Insurtech Digital - September 2023

September 2023

Insurtech

Unicorns

BIG DATA: TRANSFORMING INSURANCE WITH AI & ML

DIGITAL TRANSFORMATION: THE KEY ISSUES TO CONSIDER

HSB CANADA: A HISTORY OF

INSURANCE TRANSFORMATION

VP Client Solutions & Innovation Lasith Lansakara, and VP Information Technology Mike Scarbeau, explain how HSB Canada has evolved over nearly 150 years

The World’s Fastest Growing Fintech & Crypto Event

8 - 9 November 2023

QEII Centre, London

SPONSORSHIPS GET YOUR PASS

INSURANCE TOPICS ON EVERYBODY’S LIPS

If there are two common long-term challenges that keep business leaders awake at night (and of course, there are way more than two), it’s the need for digital transformation and the threat posed by cyber attacks.

Changing working practices and geopolitical events, like Russia’s ongoing occupation of Ukraine, have changed the nature of the cyber risk landscape considerably. Initially, the war tested allegiances within cyber gangs, but ransomware attacks are back as the main cause for cyber concern. We delve deeper into this murky world, one of the fastest growing insurance lines, in September’s issue of the magazine.

Most business leaders understand the imperative to embrace digital transformation and migrate away from legacy systems – but understanding and executing are two completely different endeavours. We ask whether insurers themselves are doing enough to prepare themselves for the future.

It’s an exciting time at InsurTech Digital. We’re currently preparing to host a two-day virtual conference called InsurTech LIVE, which takes place from 18-19 October 2023. Go ahead and save yourself a seat at InsurTech LIVE and ensure you’re part of the action next month.

Hope to see you there.

ALEX CLERE

“Don’t miss out on InsurTech LIVE, our two-day virtual conference taking place next month”

Adam Elman Head of Sustainability EMEA Google

Musidora Jorgensen Chief Sustainability Officer Microsoft

Nick Jenkinson Managing Director Verto Solutions Ltd

Susan Spence VP, Sourcing Procurement & Accounts FedEx VP,

Geraint John VP, Interos Resilience Lab Interos

Kate Rosenshine Director - Global Azure Technology Sales Microsoft

Aravind Narayan Global Director - Sales Strategy & Execution Refinitiv (LSEG)

Sam Clarke Chief Vehicle Officer Gridserve

BIG PICTURE

UAE regulatory changes pave way for insurtech boom

Dubai, United Arab Emirates

A Cityscape of Dubai, United Arab Emirates. The scene where the general insurance market is set to grow 13.2% thanks to regulatory changes and rising premium rates, according to GlobalData. Mandatory health insurance is the key legal change behind this anticipated growth.

As a result, Lloyd’s has partnered with Dubai’s government to create a new insurtech accelerator to boost innovation in the region. Signing a memorandum of understanding with Dubai’s Department of Economy and Tourism, Lloyd’s does not only hope to foster new insurtech innovation for general insurance but also to support its autonomous vehicles sector and transition to net zero.

ALEX DALYAC

FOUNDING AI - BASED INSURTECH

We track the rise of Alex Dalyac, whose AI-based insurtech Tractable has consolidated unicorn status after raising US$65M in Series E funding

Alex Dalyac is the Founder and CEO of Tractable, an insurtech that leverages AI and computer vision to help insurers assess and price the extent of damage.

When policyholders experience a car crash or property damage, Tractable’s technology analyses their photos and recommends decisions based on damage severity..

The insurtech aims to empower the insurance industry, promoting a selfservice approach to claims.

Recently closing a US$65m Series E funding round led by SoftBank Vision Fund 2, Tractable has consolidated a position as an AI-based unicorn exclusively serving the insurance industry.

But how has it reached such lofty heights? We trace the journey of its inception through the lens of its Founder and CEO, Alex Dalyac.

Founding Alex Dalyac

Dalyac’s unicorn Tractable was the first founded through the Entrepreneur First accelerator programme, which he entered after completing a degree in Econometrics from the London School of Economics (LSE).

Going on to excel in a conversion Master’s in Computer Science at Imperial College London, Dalyac encountered deep learning, a thenevolving technology that forms the basis of Tractable’s accident and disaster recovery platform in use today.

Dreaming of founding his own start-up, Dalyac joined Entrepreneur First to accelerate his ideas for applying deep learning technology. It was here that he met Tractable Co-founder and current Chief Technology Officer Razvan Ranca, an expert in AI and computer science.

Speaking to Entrepreneur First on his and Ranca’s journey to leading what is now a US$1bn company, Dalyac says: “We’ve gotten to a place in our careers that could have taken us 20 or 30 years in just five, by simply deciding we didn’t want to wait.”

Tractable: the insurtech the world couldn’t wait for Wait Dalyac and Ranca didn’t, founding Tractable in 2014 to create a more frictionless claims experience that is up to 10 times faster than traditional methods.

Leveraging 30 years of combined research experience, Tractable, once fully conceived, was created by Dalyac not only with the help of Ranca but through the support of development work undertaken by a team of Oxford/Cambridge-trained

Know the condition of any car, anywhere at any time with a remote AI inspection

“We’ve gotten to a place in our careers that could have taken us 20 or 30 years in just five”

the company has generated US$184.9m in total funding.

After raising US$60m in Series D funding in 2021, Dalyac and Ranca were able to expand Tractable to include a range of other product offerings.

These included solutions to help insurers accelerate visual inspection and appraisal processes, expanding pricing services from salvaged car parts to property assessment.

Funding has also allowed Tractable to expand on industry partnerships, striking deals with established insurers including Root, Verisk, Covéa, and American Family Insurance.

It has also expanded its services into new markets, having launched a German subsidiary in April 2022 to

better target the world’s third largest insurance marketplace.

With another US$65m in the bag, Dalyac is excited to see his company expand “across the auto and property ecosystems, to apply AI to cars and homes that need to be repaired, protected, recycled or sold”.

He adds: “I’m excited by what we can achieve in redefining trust and transparency to support people in managing the life cycles of their cars and homes.”

Today, Dalyac’s Tractable still lives by the same mission statement: “With AI on our side, we can free employee time for more valuable tasks, improve customer experiences, accelerate repairs and increase recycling – better for all of us, and the planet.”

Q. DESCRIBE YOUR ROLE AND YOUR BACKGROUND. HOW DID YOU GET TO THIS POINT IN YOUR CAREER?

» I joined Novidea several months ago as Novidea’s Chief Technology Officer leading the R&D and product departments. Formerly, I held executive roles in large-scale global technology companies, leading R&D, IT, and product & engineering groups.

Most recently, I served as EVP Head of Casual Gaming for the US$7bn gaming company Playtika. Previously, I held senior positions at other

successful industry leaders such as NICE surveillance, Amdocs, Retalix, and was head of the innovation group at SAP.

I am experienced in leading complex software, development projects in global companies from inception, market analysis and requirements definition, through technical system design and product development.

Actually, I got into technology in kind of a funny way. When I finished my army service, my grandfather asked what I was going to study. I had no idea.

EREZ NISSIM

He said that I should pick something that would be lucrative right off the bat.

So, I went to Tel Aviv University to speak to one of the professors from the Computer Science department and left after four hours completely in love with the space.

Q. CAN YOU EXPLAIN TO US WHAT NOVIDEA IS IN 25 WORDS OR LESS?

» Novidea is the creator of the industry’s first cloud-based, data-driven insurance management platform for brokers, agents, MGAs/MGUs, specialty insurers, and wholesalers.

Q. WHAT, OR WHO, INSPIRES YOU IN INSURANCE/INSURTECH TODAY?

Q.

WHO WAS YOUR CHILDHOOD HERO AND WHY?

» Rambo – as your typical Israeli kid growing up, war heroes were popular – but only those who show dignity and respect to others around them.

