The top technology trends upending the lives of insureds and insurers

The top technology trends upending the lives of insureds and insurers | Insurance Business

The top technology trends upending the lives of insureds and insurers

As Christmas shoppers swarm malls and scour online stores for the year’s most in demand technology gifts, companies in the insurance industry and their insureds are writing their own technology ‘want’ lists for the coming year. From artificial intelligence to connected devices, 2018 saw a continued rise in interest from both insureds and their insurers in implementing tech-based solutions to mitigate against risks, reduce losses, and increase efficiencies – and for good reason since some experts say that insurance companies have no choice, but to innovate or risk being left in the dust by their competition.

While the benefits of technology are clear to anyone who has ever upgraded from a flip phone to a smartphone, these solutions can also introduce new risks that insurers need to be aware of, particularly when it comes to one tech trend that’s on the rise.

“The IoT market is experiencing incredible growth [in] every single industry – whether it’s healthcare, manufacturing, or retail. It’s all about collecting data, analyzing data, and [determining] how it can be used to go after clients and customers in a more effective and efficient manner. It’s also being used with the rise of driverless technology, so again, [using] data collection so that the service can be improved,” said David Derigiotis, director of professional liability and corporate vice president at Burns & Wilcox. “All of our movements are valuable, all of our data is valuable, and that’s what IoT data is all about – data connectivity and data collection.”

Read more: “Silent” cyber incidents a growing risk with spread of IoT

Government interest around IoT devices is also picking up as cities plan their evolution into ‘smart cities’, which will involve tracking what the city’s population is doing, where they’re staying and spending their time, and how they move and travel throughout the city with the use of sensors. The expectation is that over the next few years, there will be more than 50 billion IoT devices in use around the world, explained Derigiotis.

The risks of sensor technology range from an Uber vehicle’s fatal collision in Arizona this year, when the car’s sensors failed to identify a person crossing the road, to potential cybersecurity breaches.

“Let’s say you have your sprinkler system that’s connected. It sounds very harmless, but if your sprinkler device is on the same network where you’re doing your banking and you have other areas that are connected to that network, cyber criminals could get into your network through your sprinkler system and be able to access your bank account or actively track your online movements,” said Derigiotis. “If it can connect and if it can collect data, it’s vulnerable to an attack, so you have to have methods to be able to secure that device.”

Anyone using these devices, added Derigiotis, whether it’s a homeowner or a multinational company, needs to ask themselves, “What are we using it for, how are we protecting that data, and how will those sensors and those other devices that we’re connecting be upgraded and protected when vulnerabilities are discovered as we implement them?”

Insurance companies are not only interested in what their insureds are doing with technology, but how they can bring technology solutions in-house to add value to their business processes. The Philadelphia-headquartered agency and brokerage firm Graham Company has been investigating machine learning and automation in the analysis of the provisions of specific insurance policies for large commercial insurance buyers.

“That today is still a relatively labor-intensive process, to make sure that you are getting the exact coverage that you negotiated with the insurance carriers,” said Thomas Morrin, SVP at Graham Company. “Where I think that the artificial intelligence and machine learning has the ability to really help is to automate that process [of] the analysis of insurance policies that largely takes place manually by humans looking for exact wording.”

Graham Company offers many customized insurance products to its insureds, and sees a ton of upside in utilizing AI tools to ensure that any vulnerabilities in policies that expose businesses to loss are caught before they cause problems. That technology can also help confirm that updated policies still reflect what was agreed upon by the carrier, broker, and insured, explained Morrin.

Many brokers agree that AI will help them work smarter and provide more personalized solutions to their clients, according to a recent Argo survey, though, at the same time, many view the technology with weariness because they believe it poses a risk to the insurance industry. That’s not the only obstacle standing in the way of artificial intelligence adoption by the world of insurance.

“Traditionally, the insurance industry has not been on the leading edge of technology,” said Morrin, pointing to the many large incumbents in the insurance industry that have been around for a very long time. “Like any organization that has grown large and been successful, and has been around for decades, you don’t easily or quickly change those things that made you successful. You’ve also built processes and procedures, and it’s not always that easy to change them overnight.”

Nonetheless, despite the hesitancy by some to dive into AI – even by giants in the industry like State Farm, which recently launched an ad mocking AI-powered insurtechs – insurance companies are recognizing the potential of AI and other technologies to change their work for the better.

“I think that overall, the industry recognizes that AI and machine learning are here to stay, and it’s not going anywhere,” said Morrin, cautioning, “Put your head in the sand at your own peril.”