‘Challenging’ 2023 presenting insurance technology executives with ‘tough’ task

Technology executives within the insurance industry have faced the “tough” task of delivering balanced systems for their firms during a “particularly challenging” year for the sector.

That was according to Guidewire’s chief executive Mike Rosenbaum, who said that economic headwinds and global catastrophes had made it harder to ”balance between delivering systems that are efficient, but also innovative”.

Among challenges Rosenbaum highlighted was “persistent inflation”, noting that this had caused a 20% increase in the cost of fixing a car and the price of building materials to also rise.

He also said the factor that was “really driving” a lot of problems was weather-related risk.

In Swiss Re’s annual Sigma report, published earlier in the summer (10 July 2023), the global reinsurer stated that insured losses from natural catastrophes grew by an average of between 5% to 7% year-on-year between 1992 and 2022. 

The reinsurance firm said the majority of this increase in insured losses was caused by increased rates of urbanisation and rising populations in areas exposed to natural catastrophes, with factors like social and economic inflation piling on increased upward pressure. 

“All of these things together have made this year particularly challenging – in general, this points to the concept that this industry itself is particularly challenging,” Rosenbaum said in his keynote speech during the Guidewire Connections 2023 conference in Nashville this week (13 November 2023).

“It’s a tough balance between delivering systems that are efficient, but also innovative, and delivering systems that are scalable, but also functional, or systems that are secure, but also fast.

“Finally, they need to be reliable, but also extensible.”

AI

Guidewire is an insurance software insurtech that specialises in the property and casualty space.

Rosenbaum said his firm’s mission was to ”improve the state of the property and casualty insurance industry” as well as the sector’s agility.

With the insurtech operating in the cloud, the chief executive felt it had been able to increase the pace of innovation and delivering updates.

And he also beleives that generative artificial intelligence (AI) could present an opportunity “for a new and more service-oriented approach”.

However, he stressed that this would not mean replacing the human in the value chain – instead, he felt this would be “a tool for human beings to become more productive”.

“We expect large language models (LLMs) to facilitate that cogeneration, but not do it in a completely automated way,” he added.

“Our strategic focus has not changed, we remain completely focused on delivering a platform to support the complete insurance lifecycle.”