INSURANCE IN A DIGITAL WORLD Conference: capacity, consistency and culture are the three key success factors in the digital transformation of insurers

The INSURANCE IN A DIGITAL WORLD Conference, taking place at FIAR 2018, brought into debate the impact of digitization on the insurance industry. The first part of the conference focused on risks & opportunities of digitalization for both industry and consumers, as well as case studies and best practices: BigData & IoT, BlockChain, Peer-to-Peer, and AI.

Tudor GALOS, Senior Digital Transformation Consultant, Romania
  • In many industries, technology moved bureaucracy to e-bureaucracy.
  • Digital transformation is about using the latest technologies to become more efficient. 
  • Digital transformation should eliminate bureaucracy.





Michael THEILMEIER, Senior Vice-president, GEN Re, Germany
  • Digitalization is a tool, not an objective.
  • Without good intermediaries, insurance industry does not work. 
  • Cost effective handling concluding insurance contracts means: 1) Less administration - with fair remuneration for necessary services, 2) Simplified handling: standardization of processes across the industry; automated data feeds, 3) Individual pricing, tarrification transparent and accepted (if you use 12-13 tarrification criteria, that information comes from somewhere and the way you use and obtain this information must be transparent).
  • Example of applications of IoT in insurance: Bursting water pipes represents by far the biggest risk we have in property insurance: 53% of the 5,2 billion EUR paid in Germany for claims on the property segment in 2017 was due to bursting water pipes. Thus, the digital monitoring of waterpipes can have a huge potential for the insurance industry, because sensors and connection can be used to minimize this risk.
  • Digitalization also brings legal constraints and issues: who owns the data? Who has an interest in the data? Regarding Big Data - How will we keep the computer from discriminating - directly or indirectly - because of ethnical origin, gender etc.? Also regarding Big Data and Governance/Supervision - How do we avoid excessive work and reporting ... just because there are data and systems available? 
  • We have to make sure we put the customer in the center.
Calin RANGU
Vice-chairman, Committee of InsurTech Task Force, EIOPA
Director, Intermediaries Supervision and Monitoring Rules of Conduct Department, ASF, Romania
  • Fast innovation in the insurance sector presents numerous benefits to consumers, including: 1) lower costs driven by improved efficiency, transparency, and disintermediation, 2) Increased accessibility driven by improved mobility, speed, and user interface, 3) Customer centric new products. 
  • However, this innovation also brings risks to consumer protection that need to be managed: Data protection, cyber attacks, discrimination, disengagement, etc.
  • The InsurTech Hub launched by ASF aims to encourage responsible innovation at each stage of development: 1) Idea stage - Promote the generation of ideas, 2) Compliance stage - Facilitate the process of compliance, 3) Implementation stage - Test how the idea works in practice, 4) Expansion stage - Facilitate expansion to all market.
  • The challenges of the InsurTech Hub include: a) Mandate of oversight body - How does promoting innovation fit?, b) Keeping up with innovation - Knowledge, identifying barriers and how regulations should apply, c) Structural issues - Financial institutions - focused regulation, local ownership, paper requirements, d) Institutional culture - How to promote a culture of innovation outside of hubs?, e) Consistency - Interpretation of regulation, variety of InsurTech, f) Capacity - Demand for regulatory support may exceed supply.
  • The key to success is represented by three elements: capacity (resources and networks, as well as international approach), consistency (the consistency in the application of regulation, as well as international cooperation to limit regulatory arbitrage) and culture (organisational support and buy-in, as well as adaptability to change).
  • Big Data impacts all the stages of the insurance value chain: Product design and development (Usage-based insurance products (e.g. car telematics or health wearables); Tailor-made product and services; New products: cyber insurance products), Pricing and underwriting (Enhanced risk assessments; New claims drivers and predictive models; New non-risk based pricing techniques), Sales and distribution (Automated advice; Disintermediation of sales processes; Increased frequency and customer interaction; Gamification), Post-sale services and assistance (Smartphone applications; 24/7 service, accessible from any location; Chat boxes and artificial agents; Geolocation and personalised warnings in case of flood, storm, hail, etc.), Claims management (Enhanced fraud analytics; Accurate information about the accident and its dynamics (e.g. photos, geolocation etc.); Picture recognition (e.g. car damage or facial recognition) and automated loss adjusting).
  • InsurTech HUB Romania has four objectives: 1) Presenting the best practices in the field; 2) Stimulating innovative technologies favorable to consumers; developing regulation and supervisory resources and the development of the insurance market; 3) Monitoring of innovative technologies development from the perspective of: the current regulations and those required to be applied in the future; the conduct of companies that promote such solutions and the conduct of entities that use innovation technologies and solutions; 4) Supporting innovative technologies development in a controlled and consumer-friendly manner with the protection of their rights and interests from the perspective of digital identity, dematerialized assets and personal data.
  • The members of the InsurTech HUB include ASF, insurance undertakings, insurance intermediaries, rRelevant insurance and IT associations (UNSAR, UNSICAR, CCPA, PRBAR, ANIS, CLUJ IT, ATIC, ANSSI etc.), interested IT companies (MATRIX ROM, SMART TECH ALLIANCE, TREMEX etc.).
Cees WERFF - CEO, CCN - Claims Corporation Network, Netherlands
  • We live in a world where thing happen very, very fast, inclusively in the traditional insurance industry. Let's remember the year 2015, when Google entered, for a short period of time, on the insurance market, starting to offer such kind of products on the US market. It had a very big impact after only a few clicks. Due to complexities in regulation, Google considered it was not the right moment to continue to offer this service, but it can be considered as a 0 moment for other examples in our days.
