Is the insurance industry prepared for new tech risks?

Is the insurance industry prepared for new tech risks? | Insurance Business

Is the insurance industry prepared for new tech risks?

Technology is creating new risks that the insurance industry is currently unprepared for, according to an expert at INSTANDA, a business platform for the insurance industry.

“Risk, the bedrock of the insurance industry, is undergoing a silent revolution,” said Gari Gono, INSTANDA’s head of solutions. “While digital transformation has been the bastion of change for insurers over the last year, there has been far less said about how technology is changing insurance from the outside in.”

Gono said that over the next five to 10 years, “insurers will have to create entirely new product lines” as technological advances create new risks.

“Difficult conversations will need to be had over liability – if a driverless car is to blame for a road incident, who is responsible?” Gono said. “Only those insurers that adapt to these risks will survive and thrive. At the same time, with the developments of data and AI, incumbents will soon know more about risk than ever before. This is creating an opportunity for insurers to embed themselves deeper into consumers’ daily lives, in the same way we have seen with online banking apps.”

Gono said that if technological advancement continues at its current pace, insurers will be able to use their knowledge of risk to offer better recommendations on how customers can protect themselves.

“Last month’s annual CES technology event provides a good starting point for exploring these issues,” Gono said. “The event saw bigger, better, and thinner TVs and laptops. It also presented groundbreaking solutions designed to improve life and reduce the risk of accidents or death. But we should question if it is really that straightforward when it comes to insurance.”

One piece of technology unveiled at the event was Panasonic’s new heads-up display for drivers, which displays navigation routes and alerts on their windshield. Another was Nobi’s smart ceiling lamp, which features motion sensors and infrared detectors in order to detect irregular motions and falls. A detection will activate a voice asking, “Did you fall?” If the response is “yes”, the lamp will notify a caregiver.

“Both technologies hope to be released within the next two years. But as an industry we are totally unprepared for them,” Gono said. “How will the Panasonic’s new HUD impact car insurance? How will insurance policies incorporate augmented reality? How will it impact risk? What if the Nobi smart lamp doesn’t alert a family member to a serious fall? Are they liable?

“These are all risks we need to be thinking about as soon as possible,” Gono said. “New technologies will require completely new policies, as the need to protect consumers from emerging risks increases. Insurers will also need to have flexibility in their policies, so they can adjust and update policy details quickly to accommodate new gadgets and dangers.”

Insurers’ existing technology systems make it very difficult for them to update that quickly.

“It can take years to create a new insurance product and months to update the details of an existing policy,” Gono said. “The only way insurers will be able to adapt to these new risks is if they themselves embrace digital.”

Read more: How insurance organizations can harness the power of data

Gono said that the technologies presented at CES pose serious questions for the industry. While technology creates new opportunities and opens new markets, it also creates new risks, demanding new types of insurance.

“If we want to get this new type of insurance right – create better, more personalized and affordable insurance products that consumers need – insurers need to get ahead,” Gono said. “To do that, they need to reflect on if their own technology is up to scratch. Can they bring new products to the market quickly to react to new technologies and dangers? Can they make changes to policies quickly? Can they make use of data to better price risk? These are serious questions to be asking.”