» Novidea’s CEO (Roi Agababa) inspired me to enter the insurtech space – he sent me business articles with plenty of impressive data and showed me the potential to make a significant impact in the insurance industry which was slow to ride the innovative wave. That really excited me.

InsurTech Digital delves into the mind of Novidea’s Chief Technology Officer, Erez Nissim, looking over his career and life inspirations

Q. IF THERE’S ONE PIECE OF TECHNOLOGY YOU COULDN’T LIVE WITHOUT (BESIDES YOUR MOBILE PHONE), WHAT WOULD IT BE?

» Spotify – I’m a music junky. It’s an opportunity (and a necessity) and provides a way to relax and de-stress. I can’t imagine living without music.

when it comes to technology. However, based on what we have seen, that is changing, and we have the pandemic to thank for that.

The sudden need to support agents and brokers as they shifted to remote work forced everyone in the insurance space to accelerate when it comes to digital.

It moved quickly from a far-off goal that was regarded as a competitive edge to a top priority to keep businesses functional.

Some estimates suggest that in 2020, the insurance industry advanced the equivalent of seven years in its digital transformation initiatives.

Q. DO YOU HAVE ANY INSIGHTS INTO HOW MUCH TIME OR MONEY IS WASTED WHEN BUSINESSES DON’T MODERNISE QUICKLY ENOUGH?

» A client of ours recently built their own algorithm to measure the ROI of digitising its agency, and more specifically, automating certain processes. It discovered that for every process that wasn’t automated and required an employee to intervene, it was costing them US$1.3m per minute.

In this highly competitive landscape, no broker or agent can afford to lose that kind of money. The goal is to maximise efficiencies and streamline every workflow and aspect of your operations. Unfortunately, those who are too slow to adapt will not be able to compete.

Q. HOW DO YOU ASSESS THE RATE OF DIGITISATION IN THE INSURANCE MARKET? IT’S USUALLY ACCUSED OF DRAGGING ITS FEET TOO MUCH – IS THAT FAIR?

» It’s fair to say that the industry as a whole has been notoriously slow to adapt

The pandemic was a moment for the industry to rise to the occasion, and for the most part, it did so. But there’s still a lot of work to be done.

Q. WHAT IS NOVIDEA CURRENTLY WORKING ON – WHAT IS THE STRATEGIC FOCUS AT THE MINUTE?

» We recently announced a US$50m round of Series C funding led by Battery Ventures, a new partner for us.

With that funding, we have been focused on the further development of our platform, including new enhancements that better support low-code/no-code software and help our customers expand into new lines of business.

We’re also augmenting our customer success infrastructure and expanding our offices across all target markets in the US, UK, EMEA, and APAC.

Q. WHAT ARE YOUR AMBITIONS FOR GROWTH?

» I feel like I’m in the exact role I want to be. I love technology. It’s challenging. It fills me with the ability to influence and make a difference. The combination

“The pandemic was a moment for the industry to rise to the occasion, and for the most part, it did so”

between technology and business is very fulfilling and is what inspires me daily.

Q. WHAT DO YOU GET UP TO AWAY FROM WORK?

» I love keeping busy and would even call myself a workaholic. But when I’m not working, I listen to “geeky” technology podcasts. I also love going to the beach and listening to music.

I love doing things with my kids (not watching tv!) – even playing Monopoly and other board games.

Q. IS THERE A PERSONAL ACHIEVEMENT FROM THE LAST FEW YEARS YOU’RE PARTICULARLY PROUD OF? AND WHAT IS THE STANDOUT MOMENT OF YOUR CAREER TO DATE?

» In my previous job at Playtika, the CEO asked me to take over the strategic

development of one of the mediumrevenue games, and I was able to turn it into the second most profitable and then the most profitable game in the company. Even after I’d left, the game was so stable and strong that it continued to grow and succeed. That is an amazing achievement for me to see that the game tripled in revenue in less than two years.

Q. WHAT WAS THE LAST GOOD BOOK YOU READ AND WHEN WAS IT?

» An Israeli children’s book called Dani Din which I read to my daughter – at least a decade ago. Please don’t judge me!

Q. WHAT’S NEXT FOR YOU?

» I look forward to making a difference in the insurtech industry globally so that Novidea becomes known by everyone everywhere!

Closing the Protection Gap in Insurance

WATCH NOW

The Portfolio

INSURTECH UNICORNS OF 2023

InsurTech Digital takes a look at the top 10 insurtech unicorns of 2023 by market valuation, with our highest entry valued at a significant US$12.6bn

WRITTEN BY: LOUIS THOMPSETT

The insurtech industry is continuing to gather momentum, with Spherical Insights expecting the global insurtech market to reach US$166.7bn by 2030.

We take a look at the Top 10 most valued insurtechs today in 2023, covering full-stack insurers, Medicare providers, platform suppliers, business insurance and life insurance solution providers, among other insurtech types.

Accelerant

US$2bn

Accelerant is a data-driven technology company that provides underwriters with risk exchange and data analytics solutions. Backed by Chelsea FC Co-owner Todd Boehly’s VC firm Eldridge, Accelerant has generated US$343m across three rounds with investment also coming from Barings. Calling underwriters its members, Accelerant empowers underwriters with transparent data, differentiated technology and dynamic analytics, which it says is a recipe for profitable growth. The insurtech supports underwriters across the US, Australia, the UK and mainland Europe.

Newfront US$2.2bn

The California-headquartered Newfront Insurance specialises in the distribution and management of business insurance and employee benefits. Founded in 2017, Newfront leverages in-house solutions to help generate revenue streams through brokerage commissions. The insurtech is also the proprietor of a solution streamlining the process of completing application forms across multiple carriers using a single set of responses, facilitated through automation. The company is led by CEO Spike Lipkin, the entrepreneur who founded Opendoor.com, a company worth in the region of US$3bn.

“Accelerant empowers underwriters with transparent data, differentiated technology and dynamic analytics”

ManyPets

US$2.4bn

Valued at US$2.4bn, ManyPets (formerly Bought By Many) is a pet-focused insurtech founded by Guy Farley and Steven Mendel in 2017. Expanding out of the UK into other regions including Sweden, the insurtech most recently extended its services to pet owners in the US. It now operates across 40 US states, making it active in 85% of America’s pet insurance sector. ManyPets expanded its services by acquiring the insurance carrier Digital Edge, made possible through made possible through US$483m in funding generated across seven rounds. Now valued at US$2.4bn, ManyPets can count itself as a world leader in the digital pet insurance space.

Ethos

US$2.7bn

Hailing from California, Ethos is an insurtech specialising in morally conscious life insurance solutions. The company secured US$300m in Series D funding during the summer of 2021, consisting of a US$200m round in May followed by a supplementary US$100m extension. This achievement has propelled Ethos’ current valuation to a robust US$2.7bn. Notably, the company has attracted a diverse group of investors, ranging from renowned VC firms such as Sequoia Capital and General Catalyst, to investment entities associated with notable celebrities like Will Smith and Robert Downey Jr.

“the company has attracted a diverse group of investors”

Experience composable banking with Mambu's SaaS cloud banking platform.

Learn more

Alan is a French insurtech company that provides digital insurance solutions for businesses and individuals. Founded in 2016, Alan offers a range of insurance products, including health insurance, personal accident insurance, and liability insurance. The platform provides customers with an easy and transparent way to purchase insurance policies, compare coverage and prices, and manage their insurance needs.

In addition to insurance products, Alan also offers digital services, such as policy management, claims management, and telematics services. This allows customers to easily manage their insurance policies and make claims through the platform, making the insurance process more convenient and efficient.

