The re/insurance industry is facing a major disruption by technology, but new capabilities such as automation will ultimately complement, rather than replace, the work done by re/insurers, according to Andrew Horton, Chief Executive Officer (CEO) of Beazley and Chairman of the London Market Group (LMG).
“We’re definitely facing a disruption by technology,” said Horton, addressing an audience in the Old Library at the Lloyd’s headquarters. “And disruption I think is always a very harsh word because I’m not sure that technology is going to come in and blow us out of the water completely. But it is definitely making our lives change and we need to think about that.”
“We should be thinking about technology as complementing what we do, rather than actually replacing ourselves with it and we shouldn’t worry about more use of technology, machine learning and artificial intelligence,” he added.
Pointing to examples such as the recent introduction of electronic placement at Lloyd’s through the LMG’s Placing Platform Limited (PPC), Horton claimed that the effect of technology on the efficiency and accuracy of re/insurance business is already becoming clear.
However, he added that the re/insurance industry has generally been slow to integrate new technologies, partly due to apprehensions about some roles becoming obsolete.
Citing a study from the Sunday Times, Horton noted that underwriting tasks a 99% chance of becoming automated in the future, and most simple, data-driven tasks will also be under threat.
“We have an initiative at Beazley called ‘Beazley Digital’, which is all about making simple business use technology more and therefore less underwriting and claims involved in it,” Horton explained. “And of course the first response is ‘What am I going to do? and ‘Is my role going to disappear?’ The answer to that is ‘No, you are going to do more value-added things.’”
Looking at data from Accenture, Horton highlighted that on average, only 25% of an underwriter’s day is spent on selling and broker engagement, while more than 50% is spent on core processing.
Implementing more data-driven and automated technologies will therefore allow underwriters to make better use of their time and add value to their roles, Horton said, rather than replacing them altogether.
“We need to respond to a more modern world by getting efficiencies in there, increasing volume, and ensuring that people spend time on value-added tasks rather than things that technology can do,” he explained.
Additionally, some aspects of the re/insurance process, such as claims, have already proven to be largely resilient to technological disruption.
“Claims is always more challenging,” Horton continued. “One of the reasons that I personally believe the Googles, the Amazons, and everybody else has not come into the insurance market and disrupted the specialist end of the insurance market is claims is more difficult to disrupt.”
“Whatever technology does in trying to assess claims, whether they’re small car crashes or anything else, it often gets it out by factors,” he added. “Claims is something we should hold on to and that of course is what people are buying. And that is much more difficult to disrupt in my view.”
By allowing re/insurers to concentrate more on value-added tasks, technological disruption will also result in companies relying on less specialised roles than they have done traditionally.
“We are going to have underwriters who understand about the technology,” Horton said. “We are going to have claim managers you understand a lot more about data, and certainly at Beazley my belief is we’re going to have much more hybrid roles than we historically have had.”
