Machine learning and artificial intelligence (AI) are now in an “arms race” within the insurance market, and what was a competitive advantage a year ago is ‘table stakes’ today, according to Concirrus CEO, Andrew Yeoman.
In a recent interview with Reinsurance News, Yeoman discussed the impact that AI and tech has had on the re/insurance industry, and how the pandemic has altered attitudes towards the need for new technology.
“The market has always had a strong grasp on where to maximise investments and how to deploy capital, requiring the best pricing models and a continual push to improve knowledge of underlying risk,” he explained.
“Simply put, we are in a position where the amount of data now available exceeds the capabilities of traditional technologies to cope.”
He highlighted that the speed at which this data can be assessed exceeds the abilities of even the most experienced actuaries and underwriters to process this, leaving machine learning and AI as the only answer.
“We’re seeing that the cycle from innovation to implementation in a traditional re/insurer can be 12-24 months.
“However, in recent months there’s been an influx of capital supporting new market entrants and these companies have one thing in common, they are technology fuelled.”
Yoeman further noted that for the wider market, there’s a rapid need to embrace new technologies to seek out new insights, assess new data, and improve business outcomes.
“AI is the enabler that unlocks the processing and insights that reinsurers can feed into the work they do. This relationship between data and AI presents exciting opportunities for the future, enabling a blend of rich expertise and new technology that will change insurance for the better,” he said.
He believes that there has been an industry shift in how reinsurers approach insurtechs, technology, and AI, as they now look for the partnerships that give them the best access to data, and more diverse ranges of data.
“The trajectory of the industry would have made it take that route regardless, but change has been accelerated. The biggest shift has been from reinsurers providing capacity to primary insurance companies, who would provide capacity to start-ups. Now you have reinsurers providing capacity directly to start-ups and MGAs.”
“This will happen more and more as reinsurers try to get closer to the insurance data through direct partnerships.”
When asked whether he believes the pandemic altered attitudes towards the need for new technology, he explained how COVID-19 acted as a catalyst for adopting new technology, and it opened everyone’s eyes to what it could achieve for businesses and customers.
“Now we are seeing the benefits of improved decision-making, greater accuracy and faster response time that can enhance the way we work.
Yoeman believes that with new capabilities, tech will change future working roles, ultimately leading to a change to some of the skills needed.
He said: “As technology takes on the ‘heavy lifting’ of some tasks, freeing up practitioners so they can spend time on more important work, as well as upskilling and being more creative in their roles. It has the potential to elevate what we see brokers do every day and gives them the power to make their work more profitable.”
Whilst discussing whether or not be believes AI and tech will have any negative impacts, he discussed that there will be some structural changes in the market and change in the way that people work, however, these advancements which helps players in the industry gain the next level of visibility into the risk they are reinsuring is a positive step.
“Some of the administrative tasks today will undoubtedly be automated and we’ll see an emergence of AI-powered decision-making within organisations.
“If it can be automated, it will be automated. Equally, this will free up time for people to research markets and develop nuanced views of risk and operations which will be incredibly positive.”
Ultimately, the latest AI and tech will give insights into areas that represent higher risk within a customer’s portfolio which will help mitigate losses through allowing loss prevention advice.