  • Such examples continued and will continue. Some will be successful, others - not.
  • Innovation is necessary in insurance. Why? It's an "unpleasant" field for the consumer, he doesn't like it, he doesn't want to talk about it, especially if a damage occurs.
  • There are various forms of insurance offered by start-ups, which provide more and more diverse things, at a distance of only a few clicks on the mobile phone.
  • Many industries have changed compared to 10 years ago. We no longer go to a travel agency, we book online, we no longer buy CDs with music, we download it, printed media has become a rarity, we take the cinema with us through Netflix, shoppings on Amazon and Ebay and the examples could go on. This is the direction which the insurance industry is taking - the moment when the consumer is in the center of attention.
  • Innovative products started to appear also in the insurance industry. There is a start-up that launched a mobile app through which you can buy insurance for your bike for the moment you use it; you can insure it for a day, a weekend or a week. This kind of solutions is the market searching for.
  • Another example is Jetty - a property insurer. In order to buy insurance for your house, you only have to answer one question: what's the address? Based on this, based on the public data such as criminality, construction model, building age, the insurer calculates the premium. It all happens very fast, less questions and documents, the client must be in control.
  • Traditional insurers must not forget about technological changes - to develop new methods to interact with their client, new ways of evaluating and managing risks and damages. Insurers must develop together with the consumers, follow them online, tailor customized products. Sooner or later, the whole industry will face digitization.
  • Digitization and automation are not far. In Sweden, there are tests with dozens of automated cars. Although now we don't have enough confidence to use a self-driving car, once technology grows, our confidence will also grow.
Ioana GHERMAN, Data Scientist, GENERALI, Italy & Yasmine NOURI, Senior Actuary, GENERALI, Italy
  • The digital transformation - everybody must be opened to the data offered to us.
  • Insurance companies use data analysis for a long time.
  • We need to change our point of interest in analyzing data. We should not only use them for underwriting and risk analysis.
  • It's a difficult context in which insurers operate. Insurers' customers are Google, Amazon and Facebook clients, they want customized products, they want product recommendation, they want and expect to be offered the products they want to buy, products they can afford, products that fit them.
  • We need to change our focus point on cross-selling, broaden the perspective, use the data provided by the support systems when we drive, to use all available data.
  • Thus, potential business growth solutions are identified.
  • Finding such solutions reduces costs and generates profits for the company.
  • In this regard, GENERALI has developed Analytics Solutions Centre - to support the digital transformations of GENERALI Business Units by developing data analysis to address business challenges and identify potential growth.
  • Existing cross-selling models need to be built/revised, to improve portfolio profitability and support distribution.
Valeriu FILIP, General Manager, I-TOM Solutions, Romania
  • The Romanian market is a small one, in which the money invested in technological platforms are not big.
  • This is the trend: the are platforms (in UK) in which clients introduce their data for themselves and pay - platforms where 70% of tranzactions are automatic polling, that do not require any human intervention.
  • The future of insurance, even in Romania: platforms that incorporate chatbots, automatic notification systems in case of damage, BigData analysis, behavioral analysis.
Victor SRAER, Managing Partner, OTTO Broker
  • InsurTech appeared 4-5 years ago as a high-profile promise, becoming a reality validated by many millions of dollars invested. When I refer to InsurTech, I refer to companies that use technology to develop products and solutions for the insurance industry.
  • I think InsurTech can be a chance for Romania, but I think we have no chance to grow and consume InsurTech in Romania because the market is too small. I think we can really consume InsurTech created elsewhere, from this point of view the market is relatively attractive, but I think the only chance is to create InsurTech from Romania to be consumed at an European or even global level.
  • My main objective today is to challenge you to solve the problem, decide and act on this crucial question for the Romanian insurance market, in a 10 year perspective: we want to be a consumer or a creator of value on the global market? From my point of view, the only strategic option we should be pursuing is to be a value generator through InsurTech.
  • Which could be the ideal conditions for such an objective? First of all, to have a favorable environment for InsurTech start-ups - this means capital, training for entrepreneurs and an environment friendly to failure and risk. We also need a constructive and flexible regulatory environment for teams and people who have at least  2 out of the following 3 competencies: insurance, IT, marketing.
  • I believe that we can meet these conditions on the Romanian market and we could call them success signs of the development of InsurTech in Romania, if, in the next 18-24 months, we will see very few more drastic regulations than the European ones, if we will see at least 5-10 ideas to be funded by the industry, a minimum of EUR 2-3 million in initial capital (seed capital) and another EUR 10-15 million in growth capital.
  • If we stick to the alternative of remaining an InsurTech consumer from elsewhere, we will probably see that the big European groups will implement their initiatives here or we will see international start-ups or perhaps even local ones associated with innovative insurance companies from other markets.
  • The benefits for the Romanian market to become a value generator through InsurTech would be very high: we will grow above potential, Romanian subsidiaries will gaind a more important role on group level, the virtuous spiral that we have been looking for so many years is born.
Alexandra DURBACA, Executive Director, LEADER TEAM, Romania