Digit Insurance

US$4bn

A full-stack insurer, Digit Insurance is one of India’s leading insurtechs on a mission to offer simple products and services to its clients. The company expanded its offering in 2018 after acquiring ITI Reinsurance for US$72.8m. It has also generated US$585.6m in funding across nine rounds, with lead investment from venture capitalists Peak XV Partners and TVS Capital Funds. Most recently priced at US$4bn, Digit Insurance’s full-stack service really is full stack, covering everything from car, bike, commercial, travel, health and D&O insurance among other services.

Next Insurance

US$4bn

Based in California, Next Insurance is a digital insurer specialising in coverage for small businesses and entrepreneurs. Valued at US$4bn, the insurtech has raised a total of US$881m since its founding, most recently securing US$250m in Series E funding with lead investment from Battery Ventures and FinTLV Ventures. Offering tailored insurance to its clients, the insurtech is known for its affordable and simple policies. Next Insurance lives by the mantra “100% dedicated to the self-employed, 100% how insurance should be”.

Wefox

US$4.5bn

Founded in 2015 by Julian Teicke, Fabian Wesemann and Dario Fazlic, Wefox is a category-defining insurtech platform that connects insurance companies distributors and customers, to give the world simple access to digital insurance solutions. The goal is to keep people safe by making insurance better through technology.

Earlier this year it raised US$110m in its latest Series D funding, on the back of a strong performance in the first quarter of 2023.

“The insurtech is known for its affordable and simple policies”

Coalition US$5bn

Founded in 2017, Coalition combines comprehensive insurance coverage with preventative cybersecurity tools, access to digital forensics, and incident response to help organisations identify, mitigate and insure against all types of digital risk. The insurtech unicorn boasts 500 employees and serves more than 160,000 customers worldwide.

Its Active Insurance combines industry-leading cybersecurity tools, access to round-the-clock digital forensics and incident response and broad insurance coverage to help organisations identify, mitigate and insure digital risk.

It closed its most recent Series F funding last year, raising an additional US$250m to increase its valuation from US$3.5bn to US$5bn. It is one of the largest cyber insurance and security providers in the United States and Canada.

Devoted Health

US$12.6bn

Valued at US$12.6bn, Devoted Health is one of the US’ largest Medicare providers, offering plans tailored to seniors. With offerings available to providers and brokers too, Devoted Health’s mission is to improve the health and well-being of older Americans. In addition, the company offers tools to help its members navigate healthcare systems with personal guides, leveraging the latest technology to enable a simplified experience for members. Partnering with the best providers, Devoted Health is able to drive greater health outcomes for its members.

The Medicare provider raised US$2bn in total funding across five rounds since its inception, most recently securing a US$1.2bn Series D round with lead investment from SoftBank Vision Fund and Uprising Ventures.

“Devoted Health’s mission is to improve the health and well-being of older Americans”

A history of digital transformation within insurance

WRITTEN BY: ALEX CLERE

PRODUCED BY: JAKE MEGEARY

history

When a company has been in business for almost 150 years, you would expect to encounter some change along the way. Founded in 1875, HSB Canada started life at a time when pressure boilers were the primary engine powering equipment and machinery in industry across Canada.

The technology was relatively new and explosions were quite common, until companies like HSB Canada started deploying engineers to routinely inspect this prone equipment. At the time, this was an extremely novel approach, but the insurance industry has come a long way since 1875 –and HSB Canada with it.

Today, the Toronto-headquartered business provides inspection, risk management and IoT technology services, as well as insuring a number of specialty lines, including equipment breakdown cover – a nod to the company’s heritage, which is still reflected in its logo – as well as cyber insurance cover, a huge area of need in an increasingly volatile world. Since 2009, HSB has been a part of the Munich Re Group, giving it access to a wider pool of expertise –and the company acknowledges that talent is one of the things that sets it apart.

“The people here are one of our biggest differentiators,” proclaims Mike Scarbeau, Vice President Information Technology at

HSB Canada. “We have a lot of fantastic subject matter experts who are, I would say, the de facto experts in Canada, particularly on the inspection and engineering side. There’s a lot of great talent that has been brought into the business, so it’s a really exciting time to be here.”

Becoming part of Munich Re 15 years ago – the latest chapter in a long and storied history for the business – has only helped to accentuate that. “You certainly feel you’re part of a bigger group that has some amazing talent across the globe,” Scarbeau adds.

How has insurance evolved in 148 years?

A lot of things have changed since HSB Canada was founded in 1875. There have been seven British monarchs (from Victoria to her great-great-great-grandson Charles III); 13 new American states; and 23 prime ministers of Canada (all but one term, in fact, as the company was started just eight years after the formation of the country).

A lot has changed from a technological viewpoint, as well as a social one, as HSB Canada’s Vice President Client Solutions and Innovation, Lasith Lansakara, explains: “I think there has been an evolution of technology with the introduction of connected technology, like internet of things (IoT) devices. There has been quick transfer of data, and there’s been increased proliferation of data available.

HSB Canada has evolved as a business and kept pace with societal changes and shifts in consumer demand during its near-150-year

“From an insurer’s perspective, it’s allowed us to create new products and assess risks better. I think those changes in technology, and even an evolution in consumer habits, are shifting the nature of risk. So if you take cyber insurance for example, a couple of years ago a hacking incident would have meant business interruption for a couple of days. Today that has evolved, and now there is the risk of extortion due to stolen data.

“It’s that evolution of the nature of risk that has created the need for these new products and requires insurers to be a bit more agile,” he says.

The way that consumers transact has also changed – not just in terms of the

“Today the biggest cyber threat to businesses is cyber extortion or ransomware. The exposure for your customers and as a business are significantly higher”

LASITH LANSAKARA VICE PRESIDENT, CLIENT SOLUTIONS AND INNOVATION, HSB CANADA

propensity to pay with coins and notes, but also what level of service they expect from their insurer. “They’re looking for a seamless, frictionless experience,” Lansakara says.

This evolution has inevitably resulted in some side effects. There are upsides, sure; the connectedness of our world results in improved access and availability of data, with sensors allowing insurers to gather data in real time and mitigate risks sooner and faster.

But there are also downsides. “It’s created another layer of risk, and it’s an area that is constantly changing,” Lansakara continues. We have more IoT devices in our homes and our work premises than ever before

LASITH LANSAKARA

TITLE: VICE PRESIDENT, CLIENT

SOLUTIONS AND INNOVATION

INDUSTRY: INSURANCE

LOCATION: CANADA

Lansakara leads client-focused innovation and engagement for new solution development and adoption focusing on enhancing strategic engagement with clients. He acts as an innovation facilitator within HSB Canada to support achieving its ambitious growth and development objectives. Lansakara oversees the New Solutions practice and the Digital Distribution team.

Lansakara joined HSB Canada with over 10 years experience in the insurance industry and prior to joining HSB Canada, Lansakara was National Commercial Insurance Practice Leader, Senior Manager with a leading global consulting firm.

EXECUTIVE BIO

Lansakara holds a Bachelor of Science degree in Computer Science from Illinois Wesleyan University, as well as a Master of Business Administration from New York University.

Securing IT Success:

Toronto's Global IT Consulting and Staffing Powerhouse

Revolutionize your operations with our Toronto-based Tech company, offering expert IT consulting and staffing services. We empower Insurance and Financial service clients through Digital Transformation, Cloud, Cybersecurity, Data analytics and beyond. Leverage our global onshore, nearshore, and offshore capabilities for unmatched application development, data analytics, and quality engineering to drive your business forward.

– over 25, in fact, in the average American household, according to research published by Deloitte. This creates an additional vulnerability that cyber criminals are constantly seeking to exploit.

“Today the biggest cyber threat to businesses is cyber extortion or ransomware,” Lansakara says. “The exposure for your customers and as a business are significantly higher. This is where I think insurers, and even various technology vendors, need to focus their efforts to solve the evolving risk challenges.”

