Expanding horizons: digitising insurance
Conventional insurance practices are largely the remnants of a pre-digital world in which policies were committed to paper and sold face-to-face. Underwriting — a word which itself dates to the 17th century practice of accepting a risk by signing a contract — has evolved around 20th-century conventions of how insurers should estimate risk.
Today, there’s enormous potential for change in our industry (see box).
And for insurers that set out on a different path, the payoff can be more than simply finding new revenue streams — they can expand the reach of insurance and build a more resilient future.
Technology is driving the biggest opportunities for change. Insurers can reach more consumers through their mobile devices. Mobile devices also help consumers reach their insurers — especially as their phones and tablets come to serve as their ‘digital advisors’, pointing them to the right products and services, such as which health insurance to buy.
Insurers who underwrite based solely on traditional insurance policy application forms will miss out on the deluge of data available to them. Think of sensors that can say where a car is located and how fast it’s going. Think of roads that can warn authorities when they’re congested and when they need repair. Think of the watch that tells you when your blood pressure is too high or when you’re getting drowsy. Then think of the interaction of all these things and imagine the impact they could have on reducing motorway accidents and fatalities. This is only one scenario across the universe of activities where insurers are the ultimate risk-taker: health, trade, construction and more.
The combination of emerging and existing technologies will have an impact on the whole of society. Risk pools will shift — perhaps from driver to manufacturer, for example, in the case of the autonomous car. New technologies will create new opportunities, while at the same time they will also make some current offerings of the insurance industry obsolete.
Embracing the new
Swiss Re is eager to meet the future. Over the last three years, Swiss Re has run more than 500 case studies on digital products and applications. Some of these are already on the market today, such as the Magnum Mobile life underwriting application. This tablet-based tool enables agents to accept and price life insurance applications in real time. Magnum Mobile intuitively takes the applicant through the risk assessment process and gathers key information, even when an internet connection is not available.
CatNet® is another example where we’ve used technology to bring insight to our clients. CatNet® makes the risk profile of a given region visible. It combines hazard, loss, exposure and insurance information with maps and satellite imagery to assess the risk of individual locations or entire portfolios. With CatNet®, clients can see risk exposure across the globe — quickly and easily. CatNet® is browser-based, ready to use and available free of charge for Swiss Re’s clients.
Even more complex technologies underlie some of our products, such as parametric solutions that employ satellites to monitor weather data and provide quick payouts (see Rural and urban resilience in China). We are also working with IBM Watson’s cognitive computing technologies, with the eventual aim of developing an industry-wide range of solutions to transform underwriting processes.
The Swiss Re Institute, the creation of which was announced in late 2016, will aim to make sure we remain at the forefront in this transformational period in our industry’s history. The Swiss Re Institute will help develop knowledge and approaches that can help clients and end-customers alike. We are actively investing in creating product offerings for new and peak risks arising from technological advancements like telematics, cyber and accumulation risks, while bringing outside innovation into insurance through accelerator programmes that nurture young tech startups (such as Swiss Re’s own accelerator programme in Bangalore, India).
Some of our initial technology investments include stakes in personal data start-up Digi.me, which helps consumers manage their personal data, and wearable physiology monitoring company Biovotion Ltd (see New health challenges, new solutions). The opportunities to transform our industry are vast — and it is our strategic priority to be at the heart of the technology transformation.