How new technologies challenge insurance

Alice Underwood and Dave Ovenden from Willis Towers Watson discuss how technology is impacting the insurance industry and what we can expect to see in the years to come

Lindsay James
Lindsay James
By Lindsay James on 01 May 2019
How new technologies challenge insurance

This article was originally published in the Spring 2019 issue of The Record. Subscribe for FREE here to get the next issue delivered directly to your inbox. 

How will automation, AI and big data impact the insurance industry?
Ovenden: Artificial intelligence (AI) isn’t just about well-trained computers but encompasses a huge breadth of technology from deep predictive models to cognitive learning. As for big data, our view has long since been that it starts at home, so having a good grip on your underlying data assets so you can bring in the capabilities from AI predictive models and deploy them against those assets will be transformative. 

Underwood: We need to step back and think about what those terms mean. Automation is about getting a computer to do a well-defined set of tasks, whereas AI can take on almost anything that we can get a computer to do and follows an iterative learning trajectory. But it’s not an either-or choice: automation and AI can work together.

How is technology helping insurers increase growth and profitability?
Ovenden: Insurers are using data from predictive models and other types of AI to build mobile apps that drive the right product to the right customer. In the near future, we’ll see commercialised trading hubs that have intelligent automation driving sophisticated pricing into the hub from the insurer’s side – and from the broker’s side, automated decision rules about what to present to the insured.  

How will technology address the range of regulatory environments in insurance?
Underwood: Where the rate environment is flexible, insurers may want to focus technological development around pricing, whereas those in regulatory environments may want to focus technological development on underwriting or claims. Claims processes can be automated to be more efficient and cost effective. AI can also be used to bring the claims that need attention to the right handler and process the claims that don’t need close attention in a no-touch way.

How do you see insurance changing over the next decade?
Ovenden: The technology around handling unstructured data is interesting for commercial insurance. There will be greater ability to use less structured forms of data in a way that we previously haven’t been able to. Ingesting reports and turning them into actionable data and instantly usable insight will be possible in the next couple of years. That will lead to an ever-richer source of data for models because you’re no longer bringing just facts and figures together, you’re bringing insight to unstructured data. The issue of privacy will run in parallel as people and regulators begin to think more carefully about it. 

Underwood: I think we’ll continue to see increased connectivity in the market. Companies will form alliances and partnerships with those previously regarded as competitors, and with players they just hadn’t considered before. It’s no longer about vertical integration. It’s more about being able to connect to different providers of information and technology and integrating that technology with legacy systems. 

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