The state of digital transformation in Canada

Despite being over 200 square miles larger than the US, Canada is often overlooked in favour of its older, more southerly neighbour. The country sometimes does not receive the credit or attention that it deserves, particularly for big discoveries or breakthroughs – insulin being one of the most famous examples, discovered by scientists at the University of Toronto.

So are we overlooking the progress that Canada’s insurance industry is making towards digital transformation? In short, no, say Scarbeau and Lansakara, who believe that the Canadian insurance ecosystem lags behind comparable countries when it comes to digitisation.

“When I talk to other CTOs or CIOs, I feel like some common problems are apparent in the trends and transformational goals that they have. But everyone seems

“We intend to be a dominant player in the cyber insurance space”

MIKE SCARBEAU VICE PRESIDENT, HEAD OF INFORMATION TECHNOLOGY, HSB CANADA

MIKE SCARBEAU

TITLE: VICE PRESIDENT, HEAD OF INFORMATION TECHNOLOGY

INDUSTRY: INSURANCE

LOCATION: CANADA

Scarbeau has extensive experience in senior management roles leading and developing high performing teams and worked as a Director of IT at a large mutual insurance organization before joining HSB Canada. Prior to that, he worked within the same capacity in the banking and the provincial government. The Board of Directors appointed him Vice President in 2021.

EXECUTIVE BIO

to be at a different place in the journey,” Scarbeau tells us. He accepts that most Canadian insurers are not at the fully digitised end of the spectrum.

“I think the Canadian market is probably behind the curve a bit,” Lansakara adds. “If you think of things like digital quote and bind rate comparators that are available, the UK certainly leads the pack. The US, I’d say, is not there but definitely catching up. I think Canada is gradually moving there.”

He believes that the company’s global footprint – including the beneficial relationship it shares with Munich Re –means that HSB Canada is able to incubate ideas faster and create opportunities for new technologies or new insurance models, like embedded insurance, faster than locally grounded players can.

Lansakara has a theory why Canada is looking up the track towards other countries. “As with a lot of digitisation journeys, there’s a bit of a lag until you see the results,” he says. “Markets like the UK and US probably made those investments a couple of years before we did here in Canada, but I believe the players here are feeling that competitive pressure [to evolve].”

Transformation is slowly happening, driven by relentless consumer demand, and both our interviewees are keen to see what future transformation this causes in the Canadian insurance landscape. Perhaps in another 148 years, future generations will be scoffing at the notion of cyber insurance or scratching their heads about the way cyber risk is insured.

How is HSB Canada adapting to change?

As the custodian of all of HSB Canada’s technology initiatives, it falls with Scarbeau to orient the business’ tech stack for future success. “In terms of the IT space, I’m constantly looking for opportunities to adopt the philosophy of low-code and no-code, self-service for the business, and not becoming too reliant on IT all the time,” Scarbeau tells us. “But we have to have a really solid foundation to do that.

“Thankfully for us here at HSB Canada, we’ve already gone over to the cloud and we’re on scalable infrastructure that affords that type of responsiveness.”

Lansakara believes the insurance industry is “on the cusp of drastic disruption.” It is constantly evolving, but right now it has reached an inflection point, he says.

“The current situation creates the opportunity for insurers to provide offerings that predict, prevent and mitigate risk before it even happens,” he says, referring to the prevention-led models that have become ubiquitous across the insurance sector as it evolves.

“That means insurance is no longer a paper product or a financial recovery when an incident happens; it is about avoiding an incident in the first place, and then if it does happen you know you are covered. That’s what we believe at HSB and that’s why we are making all the investments we are making in IoT capabilities, data and our technology offerings.”

That’s why HSB Canada is investing majorly in automation, a “game changer” that allows insurers to reduce time spent on manual processes within the claims journey, providing a “leapfrog” effect that propels businesses forward in time. Emerging technologies within the field of automation, like generative AI, will assist underwriters with decision making, expediting the process and increasing the quality of risk assessment.

So what will the future hold in store for the Toronto-based insurer? “We are going to continue monitoring the shift in

risk landscape and look to strengthen our offering in the space. We intend to be a dominant player in the cyber insurance space,” Lansakara says.

“We are also going to continue evaluating traditional risk products and see how we could better take advantage of some of this IoT technology, if there are opportunities to embed some of it in insurance offerings so data received becomes part of the underwriting process or part of the coverage solution.”

Scarbeau concludes: “From an IT perspective, we’re continuing to scale our cloud infrastructure, and our real-time digital capabilities support that. For me, it’s all about working closely with and his team, prioritising the best opportunities, and really trying to find ways that we can accelerate the innovation trend internally.

As things evolve, we’re continuously looking at the skills we have, what frameworks we’re using in IT, and consistently shifting on the back end in the parts of the business that most people don’t get to see.”

“Working at HSB Canada, you certainly feel you’re part of a bigger group that has some amazing talent across the globe”

LASITH LANSAKARA VICE PRESIDENT, CLIENT SOLUTIONS AND INNOVATION, HSB CANADA

AWARDS

The Global FinTech Awards 2024 will be celebrating the very best in Fintech with the following categories:

Digital Banking Award

–PayTech Award

–

Digital Currency Award

–

FinTech Award

–InsurTech Award

–

Sustainable FinTech

–

FinTech Technology Award

–

FinTech Consultancy Award

–

Future Leader Award

–

Executive of the Year Award

–

Project of the Year Award

–

Lifetime Achievement Award

REVOLUTIONISING INSURANCE WITH BIG DATA

Big data, and its interconnectivity with machine learning and AI, are revolutionising insurance processes. We look at the relationships of this triumvirate

WRITTEN BY: LOUIS THOMPSETT

Insurance is in a new age of digitisation. Over the past few years, insurtechs have perforated the market to offer their own products in a B2C capacity or formed B2B models to become suppliers for established insurers.

The word “revolution” has been synonymous with a rapidly changing insurance industry, none more so than for digital strategist and author Bernard Marr. He says: “Insurtechs are revolutionising the insurance industry by exploiting the mammoth potential of big data.

“Big data allows insurtechs to offer personalised policies, streamlining the claims process using predictive analytics for fraud detection and claim probability. A key takeaway is how insurtechs leverage big data to improve customer experiences through chatbots and AI-driven claims processing, which is shifting the industry from being reactive to proactive.”

Fujitsu UK’s CTO and FS&I of Data & Applied Intelligence, Hugh Coughlan, agrees on the transformative impact of big data, particularly its role in “redefining underwriting and risk assessment”.

Meanwhile, Persistent Systems’ Head of Solutions for Europe, Devashish Mishra, highlights big data’s ability to “automate complex insurance processes” through its relationship with AI and machine learning. Such advancements, and the relationship between big data, AI, and machine learning is saving “insurers a lot of time and enabling human experts to focus more on the marginal cases where their expertise is most required”, according to Viren Patel, Financial Services Industry Strategist at Workday.

So, how is big data and its relationship with AI and machine learning revolutionising insurance, and how does the relationship work?

The triumvirate of AI, machine learning, and big data

For Persistent Systems’ Mishra, “big data is the bedrock of building data models to support insurance operations.”

He explains: “The first set of big data comes from internal systems of policyholder master records, billing, accounting, and claims. This is then merged with third-party data to create data clusters for business processes.

“The next step is to create an analytics platform to analyse the data clusters.

Additionally, self-service options should be provided to business users for collating insights on historical data on products, claims, and customer segmentation.

“Once self-service maturity is in place, predictive analytical machine learning models can be built to enable customisation with self-driven rules and extracts for root cause analysis, triage, and trends.”

It is clear, then, that big data is the symbolic fuel for machine learning (a type of AI), but what of AI’s broader role? Coughlan expands: “AI provides the larger framework within which machine learning operates, creating intelligent systems capable of problem-solving, decisionmaking, and complex reasoning.”

