How many times have we heard that technology continues to increase and improve at an increasingly faster rate? We know from Moore’s law that computer processing power doubles every two years and that has been the case for decades. We also have (pretty good) predictions from companies such as Cisco that Internet traffic will treble every five years. However, applying the rules of compound interest means that next year’s 50% increase will be bigger in absolute terms than last year’s 50% increase. What does that mean for the insurance market?
The important thing to remember is that insurance is a data-driven industry. The scale of data customers will be creating provides immense challenges to the current systems that insurers operate, which were designed in some cases before their customers even had computers. That is even before you consider the current and future challenges being imposed by regulators and massively escalating customer expectation.
A key “must have” for all future insurance systems will be rules-based applications which can automate the analysis of huge volumes of data and drive intelligent, individualised interactions with insurance customers. Only by combining automated rules and data analytics, will insurance companies be able to stay on top of the increasingly large oceans of data.
Underwriters are a very good example: In the future, they will be filtering and prioritising the opportunities generated for their business in order to focus on what they want to write. Working in the context of the relationship value of their client, broker, segment and geography (all analysed automatically for them) they will be allocating the right underwriting resource at the right time to the best cases.
By institutionalising best practices and removing or automating the non-value added work that currently squanders much of their working day, they will focus on underwriting, not admin, and maximise their organisation’s profitability.
Does all this sound too good to be true? Well no, actually it is already being done by some of the most innovative global insurance companies. The investment they are making today will provide significant competitive advantage in a few years' time when the rest of the market is drowning in data.