During a recent interview with Reinsurance News, Moses Ojeisekhoba, CEO, Global Clients & Solutions, Swiss Re, suggested that building trust in digitalisation is key for re/insurers to make the most of the latest technology, which will in turn assist in closing the protection gap.
“Even the most promising technologies need the right conditions to reach their potential… Focused efforts to build trust in digitalisation can help re/insurers make the most of the latest tech,” Ojeisekhoba said.
He described digitalisation as the “technological revolution of our generation” adding that it has fueled big changes across the world.
“It has transformed shopping and global supply chains. The banking industry will never be the same. In many ways, digitalisation has brought the planet’s 8 billion people closer together,” Ojeisekhoba explained.
He continued, “It’s reshaped parts of the re/insurance industry, too, creating opportunities to collect, analyse and leverage risk data so we and our clients can make better decisions.
“Still, one compelling conclusion of Swiss Re Institute’s latest sigma publication, ‘The economics of digitalisation in insurance: new risks, new solutions, new efficiencies,’ is that labour productivity gains over the past two decades have actually been pretty lacklustre, despite this being a period in which digital technologies that promised greater efficiency were adopted nearly everywhere.”
Ojeisekhoba noted that the team behind the report call this the “productivity paradox.”
“They cite some complex reasons behind it, and there’s much debate over its significance. Some conclude it may simply take more time before the dividends of digitalisation achieve critical mass and spark the next wave of productivity gains,” Ojeisekhoba said.
He went on, “In fact, we may be approaching that point. After years on the horizon, for instance, artificial intelligence and machine learning are enjoying what you might call ‘a moment’. They are quickly becoming valuable, efficiency-boosting tools across a variety of industries including re/insurance, even as people debate what this means for society.”
Ojeisekhoba observed that as a business, Swiss Re is also examining these technologies’ potential and in some instances deploying them, since it sees real-world use cases to drive the firm forward.
He added that benefits range from reducing claims processing costs, improving loss ratios, detecting fraud, streamlining marketing and strengthening distribution to customers, including groups the industry has “long struggled to reach.”
Underscoring another “slightly less tangible” area where the industry should focus its attention to help accelerate the adoption of productivity-boosting digital technology, Ojeisekhoba maintained the importance of building digital trust.
He stated, “Swiss Re has long recognised making the most of new technology requires winning the confidence of our customers and policyholders. These groups must remain the ultimate beneficiaries of digitalisation.
“I’ve written before about how mistrust of technologies can impede progress. That’s why establishing trust in new digital technologies is a priority for me and my colleagues.
“This means informing and reassuring people that biases have been eliminated from our algorithms. Our stakeholders, from insurance consumers to regulators, are keen to know what we’re doing with the information we collect. Trust soars when we prioritise transparency and explainability.”
Ojeisekhoba added, “That’s why we think it’s important to support multilateral efforts like the Digital Trust Label in Switzerland, a first-of-its-kind effort aimed at helping organisations convey their commitment to digital trust.
“Without this, the benefits of new technology will accrue more slowly. When trust is strong, however, digitalisation can fulfil its productivity-boosting role for our clients and their customers as they look to manage ever-more-complex risks more efficiently.”
Ojeisekhoba concluded, “When I sit with clients, we discuss their wide-ranging concerns, from macroeconomic uncertainty and geopolitical risks to extreme weather and insurance consumers’ physical or mental health challenges. They want better digital tools with which they can leverage increasing volumes of data to guide risk mitigation and adaptation strategies.
“For instance, we now have AI-enabled models which can evaluate post-event satellite and drone imagery to determine damage severity, helping prioritise inspections to accelerate claims adjustment and payments. And for L&H insurers, new data-driven underwriting initiatives including Underwriting Ease are enabling customers to further digitise their underwriting processes through the effective utilisation of alternative data in their risk assessments.
“Re/insurers today face their own challenge, closing the USD 1.8 billion global protection insurance gap for unprotected P&C and L&H exposures. Digitalisation will help, but building trust is an essential condition for success, and we can’t wait.”