Marr breaks the relationship down to its nub: “Big data is the vast pool of information, machine learning is the

“One of the transformative impacts of big data is its role in redefining underwriting and risk assessment”

HUGH COUGHLAN

CTO AND FS&I OF DATA & APPLIED INTELLIGENCE, HUGH COUGHLAN

yielding powerful insights by identifying patterns, detecting anomalies, and streamlining processes.

“With this advanced risk awareness, insurers are then able to devise effective countermeasures to both internal and external risks, while simultaneously enhancing their regulatory and compliance processes.

“Moreover, they’re deploying data analytics to automate claims evaluation and detect fraud, thereby expediting the settlement process. This delivers not only faster, more accurate outcomes for policyholders but also a seamless customer experience.”

ability to learn from this data without being explicitly programmed, and AI is the broader concept where machines execute tasks in a way we consider smart.”

The result is a palpable synergy, “making it quicker and easier for customers to ensure their new home or car is fully and fairly insured,” says Patel. According to Coughlan, the relationship can also be leveraged to “bolster risk assessment, unearth fraudulent activities, streamline underwriting processes… and provide the most personalised and accurate offerings that suit the true needs of the customer.”

It is in this breakdown we come to the core purpose of insurtech innovation, to make insurance offerings more customer-centric.

Why are legacy insurers so slow to adapt?

Improving the customer experience is clearly important for any business, let alone insurance, as it evidently leads to greater customer acquisition and retention.

So, why are legacy insurers so far behind in their digital upgrade roadmaps? With oceans of data from years of being in operation, it could be argued that legacy

insurers have the greater means to innovate over their challengers, so why have innovation drives been so slow to take off?

For Marr, it is perhaps more an inability to integrate new models than a lack of desire. However, insurance is and always has been a risk-averse business -- a long-held culture that is slowing the pace of innovation too.

Marr says: “Legacy insurers are often anchored to dated systems and processes that deter them from capitalising on the big data goldmine. These archaic infrastructures impede the integration of modern data analytics tools.

“Besides, a culture that is risk-averse and clings to traditional business models can also curtail innovation. The larger size of legacy companies, compared to nimble insurtech startups, often means they have more bureaucratic inertia which can slow down the adoption of cutting-edge technology.”

However, Workday’s Patel feels this inertia could be wearing off.

“For years insurers have used tried and tested methods for claims analysis and underwriting, which have worked, but now they are recognising the need to embrace change and digital innovation. This is a mindset shift for traditional insurers who are not used to working with tech partners,” he explains.

“We are seeing a shift in the employment market, where talent let go by big tech companies is being snapped up by more traditional organisations. Interestingly, however, it is those who are starting to use smarter, AI-driven recruitment tools in their back offices who are best able to find the kind of digital talent and skills they need to drive innovation and progress.

“There has been some progress, particularly in customer-facing applications, but at the back end, most continue to use legacy IT environments where valuable data assets remain siloed in different departmental systems.”

The 5 Biggest Technology Trends In 2023 Everyone Must Get Ready For Now

WATCH NOW

“Legacy insurers are often anchored to dated systems and processes that deter them from capitalising on the big data goldmine”

BERNARD MARR DIGITAL STRATEGIST, AUTHOR, AND FUTURIST

Big data: Keeping pace with customer expectations

So, while legacy insurers may be starting to wake up and smell the roses, they must do so quickly in order to ensure customer retention rates stay stable. For as innovation evolves in the insurance space, customer expectations do in tandem.

Marr says: “Millennial and Gen-Z customers are more likely to prefer usagebased insurance and are comfortable sharing data for a tailored experience. Also, the expectation for seamless, almost instant, digital interactions is on the rise. Customers are embracing insurtechs that offer mobile apps, AI-based virtual assistants, and quicker claims processing.”

As younger consumers get older, these expectations will soon become the norm. Patel notes that “younger customers demand this kind of experience as standard now. They don’t want generic insurance products or inconvenient insurance experiences, and smart insurers are implementing plans to meet those needs.”

The future of big data: Expanded use cases

With smart insurance set to define the future of the industry, Marr believes insurtechs “have just scratched the surface of what big data can achieve”, a further warning to legacy players currently behind on technological innovation.

He adds: “In the future, we can expect more interconnected devices feeding real-time data, enabling dynamic pricing models that evolve with user behaviour. Blockchain technology could be integrated with big data for transparent and secure transactions. Insurers could also embrace augmented and virtual reality for loss assessments and customer interactions.”

Patel offers further use cases that big data could support in the future: “We are moving into a world where you can get a better price on your health insurance if you exercise better, and you can get that data from a smartwatch. Just imagine how much data Apple could access that would help in insurance.”

“You can already get a better price on your car insurance if you drive more safely, and your insurer can access that data through a smartphone app. But how about daily or hourly pricing that changes how much you pay based on whether you drive at times or in locations where you are more likely to have an accident? That’s becoming a reality.”

It is clear then, as Marr puts it, that “big data’s potential is limitless, and harnessing it innovatively will be key to staying ahead”.

PROTECTION TO PREVENTION:

GENERALI VITALITY SMART INSURANCE

WRITTEN BY: NEIL PERRY

PRODUCED BY: JACK MITCHELL

PREVENTION: VITALITY AND INSURANCE TECH

Transforming insurance customer experience using apps and smart tech is a passion for Generali Engagement Solutions

Managing Director at Generali Engagement Solutions

GmbH Peter Stockhammer understands the importance of partnerships to help develop the best possible products and services for their customers. These partnerships link both ends of the product chain, technical expertise from outside of the insurance industry to the feedback from the policy holder.

Generali Vitality is a wellness programme designed to encourage and reward the healthy behaviours of policyholders via the provision of tools and incentives to improve their overall health and wellbeing. Stockhammer has had a long career in the life insurance space, but says he has taken inspiration from all kinds of sectors to shape his attitude to industry transformation; what has chiefly guided him is considering what can be learnt from other industries.

He says: “I was once invited to Porsche and they showed me how they build cars. They showed me what they call the marriage of the chassis with the engine. I thought, ‘It’s fascinating how they’re doing this and what we can do in issuing the policy to give transparency to the customer, and can we improve things to be faster?’.”

It’s not just limited to learning from the technical expertise of other industries, but also in balancing that with the evolution for insurance provision, enabling it to become even more customer-centric and developing a deeper relationship with policyholders.

Stockhammer speaks of becoming a ‘lifetime partner’ with Generali’s customers, utilising their relationship with smartphones as the way to become part of their life and transition their insurance interactions from protection to prevention. A tipping point for him, personally, was seeing a survey where people were asked what they couldn’t live without; less than half listed their current partner, but 97% said this of their smartphone.

Consumer insight

Generali Vitality is an exciting fusion: a historic player in the insurance space, they also develop trend-setting digital products to interact with their customer base.

As such, Generali Vitality offers a personalised approach to wellness by creating health goals and rewards based on a policyholder's current health status and lifestyle. Through the app, policyholders can earn points for engaging in healthy activities such as exercise, getting regular check-ups, and even shopping for healthy foods. The more someone engages with the program, the more points they collect, and the deeper the level of value to the rewards.

Stockhammer explains that their experience and research leads them to know how their policyholders like to use the app and the results they value the most, like the small, simple incentives.

“You have a weekly fitness activity or physical activity goal and, if you reach it, you will be immediately rewarded. There’s gamification, so there’s a wheel of fortune

where you’re getting a push notification that says, ‘Congratulations, we have achieved the goal, here is a reward for you’. You can then spin the wheel and randomly get one of the awards.”

