmart have partnered with insurance service providers to offer auto insurance in the US; Ikea has started selling insurance products in the healthcare segment for children and pregnant women.
• Peer-to-peer insurance
Policyholders form groups (usually online) and part of their premiums flow into a group fund; the rest goes to a third party insurer. Minor damages are first paid from the group fund and claims above the deductible by the insurer. If there are few or no claims, insureds get refunds from the group pool or credits on their next policies or, sometimes, a donation to a cause or charity the group members care about.
US P2P start-up Lemonade has been called the "uber of insurance". Unspent premiums will be funnelled back into the community through philanthropic initiatives. Lemonade CEO Daniel Schreiber says the insurance industry is "catnip for disruptive, tech-minded entrepreneurs".
Jane said many of the nine topics had low-market penetration now and would take years for mainstream adoption, "but all have the opportunity to create new markets and fundamentally change the way we work".
She said some of the disruptive changes ahead "might provide some of the most interesting career opportunities we have ever seen".
Jane studied law only because she had sufficiently high grades to be accepted. Early experience in workers' compensation and family law made her realise they were not her favourite fields. Her first foray into insurance was medical defence work for doctors.
Jane was a partner with a major firm when, 18 years ago, a client insurer wanted a senior inhouse lawyer to manage a portfolio of financial lines claims. She jumped ship and hasn't regretted it.
Jane told Resolve: "It completely opened my eyes to the commercial environment and it's very stimulating."
She encourages young lawyers to consider careers outside law firms, saying she's been fortunate to travel and "work outside the box" in her industry roles.
While her mother grappled with the fact her only daughter left a big firm partnership to work with an insurer, Jane sees it otherwise: "For me it always seemed more valuable and authentic to choose the opportunity for new learning, challenge myself and [go] where I saw the greatest pathway for future growth."
Like many in insurance, Jane's move to the industry was "not necessarily a planned one".
"I have had serendipitous 'sliding door' moments to get me here – however I also know that, if I had not found each successive role interesting, challenging and constantly evolving, I would not have stayed," she said.