This could be achieved through flexible ‘on-demand’ insurance (e.g. cover required for only a short period of use) or through methods such as telematics for individual and motor fleet insurance. The insurance industry is recognising that embracing innovation and exploiting new and emerging technologies can go a long way to achieving true customer-centricity.
Increasingly, customers expect digital interactions when making purchases from companies and insurance customers are no exception. From arranging and purchasing insurance at the touch of a button, to notifying claims through apps, customers and brokers not only want convenience but also a more tailored service.
A regulated industry
However, the digitalisation of insurers is not without its challenges and risks. True customer personalisation requires data – and lots of it. As a heavily regulated industry, insurers are (quite rightly) subject to a wide breadth of legislation and regulation. Arguably the most prominent of recent times is the General Data Protection Regulation (2018 GDPR) and as insurers collect more granular data on customers, the more they will fall under the scrutiny of the Information Commissioner’s Office (ICO).
Data also attracts the attention of cyber criminals and cyber security has been named as the top emerging technology which insurers are investing in globally1. Cyber presents a very real threat to companies and places new burdens on directors and data protection officers, as discussed in-depth in Cyber and the Legal Landscape by Christian Simpson.
Artificial Intelligence
Artificial Intelligence (AI) is already being used to the industry’s advantage, such as the application of chatbots for answering customer queries or selling policies, or for image recognition in claims assessment. However, some experts are calling for greater regulation around the use of AI2. In December 2019, the ICO, together with The Alan Turing Institute, published detailed guidance entitled, “Explaining decisions made with AI”; this referenced GDPR, the Data Protection Act 2018 and the Equality Act 2010 as being relevant wherever AI uses personal data. However, there’s an argument that working in such a highly regulated market can be an advantage rather than a blocker when it comes to implementing AI. Insurers have always been required to explain their decisionmaking processes and AI enables this to be more transparent and auditable, since the outcome can be traced back to certain inputs and algorithms.
Summary
Historically, innovation and regulation have seemed to be at opposite ends of a spectrum with the former associated with experimentation and risk-taking and the latter with control. However, there’s growing evidence that adopting new technologies can help insurers automate and de-risk processes, making it easier to comply with regulation whilst offering more superior products and levels of service to customers.
1 Global Emerging Technology Trends Survey 2019. GlobalData. 2019
2 Why Google thinks we need to regulate AI. Financial Times. January 2020.
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