The insurance value chain is getting increasingly fragmented compared to a few years ago, and the future will see start-ups that will focus only on client interactions while down the value chain there will be several different service providers which the insurance company will need to orchestrate.
Munich Re’s global head of innovation Tom Van den Brulle sketched this picture of what the future portends in his speech yesterday at the 15th Singapore International Reinsurance Conference (SIRC).
He said, “Earlier, there would be only a few insurers and one reinsurer that would cover almost 80% of the value chain; whereas we now see different providers coming up with very different and focussed services.”
Technology is rapidly changing the insurance industry and different ecosystems are being harnessed to provide a seamless customer experience, he noted. An ecosystem revolves around the idea of the customer who is ready to experiment with different services from multiple players rather than one service from one player. A digital platform facilitates the development of the insurance ecosystem.
“For a seamless customer experience, there needs to be cooperation and constant interaction among different technology players across the world, and all systems must be aligned to the ecosystem for customer access,” he said.
“Technological focus is getting us into a much more efficient direction as we are getting rid of redundancies and focusing on the problems we are trying to solve, and the masterpiece will be an integrated process where the customer will not feel that he is dealing with one insurer, but rather an ecosystem of players that are providing him the service,” he said.
Speed and efficiency from Industrial Revolution 4.0
A panel discussion titled, “Reinsurance reloaded—Industrial Revolution 4.0” had all the eminent panellists agreeing to the fact that technology and digitalisation are having an impact on the industry and that it is important that the human side be preserved too.
Swiss Re’s managing director and head of insurance risk research Dan Ryan said that digitalisation dramatically reduces time and makes data much more specific, as the information on a client is already available in the system.
“Data is recognised for the value it generates and we need to show what is the genuine value of data. It is the democratisation of technology today that has changed the whole game,” he said.
Axis Re’s CEO Steve Arora said that the insurance industry is making huge progress with digitalisation, and new data sources are getting sharper and more integrated.
“Digital technology, data analysis and innovation help in speedy underwriting and claims activity apart from reducing prices of products and can also be used to narrow the protection gap through better and efficient distribution channels,” he said.
Guy Carpenter’s vice chairman, strategic advisory, Ms Victoria Carter, said that understanding clients’ needs is key and helping them develop tools for the future is vital for a reinsurance broker. “We are in a complex world today, and so we help our clients navigate through this complex environment by using our database and understanding their needs,” she said.
DBS Bank’s group head of innovation and ecosystems, Bidyut Dumra, spoke of the bank’s decision to undertake digital transformation in 2014, as the bank faced competition from tech-savvy rivals and new start-ups. “It started with the customer as our focus point. We had to take the fight to our competition or they would run through us,” he said.
Distinction.Global co-founder and cyber security expert Peter Hacker spoke of the ticking time bomb of silent cyber risks that are a threat for every company on the face of the earth.
“We cannot ignore cyber risks as this will be a recipe for disaster as every company can be hacked and it is only a matter of time,” he said. He highlighted the NotPetya malware that hit companies in Europe and the US in 2017, resulting in losses of over $10bn. The malware was launched to destroy and wipe out data and the severity of such attacks is increasing across Asia.
“Cyber risks are becoming bigger and this is a highly severe and frequent risk,” he said.
Mr Hacker is collaborating with the Singapore Reinsurers’ Association to establish the world’s first commercial cyber risk insurance pool in Singapore that will have a capacity of $1bn, bringing together both traditional insurance and insurance-linked securities markets. The pool will assist Asian economies, particularly in the ASEAN region, to tackle cyber risk,
The SIRC, which concludes tomorrow, is organised by the Singapore Reinsurers’ Association in conjunction with the Reinsurance Brokers’ Association of Singapore, as well as Asia Insurance Review as the official media partner.