It’s this attitude to gamification and continued product improvement that excites Stockhammer, as it helps welcome an insurance provider with more than 190 years of industry experience to the cutting edge of digital transformation. It also heralds a new relationship with their customers. With such modern digital tools, customers have regular contact with their product, rather than just an initial interaction before embarking on a distant relationship that’s only rekindled when a problem arises

“WE ARE SAYING WE ARE NOTICING AND REWARDING YOU AS YOU ARE CONSTANTLY DOING SOMETHING”

PETER STOCKHAMMER MANAGING DIRECTOR, GENERALI ENGAGEMENT SOLUTIONS GMBH

EXECUTIVE BIO

PETER STOCKHAMMER

TITLE: MANAGING DIRECTOR

INDUSTRY: INSURANCE

LOCATION: GERMANY

Peter is Managing Director of Generali Engagement Solutions

GmbH since 2015, based in Munich. He has held executive positions in many international insurance companies throughout his career and has worked in the insurance industry for 30 years. Prior to that, he had been CEO Life of Zurich VersicherungsAktiengesellschaft in Austria since 2007. Prior to 2007, Peter held several management functions at the UNIQA Group and its predecessor companies.

According to Stockhammer, some of the individual feedback received can enlighten the development teams. It has the capacity to reveal how customers interact with and value the apps — as well as their rewards — on a day-to-day basis.

“For example, we had feedback from a lady saying her daughter is always pushing and asking ‘have you already achieved your weekly goal?’, which is because she wants to spin the wheel. So these are the things, this little nudge; it's not that you're getting a big prize, but it's this regular thing where we say we’re noticing and rewarding you as you’re constantly doing something.”

PAVING THE WAY FOR WEARABLE INCLUSION IN INSURANCE

Garmin Health is enhancing the insurance landscape through the inclusion of wearable technology in the transition from traditional coverage to dynamic engagement and prevention.

If you’re interested in partnering with Garmin Health or simply learning more about what we are doing in the health space, please reach out to us!

Jake O’Connor, Global Business Development Manager, Health B2B

Garmin Health produces world class devices for corporate wellness programs, providing the best battery life and biometric sensor data in an ever-expanding industry. Founded in 2014, it has invested in connectivity solutions such as the Garmin Connect Health API and the Garmin Health SDKs to provide the maximum flexibility for partners to access this data. Combined with a global distribution network, Garmin Health offers a wide scope of services across several industries including Health Care, Insurance, Research and Clinical Trials, Gym and Fitness and Corporate Health Benefits.

How does Garmin Health operate in the insurance industry?

Garmin Health provides fully or partially subsidised devices and monetary incentives to insurance customers to encourage a healthy and active lifestyle, with the goal of engaging their members and reducing medical costs. Life and re-insurance companies use our wearable devices to stratify risk and improve their margins. Ultimately, we seek to find and relieve our customers' pain points through our comprehensive data-ecosystem that allows them

to share the data generated via our wearable sensor technology.

How do partners benefit from working with Garmin Health?

Whether it be customer acquisition, health promotion, risk assessment, or selective prevention control, we have access to thousands of partners to find the perfect solution. With the ability to bring wearable devices to customers anywhere around the globe, we are dedicated to helping you offer the best health solutions for your customers.

Where do you see the future of the insurance industry trending?

Wearable devices are playing an increasing role as insurers invest heavily in accurate risk assessment and underwriting procedures. Wearables can help detect health risks earlier and advise for quick and timely treatments. Insurers can also augment their traditional underwriting dataset with additional physiological endpoints, transitioning from a static underwriting process to a continuous, long-term assessment that provides the ability to engage and affect behaviours and outcomes.

For questions and more info, please feel free to contact me directly at jake.oconnor@garmin.com

at Garmin shares his industry insight.

A customer-focused approach

This kind of customer relationship has been made possible thanks to the transformative technical tools now available to insurers in conjunction with the power of data, which allows insurers to provide a more personalised service.

Stockhammer believes that progress is causing a fundamental change in the level of service an insurer can provide to their life customers, going from a passive observer to being part of them making positive life changes.

“It pushes us towards a customer-focused approach, this ongoing communication, as we’re getting immediate feedback from the customers. This is helpful for us because we’re really having the voice of the customer immediately there.”

“IT PUSHES US TOWARDS A CUSTOMER-FOCUSED APPROACH WITH THIS ONGOING COMMUNICATION AS WE ARE GETTING IMMEDIATE FEEDBACK FROM THE CUSTOMERS”

PETER STOCKHAMMER MANAGING DIRECTOR, GENERALI ENGAGEMENT SOLUTIONS GMBH

External expertise

Stockhammer believes it’s crucial for players in the in sector to take not only feedback from their customers, but to align that feedback with the expertise of their technical partners. One of the key technical relationships Generali have is with Garmin.

Garmin was founded in 1989 by Gary Burrell and Min Kao, initially focused on developing GPS devices for aviation and marine use. The company later expanded to include products for outdoor, fitness, and automotive markets. It made them one of the leading exponents of exploiting GPS technology in a consumer market place, and they have continued to develop cutting-edge technologies since, such as GPS-enabled smartwatches and cycling computers.

As Stockhammer explains, it’s crucial for deployment in the overall digital transformation of insurance to leverage this kind of expertise — to the benefit of not just the consumer, but the insurance industry trying to develop smarter relationships with their clients.

He says: “It’s a regular exchange — what can we do together next? What’s the development? How can Garmin help us? How can we help Garmin? What feedback are we getting from a customer? What’s good, what’s not good? What are they looking for? So it really is a partnership.”

Just as the feedback from policyholders can provide a different perspective, Stockhammer is adamant that being open to, and embracing, technical advances can keep Generali Engagement Solutions

products at the forefront of the industry. He believes that the change in perspective through these partnerships can challenge the established ways of doing things, pushing boundaries that previously wouldn’t have been considered.

“My main principle is to get input from other industries. It is always good to get some input and some ideas from the outside. When you are permanently working on a single piece, you have a deep expertise, but bringing in some expertise from a different, outside point of view is always super helpful.”

Powerful data

Data is crucial to all insurance companies, because it allows them to assess risks accurately, set premiums, and make informed decisions. By using the data to analyse customer behaviour, claims history, and market trends, improvements to customer experience can be made while also increasing profits and reducing losses. Protecting customer data is, however, of vital importance for insurance companies in: maintaining trust with their customers; preventing data breaches and associated legal and financial liabilities; and complying with data protection regulations.

With the increased flow of information from a customer regularly interacting with products like Generali Vitality, Stockhammer is conscious of just how precious that data is. It not only helps the provider deliver a better customer experience and product, but it is the cornerstone of trust between the customer and the provider.

“I think that it is important and we are showing they are confident we are not misusing this data and always telling the customer you are in control in the programme there are several places where they can engage.”

He also states how vital it is that the industry makes sure the customer feels empowered in knowing how to make changes to the use of their data and ensuring there’s a transparent relationship with their insurer.

“For each single piece, you decide what you’d like to share and give your consent. You can revoke it at any time, and if you revoke it, the data sharing is immediately stopped. The important thing is to give the customer control over their data.”

Staying ahead

With the flow of information, expertise, and feedback between technical partners, insurer, and customer, Stockhammer is mindful that it is only possible to continue to deliver the best product by challenging any potential boundaries. He believes that, if any company embracing this kind of customerfacing technology gets too comfortable with

“MY MAIN PRINCIPLE IS TO GET INPUT FROM OTHER INDUSTRIES. IT IS ALWAYS GOOD TO GET SOME INPUT AND SOME IDEAS FROM THE OUTSIDE”

PETER STOCKHAMMER MANAGING DIRECTOR, GENERALI ENGAGEMENT SOLUTIONS GMBH

the speed of their progress, they’re at risk of losing their advantage.

