Dig | In preview: A more proactive, data-driven insurance industry beckons

Digitalization is pushing the insurance industry into the direction of real-time information, rather than using historical data to make guesses. on risk.

The move from reactivity to proactivity as a result will be discussed in a panel discussion at Dig | In: The Digital Future of Insurance on Wednesday, May 29. Moderator Mark Breading, partner with Strategy Meets Action, says that “The capability to gain, analyze and act upon information continuously to avoid incidents, rather than restoring policyholders from a loss, will have far-reaching impacts."

“Although we’ll focus on homeowner’s insurance, we expect the session will serve as a proxy for discussing the coming paradigm shift across the entire insurance landscape,” he says.

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A representative demonstrates the interpreter mode translation feature of the Google Home Hub at the Google Assistant Playground during the 2019 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Tuesday, Jan. 8, 2019. Dozens of companies will give presentations at the event, where attendance is expected to top 180,000, with the trade war between the U.S. and China as well as Apple's sales woes looming over the gathering. Photographer: Patrick T. Fallon/Bloomberg

Breading will lead a discussion among panelists Yuval Harry, head of partnerships at Hippo, Brett Jurgens, co-founder and CEO of Notion and Daniel Turgel, CEO and co-founder of SmartInsure. On the docket for discussion are:

  • Ecosystem inevitability and management. Gathering real-time information will require a host of technologies and data sources, internal and external, that insurers will utilize for detecting anomalies. For example, detecting a heating system defect that forewarns of a breakdown on a sub-zero winter day will enable an insurer to mitigate the problem before the inevitable occurs.

Doing so will not only require insurers to combine external data with internal policyholder information, but also necessitate working with an ever-changing array of systems integrators, data aggregators, homebuilders, device makers and onsite installation/repair providers, as well as traditional distribution, claims and other partners.

In addition to devising processes for selecting partners, skill sets, talent and technologies will be needed for managing the ecosystem and its members.

  • Impacts on risk, products and services. Continuing with the heating system analogy, an insurer’s core competencies will evolve in exciting and challenging ways. Calculating risk will become a fluid process, accompanied by relevant data science skills and analytic systems, rather than an annual activity. What’s more, insurers will need to negotiate risk burdens with its partners to establish who is, and is not, responsible for the entire spectrum of loss mitigation possibilities.

On the policyholder side, insureds will expect products, services and pricing strategies to evolve rapidly to reflect the smart devices they install and information they provide to their insurers. Plus, escalating cybersecurity expectations necessitate ensuring the data transferring between insured, partners and insurers, doesn’t become weaponized against the policyholder.

  • Adoption and usage patterns. Finally, the panel will review the demand outlook for insurance products that proactively monitor structures and the equipment inside of them.

From generational to market segment differences, insurers will need to adoption and usage from multiple perspectives. For new builds, working with builders will be key. As will evolutions in building codes as evidence emerges on the benefits of various types of smart devices. For existing structures, insurers will need to evaluate which types of homeowners are more likely to adopt voluntarily and under what circumstances.

Regardless of precisely how the evolution from reactive to proactive proceeds, Breading emphasizes it’s such a certainty every insurer must begin preparing now. “The shift may take five to seven years before it affects your firm’s competitive position, but you can’t wait until then to figure it all out,” he says.

“Sensors will soon be attached to everything insurers insure – people, buildings and products,” he adds. “With real-time data available from virtually everywhere, all of the issues and opportunities we’ll be talking about in the session apply systemically throughout our industry today.”

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