Covid-19 pandemic accelerates ‘slow burn of digitalisation’ in insurance by tapping data

Tapping data has the potential to transform the insurance market by increasing productivity for brokers and underwriters.

This was the key message during Netcall and Acord’s Unlocking the Power of Data webinar yesterday.

Jonathan Prinn, managing director at global brokerage and technology firm BGC, said: “Since the pandemic started, we have inadvertently poured fuel on the slow burn of digitalisation; I think our industry has moved on maybe five or seven years in the last 12 months as we all recognise that productivity is king.

“Data will enable everyone to talk to each other. Whether you are a broker or an underwriter, it does not really matter what platform you are on providing you are able to collect data in a workflow and respond to data.”

He listed several ways that data could change the insurance industry:

• Overall prices could increase as there will be a greater understanding of risk as data will give rise to transparency.
• A seamless flow of data will establish the insurance industry as a truly global market.
• There will be a fundamental change in the cost base due to transparency and a better understanding of risk - this will lead to all classes to go vertical, meaning the firm owns or controls its suppliers or distributors. Aviation is an example of this.

“The data flow will lead to a reduction of underwriting costs and a move to algorithmic underwriting.

“Outside of algorithmic underwriting, there will be a set of processes that dramatically change the renewal process,” he added.

He gave the example of a broker book being 90% renewal and 10% growth, with most brokers having a high retention ratio, however Prinn said the renewal and new account processes are similar.

“One of the biggest ramifications will be that underwriters will be able to write rules and brokers will be able to trigger those rules and effectively auto renew business,” he continued.

Although this is already happening in low end personal line products, Prinn believes this might help large, complex risks also.

This requires intelligent and accurate benchmarking, which data analytics could provide.

“If we get the journey right, we might see a 10% to 15% cost reduction,” he said.