“If you're thinking you have an advantage, bear in mind you don't know what others are preparing in the kitchen. Is there something that will overtake you? Immediately after the game is just before the next game, otherwise others will overtake you.”

With so many providers working to improve on the customer experience and expand the reach of this technology, Stockhammer says Generali uses the competition that inevitably arises between insurers as motivation to never rest on any progress made and instead use it to fuel their next industry-leading development. He believes that working closely with both their technical partners for expertise and their customers for insight, they can continue the evolution of insurance from just simple protection to enhanced prevention.

“We shouldn’t be so arrogant in saying we are the brains for working on such a proposition, because I have respect for others that are working on similar products. So it’s always the thing pushing us permanently to the next limit.”

“I THINK THE IMPORTANT THING IS TO GIVE THE CUSTOMER CONTROL OVER THEIR DATA”

PETER STOCKHAMMER MANAGING DIRECTOR, GENERALI ENGAGEMENT SOLUTIONS GMBH

Machine learning and deep learning in the insurance space

What are the potential use-cases for ML and DL in the insurance sector, and what obstacles still exist between these technologies and broader adoption?

WRITTEN BY: ALEX CLERE

Machine learning and deep learning have really taken root in the insurance sector over the last couple of decades, building on the foundational layer set by artificial intelligence (AI) technologies to better contextualise data and create dataled outcomes.

The result is a gradual automation of the insurance value chain, helping to remove manual effort from previously arduous and cumbersome tasks – and helping insurers to realise tangible gains across risk, claims speed, and fraud prevention.

Indeed, machine learning and deep learning are such promising technologies that McKinsey estimates that the whole sphere of artificial intelligence will drive value within the insurance industry of up to US$1.1tn a year.

What’s the difference between ML and DL?

Before we can fully understand the advantages that machine learning (ML) and deep learning (DL) can bring to the insurance industry, it helps to be fully cognisant of

the differences between the two. Both begin with artificial intelligence (AI) – which is obviously the ability for computers to process and contextualise data in the same way a human could.

Machine learning utilises AI to make data-driven predictions based on the data and learned experiences. In contrast, deep learning is an additional layer of ML where algorithms attempt to model high-level abstractions in data.

One use-case that already exists for deep learning is in improving the accuracy of risk forecasting, particularly in insurance lines where there is a lot of structured and unstructured data together – like auto insurance, for example.

LexisNexis Risk Solutions surveyed more than 300 insurance professionals in the fields of data science, analytics, actuarial, technology, underwriting, product management and claims working for some of the 100 leading insurance carriers in the US.

The findings from that poll show that three-quarters of insurance-industry respondents think AI and ML can provide a competitive advantage to carriers, while more than six in 10 respondents (62%) work at companies that have already started to adopt AI and ML.

There is a role for humans and machines in any business process; instead of man versus machine, the approach should be man and machine”

OLIVER TEARLE HEAD OF INNOVATION TECHNOLOGY, THE AI CORPORATION

LexisNexis Risk Solutions say that ML and DL can help insurers make faster, more informed decisions; maximise growth and profitability across the entire value chain; and adapt better to disruption and external forces.

Just the beginning for AI and ML in insurance

“Carriers have only started to realise the benefits of using AI and ML across their organisations – especially in marketing, underwriting and claims,” says John Beal,

Senior Vice President for Data Science

at LexisNexis Risk Solutions. “AI and ML applications in the claims area, in particular, can provide carriers with an opportunity for quick wins through faster claims settlement and improved fraud detection. In the longterm, carriers that are best able to hire the right talent to operationalise AI and ML applications and apply the learnings to their business can unleash the full benefits of their efforts.

“Carriers are generally positive about their use of AI and ML and its value in helping them achieve a competitive advantage. Our study also looked at the specific challenges

associated with AI and ML implementations. Financial concerns – such as the cost of implementation, uncertainty around ROI and competing priorities – were cited by 93% of adopters. In addition, three major areas pose the biggest issues for carriers: staffing, data, and compliance and regulatory challenges.”

Still a role for humans in an ML/DL world

Despite a rapid evolution in the underlying technology, and inevitable optimism about what ML and DL can bring to the insurance sector, there are still potential pitfalls and limitations. One oft-discussed topic of

“AI models live or die by the data they are trained on. Up to 80% of the time it takes to develop an AI model is devoted to ensuring the data is of a high standard”

OLIVER TEARLE HEAD OF INNOVATION TECHNOLOGY, THE AI CORPORATION

the model can detect that fraud correctly in the future”. Tearle recommends that ML-driven strategies are routinely checked and overseen by humans to ensure the integrity of the decisions.

Generally speaking, the hurdles to effective ML and DL adoption are many and complex: they range from the cost of adoption and the sourcing of talent to potential regulatory implications and data challenges (such as ensuring the quality of data, normalising data across sources, and handling the need for increased volume of data).

“AI and ML are more than just buzzwords in the insurance industry,” John Beal controversy is the effect on the future labour market, but “it is implausible that AI will replace humans entirely,” says Oliver Tearle, Head of Innovation Technology at The ai Corporation (ai).

“The role of a human – interpreting, analysing, understanding, and compensating for data and events outside of the realms of the model – is still central to many processes. As a result, there is a role for humans and machines in any business process, and instead of man versus machine, the approach should be man and machine.”

Tearle continues: “AI models live or die by the data they are trained on. Up to 80% of the time it takes to develop an AI model is devoted to ensuring the data is of a high standard and packed with helpful information. Often, smaller and more information-dense data sets perform better than larger, untreated ones. AI is still bound by the limitations of the data, as well as the ‘ground truths’ it’s fed in a classification modelling scenario.”

As an example, he says that “a typical fraud model will only utilise what is known and confirmed to be fraud, as this ensures

“Carriers have only started to realise the benefits of using AI and ML across their organisations”

JOHN BEAL

SENIOR VICE PRESIDENT FOR DATA SCIENCE, LEXISNEXIS RISK SOLUTIONS

continues. “These technologies can help carriers streamline their processes, better meet customer expectations and get the most out of their talent. Insurance carriers that have adopted AI and ML are already seeing benefits, including more efficient processes, better customer targeting and improved fraud detection.

“Most respondents agree that AI and ML will offer carriers a competitive advantage, define industry leaders, and are being used and invested in today. In addition, the majority of respondents recognise that the adoption of AI and ML applications is imperative for business success and that will continue to rapidly grow in importance

over the next three years. However, respondents also said that it is important to be able to explain how AI and ML will be used in insurance decisions, otherwise AI and ML applications may be blocked or limited by regulatory and legal bodies.

“Respondents have four main areas of concern around AI and ML—financial, staffing, data and compliance challenges. While none of these should prevent a carrier from starting or advancing their AI and ML initiatives, carriers should be cognizant of the nuanced challenges within each area and seek a partner that can help optimise the value of their AI and ML investments.”

HOW ARE EMERGING CYBERSECURITY THREATS BEGINNING TO EVOLVE?

The normalisation of hybrid working and Russia’s invasion of Ukraine have created new cyber risks to be aware of. How have they changed in the last year?

WRITTEN BY: ALEX CLERE

The nature of cyber risk is constantly evolving, with both the ferocity and frequency of cyber attacks on the rise. But when it comes to preparedness, perception is as important as reality – and new research from Cohesity shows that perception of cyber risk is also growing.

The data security company surveyed almost 3,500 IT and SecOps decision makers in Australia, France, Germany, Japan, New Zealand, the UK, and the United States. More than nine out of 10 respondents say that the level of cyber threat has increased, while 72% say they would be willing to pay a ransom and use insurance to help recover the money.

Indeed, over 85% of organisations surveyed say they have a cyber resilience strategy in place. Nearly three-quarters have cyber insurance but, reflecting the challenges that the industry faces, almost half (48%) of respondents think it’s harder to get insurance now than it was three years ago.

