AI and Automation in Insurance

At the recent Consumer Electronics show in Las Vegas, there was one superstar present: the Internet of Things (IoT). Why the interest? The IoT holds the promise to make our personal and professional lives easier. But what does the IoT mean for insurance? For two years, the Insurance 2025 Study Group (I2SG)† has been talking about the implications of connected physical objects on insurance. And the implications are big!

With hardening markets across many product lines, challenging reinsurance markets, and preparations for a once in a generation regulatory change on pricing, it could be said that the general insurance market is living through a perfect storm. Looking ahead to 2022 and the changes on the horizon, might the tide be about to turn? Or will the grave impacts of climate change, an ongoing pandemic, and the threat of many other headline-making loss events, such as a large-scale cyber-attack, mean that this is a state of play to get used to? This lively panel debate considers the overall state of the general insurance market, what routes there are to a more stable market, whether we should expect this period of instability to continue, and seeks to answer if general insurance is living through a perfect storm or not?

Although first-party property insurance is a standard part of virtually every commercial enterprise's risk management portfolio, many provisions continue to elude easy understanding. In many cases, risk managers and general counsel do not discover how the coverages for which their companies have been paying premiums for many years actually work (or do not work) until a major loss or damage to property occurs, at which time it may be too late to address any issues or fill in any gaps in coverage.

In Digital Insurance 2.0, data is a source of competitive advantage for identifying unserved or underserved markets, identifying profitable niches, reducing or eliminating risk, driving channel optimization, enhancing service and improving customer experiences. Combining data from traditional internal and new external sources can improve the richness of information used to make a wide array of business decisions that are increasing the gap between Insurance 1.0 and Digital Insurance 2.0 at an accelerated rate. To realize the benefits of becoming truly data-driven at the company level, insurers must have a broad enterprise data strategy underpinned by a robust enterprise data warehouse and model to capture internal and new, external data sources across multiple systems so that advanced and emerging analytics can be used effectively.