Daniel JINGA, Founder, TPA 2.0

Alexandra DURBACA:
  • TPA 2.0 is our partner. LEADER TEAM is trying to get involved in interesting projects that combine technology with insurance. In this regard, last year we became the first insurance broker to implement robots to streamline and ease the work of employees.
 Daniel JINGA:
  • I'm trying to act as a platformor ecosystem orchestra on the insurance market. I am not a broker, nor an insurer, but a new type of company for this region of Europe. Here, the market is small, but it is a sensational one in terms of workforce. I hope to succeed beyond Romania's borders in the next 24 months.
  • "Digital Platforms and Ecosystems" is a trend. A study by Accenture shows that 75% of insurance executives agree that digital ecosystems transform the industry. 4% of insurers say the adoption of a platform-type strategy is absolutely crucial to their circle; however, only 33% of insurers say today they have aggressive initiatives in the sense of developing such a strategy or participate in a digital ecosystem.
  • Platforms and ecosystems - what do we mean by these words? The platform is seen as a modern business, is the platform where we can bring together different actors in a market - insurers, brokers, reinsurers, distribution partners, logistic companies etc. And the ecosystem is a complex network of interconnected businesses that are dependent on each other and communicate. The ecosystem is a unique interface that allows customers to access everything they care about in a particular area.
  • By 2025, 30% of global revenue generated in the economy will be through ecosystems.
Alexandru CIUNCAN, Secretary General, APPA
  • Regardless if the future is analogue or digital, if the distribution channels of the future are based on human interaction or on robo-advice, regardless if new upcoming insurance products will indeed be more simple and easy to understand or not - the main take away of this first digitalisation conference at FIAR is to remind the industry that offering the same level of consumer protection it is paramount. This is the key.

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