New risks, new opportunities
If you are still unsure about the breadth and depth of technology adoption and application in the insurance and reinsurance industry, then you should spend an hour or two studying Tech Trend Radar 2023. The report is a collaboration between two strategic units within Munich Re Group, namely Munich Re Business Technology and ERGO IT Strategy. FAnews was privileged to be among the virtual audience at a virtual introduction to the publication, courtesy the Insurance Institute of Gauteng (IIG) and Munich Re Chief Technology Officer, Martin Thormählen.
Tech trends for insurance stakeholders
Per the report introduction, Tech Trend Radar 2023 offers information about technology driven trends that are relevant to insurers worldwide: “It is made by insurers for insurers to sharpen awareness, provoke discussion and initiate new business opportunities that appeal to all re/insurance clients”.
This writer loves the opening page of the report, which features a half-moon shape radar mapping of 48 technologies under five headings: healthy human; connected experience; data and AI; cyber and crypto; and redefining industries. Additionally, there are four concentric circles to indicate how far each technology has progressed, from to adopt, to trial, to assess, to hold. This newsletter comments on some of the technologies presented to the IIG, with emphasis on those that may resonate with our readership.
“We need to stay agile and meet our clients’ evolving needs in a sustainable way,” Thormählen said. So, the challenge becomes to identify technology that augments your current business model and processes, and delivers better insurance outcomes to your customers, without introducing unnecessary risks. No discussion on technology is complete without a mention of artificial intelligence (AI) which has entered the mainstream as the core enabler of Chat GPT and various other large language models (LLMs). It is now inevitable that brokers, insurers and reinsurers will find myriad applications for AI-backed natural-language processing (NLP) and LLM solutions, in part due to the data intensive nature of the industry.
The spotlight turned to the first ‘wedge’ in Tech Trend Radar 2023: Healthy Human. “There is a lot of development going on in this space that will change the life and health insurance sectors going forward,” Thormählen said. Innovations under this heading include behavioural analytics; digital health care; human enhancement; robotic health; and vaccine technologies, to name few. It turns out that behavioural analytics and digital healthcare are already in the adoption stage, with the former described as “tools that monitor, analyse, measure and interpret people’s actions, intentions and characteristics from users’ footprints across devices”.
Connecting humans and machines and…
The second area on the radar is referred to as connected experience, or any technology that makes the connectivity between humans and machine or machine and machines easier. “This is really the core for 2023 because we see so many advancements in this space,” Thormählen said. Non-life insurers and reinsurers are already adopting Automotive IoT in their solutions with areas such as brain-machine interface; super apps; and ubiquitous connectivity occupying the so-called ‘assessing’ part of the development curve. There are also some staggering statistical underpins for this theme, such as the Ericsson’s forecast of 4.4 billion ‘connections with 5G’ by 2027 and 2.4 million subscribers to low earth orbit satellites by the end of 2023, per ABI Research.
The presentation shifted focus to the fifth segment of the Tech Trend Radar, redefining industries. It is in this segment that many practical demonstrations of the intersection of insurance and technology exhibit. According to the report, there is going to be significant demand for space-based services for objects and equipment in earth’s orbit, including orbital refuelling, satellite deployment and inspection. “Munich Re is actively partnering with start-ups that service in this space; it is not only SpaceX or Amazon or other US technology companies that are working on this … and we see this as a new field where we can offer insurance solutions to our partners,” Thormählen said.
A bright, tech-backed future
Insurance distribution has a bright tech-backed future. The presentation explored how technology could give brokers and tied agents an edge in making connections between insurers and customers, with additional comment on aggregators and pricing sophistication. The point was made that price is important in the commoditised personal lines motor and household contents cover area. There is, however, a distribution trend that both brokers and traditional insurers might scowl at, being the increased uptake of so-called embedded insurance. Fortunately, all is not lost.
Thormählen noted that agent- and broker-led insurance would flourish due to “more complex products that require more insurance knowledge [and a tighter focus] on customer education, treating customers fairly (TCF) and giving the right advice”. Tech Trend Radar 2023 offered a few examples of how technology is assisting brokers. In the health care broker segment NLP is being used to calculate non-binding quotes from broker emails. Per the report: “NLP models are extracting key demographic and medical information from unstructured text; these pre-assessment services can help insurance carriers to quickly and accurately provide quotes to potential customers”.
Commenting in the report, Norman Thoms, VP for IoT Technologies at Hartford-HBS said: “Tech is being used to improve productivity of agents and brokers on the one side, and product development on the other”.
Leading the way in Africa
There was some South Africa specific content in the latest Tech Trend Radar. Filipe Nunes, Munich Re Managing Director of Life for South Africa and Sub-Saharan Africa said that local life insurers were leveraging technology to support the agent and broker distribution channel, and improving engagements with customers via loyalty programmes. Key points included that technology is being used to streamline onboarding and improve risk selection via these channels; that developments in mobile phone services technology were being used to drive insurance services innovation; and that successful loyalty programmes were heavily dependent on technology and access to relevant data.
To close, we return to the Chat GPT solution from Open AI. “The big shift for 2023 is that we no longer see AI as a clumsy or ugly chatbot … but as something that presents information at par with or even better than a human,” Thormählen said. He added that AI would not replace humans, but it would certainly introduce new capabilities. “LLMs are being introduced into many products … and although it is still early days … this technology is being adopted at a rapid pace.,” he concluded. In particular, AI-backed LLM will help everyone in the insurance value chain to make sense of the dozens of documents and emails they have to analyse each day.
Writer’s thoughts:
The Munich Re Tech Trend Radar 2023 is a fantastic resource for insurance industry stakeholders who want to keep abreast of tech innovation. Is your firm experimenting with AI-backed natural-language processing or large language models? And are you concerned about how these technologies might impact your career or employment? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].
