Other parts of this series:
- Day 1 of InsureTech Connect 2017: The changing nature of risk, customer engagement and cost reduction
- Day 2 of InsureTech Connect 2017: IoT, AI and Innovation
- InsureTech Connect 2017: Insurers and insurtechs need each other
- Define partnerships, scale adoption, rethink operating models: Thoughts from InsureTech Connect 2017
Highlights from the second day of InsureTech Connect. Key takeaway: people are a key enabler for success with IoT, AI and innovation.
The second day of InsureTech Connect proved to be just as thought-provoking as the first. We kicked off the day with plenary sessions exploring partnerships and the shifting landscape of risk, before breaking into pillar sessions. Here are my takeaways from the second day of the conference.
The customer is the key to creating value with the Internet of Things (IoT)
The claims function will be first to feel the effects as connected devices help insurers mitigate claims in the first place. In commercial lines, sensors can help mitigate risk in construction, and in personal lines, the connected home means smoke alarms can alert residents to low battery levels and water sensors can provide early notice of leaks.
The IoT can also help insurers improve the customer experience. The devices themselves can enable digital engagement and enable insurers to reach customers in their daily lives. As one of panelist said, an app opens a portal for the insurer to establish a connection with their customer.
However, there are challenges in the space. Connected devices are in their infancy, and scalability is a challenge. Further, data by itself isn’t valuable—the key is in transforming the data into specific information about the customer. Therefore, to use the IoT effectively, insurers must begin by understanding the customer and the problem they’re trying to solve.
Talent and experimentation underpin artificial intelligence
Early applications of artificial intelligence (AI) have focused on increasing operational efficiency; attendees in this session learned that the key to success is good problem formulization. However, AI and machine learning also enable more personalized communications to strengthen customer engagement—which generates analytics in the process—and can be a powerful tool to mitigate risk. Experimentation must be at the foundation of AI initiatives, as well as collaboration between product teams and data scientists to make more accurate decisions.
Right now, the biggest innovations in AI are in machine vision and natural language processing. Machine vision has implications for claims as AI will one day take over all visual tasks, while natural language processing enables automated customer interactions.
In order for these advances to happen, however, insurers will need talent with special skills for the higher-level applications of AI. They must remember that they aren’t competing with insurers for talent, but with all other organizations that collect a significant amount of data—namely, GAFA.
Innovation, innovation, innovation
Unsurprisingly, innovation was a big topic at InsureTech Connect. One panel tackled the question of how to foster a culture of innovation within the traditionally risk-averse insurance industry. Panelists encouraged insurance organizations to celebrate an entrepreneurial spirit and culture, create freedom to think outside the box and challenge employees to devise ways to improve how things are done. They also noted that disruption disrupts people, not the organization—and people who aren’t retrained and repositioned are vulnerable to being replaced.
Another panel focused on how insurers can build an innovation ecosystem. Their advice? Have a good scope of what’s coming up in the market, and take the time to create meaningful relationships that are a good fit. The panel noted that insurtechs don’t understand regulators like insurers do, so successful partnerships must involve insurtechs from the beginning. They also urged insurers to take chances and not fear setbacks—failure is not a risk, but a necessity.
Finally, in a session called “Build, Buy or Partner,” Generali’s Moshe Tamir shared his insights on how innovation can bring assets into digital space at scale. In his opinion, the biggest challenge to insurer-insurtech partnership is culture, and the big opportunity is for a smart insurer to partner with someone who can improve the customer experience.