InsurTech: Embracing the disruptive age
The risk and Insurance industry is on the cusp of significant technological change. Crawford’s newly appointed global chief operating officer, Andrew Robinson, outlines three broad trends to watch out for in the rapidly expanding InsurTech arena
Tens of billions of dollars of venture capital investment has been invested in fintech in recent years and fintech is now far more mature and developed. It has also become increasingly apparent that these same investors are turning their attention to the risk and insurance space. In 2016, there was an estimated $2.5 billion of venture capital investment in insurtech, according to KPMG U.K., and that number is expected to easily surpass $3 billion in 2017.
Unsurprisingly, these investments have initially focused on distribution by attacking costs through introducing new online models, comparison engines and other customer-oriented efficiencies. This follows a pattern that we have seen in other sectors that have undergone technological transformations, including the travel, retail and financial services industries.
Following this initial phase of insurtech ramp up, the venture capital world is expected to turn its attention to opportunities in other parts of the risk and insurance value chain, including use of next generation technology to improve underwriting, reduce loss costs and claims leakage, and loss adjusting expense. While insurtech development is going to be dynamic and unpredictable, we are likely to see attention in a few notable areas in the near term.
One area is high definition information and big data, both of which offer a far more granular view of risk and events. This may be in the form of more detailed weather information, allowing for a more in-depth understanding of what kind of weather is occurring in a specific area, or data from the Internet of Things with sensor technology offering new insights and the ability to both understand and improve the underlying risk.
For instance, our response in the immediate aftermath of Cyclone Debbie in Queensland, Australia is a wonderful example. We deployed new drone capabilities producing high resolution, geo-coded information, which in combination with client risk data, allowed us to produce orthomosaic images to assess damage and triage those most impacted. Such high definition information enables more accurate and timely loss assessments and enhances our ability, as claims adjusters and TPA service providers, to triage more effectively.
Second is the data science domain, comprising developments such as machine learning and artificial intelligence. One application of machine learning is to put structure around unstructured data to gain knowledge and insights that are not readily available today.
The incredible richness of information within claims adjusters’ notes alone is a treasure trove of insight waiting to be harnessed. Similarly, development in all forms of advanced analytics for structured data enabled by artificial intelligence and machine learning is providing new insights and driving improved outcomes. For instance, in Broadspire in the U.S. we now have the ability to identify the best treatment for chronic pain before it leads to opiate abuse. We are achieving remarkable results through early identification and triage, and better insight into appropriate treatment, whether it be clinical, behavioral, or some other treatment. This is enabled through very sophisticated advanced analytics.
A third big area of development is in the convergence of mobile technologies and the gig economy. Nearly everyone is aware of Uber and Airbnb. We believe similar development in the insurance industry could be equally powerful and interesting. There is tremendous potential to dynamically utilize mobile technology and enable crowd sourced models to evaluate and underwrite risk, as well as evaluate damage following a loss event, and ultimately use it to resolve a claim.
Our acquisition of WeGoLook is the most compelling example in the industry. Today we are working with companies on everything from site inspections as part of the underwriting process, to property damage assessments in response to a claim, to title assignment as part of a process to manage total loss. We see the potential application of the WeGoLook model as having a profound impact, and we are working with our clients to create entirely new, far more efficient and customer-friendly processes.
With billions of dollars now being invested in the insurtech space, our industry is surely on the brink of exciting and unpredictable change in the years ahead.