Re/insurance think tank, The Geneva Association, (GA) has released a study revealing how technology’s streamlining of re/insurance processes is set to play a pivotal role in bridging the protection gap between insured and economic losses.
At around $40 billion, last year’s insured loss estimates rose to their highest figure since four years, but this figure amounts to less than one-third of total economic losses, which were estimated at $210 billion.
These high levels of uninsured losses are due to catastrophes heavily hitting developing nations that often lack resources for re/insurance uptake.
But technology could soon make a sweeping transformation of the industry, making insurance cheaper, more efficient, and thus more accessible to hard hit regions of developing countries, according to the GA report.
Deputy General of the GA and report co-author, Dr. Fabian Sommerrock, called technology one of the most relevant and topical dimensions of the global protection gap debate.
“With this report we want to highlight, gauge, and quantify win-win situations for insurers, policyholders and societies at large. On this basis we hope to sensitize the global re/insurance community, governments, lawmakers, standard-setters, development banks, supranational organisations and consumers to the enormous leverage technology can deploy to make societies more resilient through risk mitigation, and protection products and solutions,” said Sommerrock.
The study’s key findings showed that all areas of underwriting, from reviews, pre-purchase, areas and operations will be permeated and made more efficient by technology – boosting the affordability, awareness and appeal of insurance globally.
A digital transformation of the insurance industry is set to dramatically reduce insurance transaction costs impacting all areas of claims settlement, acquisition, and administration, the GA reported.
Deputy General of the Gen Association and report co-author, Dr. Fabian Sommerrock, said; “With this report we want to highlight, gauge, and quantify win-win situations for insurers, policyholders and societies at large. On this basis we hope to sensitize the global re/insurance community, governments, lawmakers, standard-setters, development banks, supranational organisations and consumers to the enormous leverage technology can deploy to make societies more resilient through risk mitigation, and protection products and solutions. “
Augusto Hidalgo, President & CEO, National Reinsurance Corporation of the Philippines, commented; “Technology offers a great potential to sell simple products at lower distribution cost. Think of cloud solutions or electronic payments via a mobile device, for example. In addition, the blockchain could enable quantum leaps in administrative efficiency and the security of transactions, all potentially leading to more demand for insurance.
“In developing countries, social media can go a long way in overcoming a key obstacle to buying insurance: a wide-spread distrust of public and non-public institutions. Recommendations from friends are generally more effective than insurers’ marketing campaigns or government efforts at promoting insurance awareness.”
Senior Advisor to Geneva Association and report co-author, Dr Kai Uwe-Schanz, added; “Even though the insurance industry’s revolution has just begun, technology has already contributed to narrowing protection gaps. Digitisation is a unique lever for insurers to develop more affordable, efficient and customer-centric products and solutions, thereby enhancing the societal value of insurance.”
For the vast majority of the population in many developing countries, the cost of simple insurance products is currently still too high, but an effective solution that would both raise demand for re/insurance and assist global development goals, appears to be increasingly within grasp as mobile and other innovative technologies spread insurance’s reach.
