There is a great long piece at Carrier Management on how two of the most pressing challenges on insurance are related. Those two challenges are the ubiquitous, dreaded legacy systems (i.e. old technology) and the lack of young talented people entering the industry. The following quote from Michael LaRocco, CEO of State Auto Insurance Companies, sums it up perfectly, and vividly:
The reality of our crappy technology and our old legacy systems and the old way we do business is part of that problem. It’s not going to be attractive for someone to come to a company and work on a green screen. That’s not going to do it for them.
When stated so well, it’s obvious. Insurance has historically struggled with technological innovation, and that struggle has made aging demographics a problem. The essay goes deeper into that crux, but really, these two sentences are all they needed to publish – it’s a proper money quote, and impossible to disagree with.
The article is called Three Major Areas of Opportunity, and lists three ways that technology / innovation will impact insurance in the near future. Nothing controversial in the choices – they are the calling cards of “innovation” for insurance:
- Underwriting automation
- Connected devices (i.e. IoT)
Naturally, we’ll take a deeper look at the underwriting piece, with IoT and cyber stuff beyond the Risks of Hazard horizons.
Ms. Mohan lists six benefits than underwriters can realize with the modernization of their systems, and it is hard to argue with any of them. Here are all six, with quotes from the article and comments:
- Ms. Mohan states: “Automation in the insurance industry can make underwriting both more efficient and more precise”.
- We here could not agree more: using underwriting analytics that increase automation is a sure way to reduce underwriting leakage.
After returning from a springtime vacation, and a hiatus from Risks of Hazard, I didn’t have to look hard to find topics to write about:
- Its hail season now, and I have some new stuff to share on that.
- Wildfire season is here now, too, and there is a post on that, coming soon.
- And, Houston has been flooded again so we need to revisit the challenges of underwriting flood in that city.
But, deciding what to write first was easy once I saw this video from AM Best at RIMS. Meg Ryan hosts an executive panel discussion that includes Kelly Lyles (XL Catlin), Rob Shimek (from AIG, who has provided much foundation for this blog in the past couple months – thanks Mr. Shimek!), and Inga Beale (Lloyd’s).
One of the best talks I’ve heard on insurance innovation is The Changing Landscape of Risk presented by Robert Schimek of AIG (SVP and CEO of Americas Region). He was speaking at MarketScout’s Entrepreneurial Insurance Symposium in Dallas in December.
The fact that only the people in the room, plus 63 people on YouTube, have heard it is a shame. It is super informative, very entertaining (on the Insurance Technology Lecture scale), and (for me) it accomplished the elusive goals of a good talk: it asked questions that changed the way the audience thought of problems, and provided answers to questions the audience didn’t know they had. As a bonus for blog writers, it is a gold mine of material – I will be visiting Mr. Schimek’s material over and over.
The overall subject of the presentation was the importance of entrepreneurial innovation in insurance. He had to lay a little groundwork, because AIG’s view of innovation is likely to be different from pretty much the rest of the industry’s; i.e. 63,000 employees and they pay ~ $110M in claims every day…not quite your typical insurance company. Because of this, he is also able to bring some interesting holistic macro viewpoints to the conversation.