Stewart Parkin, CTO EMEA for Assured Data Protection, explains: “Businesses are more reliant on the cloud than ever, however that makes them more susceptible to breaches, ransomware and other threats – not to mention traditional outages. With nearly all businesses looking to achieve cyber resilience, many have been investing in cyber insurance.”

Do hybrid working models impact cyber risk?

As the COVID-19 pandemic wound down and lockdowns ended, the world of work saw a sudden shift. Many businesses – buoyed by their ability to survive homeworking and incentivised to give their staff greater flexibility – kept a degree of homeworking

JAMIE AKHTAR CEO AND CO-FOUNDER, CYBERSMART

or abandoned their physical offices entirely. Research from the UK and US suggests roughly three-quarters of employers in both countries have opted for, or are planning to opt for, some form of hybrid working model on a permanent basis.

This is good for employees – although research from careers portal Zippia appears to show that employers prefer hybrid working models more than their staff (51% versus 44%). However, it has also created an

additional layer of complexity when it comes to cyber risk, with workers now dividing their time between home and the office.

“The most obvious risk is unsecured networks,” says Jamie Akhtar, CEO and Co-Founder of cybersecurity company CyberSmart. “Many staff now access company data through home routers or, worse still, public networks such as coffee shops. There’s also a psychological component to this, with research revealing that many of us are more inclined to engage in risky online behaviour when outside the office.”

“Hybrid working has been widely adopted and is not going away any time soon,” adds Fabien Rech, who is SVP & GM EMEA at Trellix. “As a result, businesses have become more vigilant to the threats of this model

“Research reveals that many of us are more inclined to engage in risky online behaviour when outside the office”

and have invested in security systems that address any gaps in defences. In this way, hybrid working is less of a threat today than it was last year.

“The shift to a hybrid and distributed workforce has inadvertently increased the attack surface area, as many employees use their own devices to access work applications and data. As a result, we’ve seen a rise in tactics such as phishing, with cybercriminals luring employees over emails to share login credentials or confidential information. This can then result in the loss of sensitive data, fraud, or network breaches.

“Mobile phones are a particular cause for concern as they represent a data goldmine for cybercriminals. The Apple security flaw that allowed hackers to access devices and obtain work emails, confidential documents, and company data is a prime example of how this could be devastating to employees – but it also illustrates the potentially crippling impact on a business.”

Is the war in Ukraine a cyber factor?

Another emerging threat in the cyber risk landscape has been the war in Ukraine. According to a new report from insurance

company Beazley, Russia’s invasion led to a ‘split in allegiances’ between cyber gangs which resulted in a temporary reduction in the number of ransomware attacks – but this didn’t lower the number of cyber attacks overall, and shouldn’t be mistaken for a longer-term trend.

The war is not just playing out on the battlefields of Kharkiv and Bakhmut; it is being fought by state-sanctioned hackers in ordinary neighbourhoods throughout the region, and in particular in Russia, which is keen to make a dent in the infrastructure of Ukraine’s allies. As the conflict drags on and

“Businesses are more reliant on the cloud than ever, however that makes them more susceptible to breaches, ransomware and other threats”

STEWART PARKIN CTO EMEA, ASSURED DATA PROTECTION

both sides become increasingly desperate, the risk increases that this cyber warfare expands to smaller and less obvious targets.

“Although state-sanctioned attacks might appear to be a risk mainly for government bodies and large corporations, the farreaching nature of supply chains mean that hackers are increasingly targeting smaller organisations further down the pecking order to try and gain access to larger targets or causes,” Akhtar says. “With attacks on healthcare providers and schools being reported, it’s clear that nothing is off the table when it comes to potential targets.”

Rech continues: “Critical infrastructure continues to be a key target for statesanctioned cybercriminals, as the impact of a successful attack can be particularly widespread and disruptive. In fact, in Q1 this year, we saw energy, oil and gas have the most detected attacks, whereas in Q4 2022, transport and shipping was the sector most impacted by these types of attacks.

“These disruptions are not only an effort to destabilise individual states, but they also have an impact on the wider global economy. As such, the impact can extend beyond borders and reverberate across different industries. It’s now crucial for businesses across all industries to bolster their defences if they are to successfully defend against sophisticated attacks.”

The fallacy of being ‘too small to be a target’ Indeed, the very nature of cyber insurance cover, with its annual premiums and renewals, means that planning in the moment instead of planning for the future puts you at an inevitable disadvantage. Few organisations can afford to assume that they won’t become a target in 6-12 months’ time, and the nature of your business’ risk might have evolved by then anyway.

Mark Hunter, Chief Financial Officer at Red Helix, explains: “For enterprises considering taking out cyber insurance as an additional safeguard, or for those looking at renewing their policy over the next few years, this means not only being aware of the requirements for cyber insurance now but also thinking ahead and considering what they may need in the near future.”

“We have also seen some other threats rising to the fore,” Akhtar continues. “Supply chain attacks have become enough of a threat – particularly for managed service providers – that governments across the world have moved to issue warnings and develop processes to try and counter the risk.”

“Hybrid working has been widely adopted and is not going away any time soon.

As a result, businesses have become more vigilant to the threats of this model”

FABIEN RECH SVP & GM EMEA, TRELLIX

DIGITALISATION

TRANSFORMING THE FACE OF INSURANCE

DIGITALISATION

Insurance is in the midst of a digital revolution. While some legacy players have been slow on the uptake of digitalisation, this hasn’t stopped new digital insurance offerings from spreading throughout the market, taking sizeable shares in the regions they operate.

Whether a provider or an operator, insurtechs have risen to take the mantle of revolutionising insurance and take it into the digital age. It has been well-documented, much like in the financial industry, that the onus is on legacy players to catch up.

For Dan Cicchetti, UK & Ireland Senior Director of Insurance Client Engagement at LexisNexis Risk Solutions, the key to continued digitalisation in the sector comes down to automation, now “a firm feature of the insurance sector and a pre-requisite of the market’s ongoing digital transformation”.

He adds: “Most insurance customers want simplicity, transparency, and speed – from quote to claim. To achieve this, insurance providers are using automated processes at an increased rate, offering faster results with a greater degree of accuracy, without losing the human touch when it’s needed, whether it’s proving No Claims Discount (NCD) entitlement or verifying an email address has no links to fraud.”

Leveraging automation would not be possible without access to significant pools of data, or an “avalanche of data” as put by Truong Hoang Phuc, Deputy Director of Financial Services Group, FPT Software, which “is being exploited by insurtechs to improve insurers’ operational efficiences”.

WRITTEN BY: LOUIS THOMPSETT

He adds: “The business of insurance has always leveraged personal relationships but there has been a seismic shift in the way companies now interact with their policyholders or potential customers; with a greater focus on digital interactions.

Insurtechs are spearheading a digital revolution. We look at what insurers must consider when choosing to transform their legacy systems

Avoid the Top 5 Most Common Open Source Vulnerabilities Within Financial Organizations

Learn what open source vulnerabilities are commonly found in financial services organizations.

PETER PUGH-JONES DIRECTOR OF FINANCIAL SERVICES, CONFLUENT

“Self-service capabilities and digital portals are making it simpler to compare policies, obtain quotes, purchase insurance and many other functions; providing a seamless digital experience.”

Insurtech: disruption-free digitalisation

Notwithstanding the positive innovations insurtechs bring to the table of digitalisation, many legacy insurers have been reluctant, or at least slowed down, in their attempts to

integrate new digital solutions because of incompatible legacy architecture in need of an overhaul – a process that would disrupt daily operations.

A key consideration of many insurers is to leverage insurtech capabilities which impact existing workflows as minimally as possible.

Rene Schoenauer, Director of EMEA

Product Marketing at Guidewire Software, runs through ways insurtechs are making it easier for insurers to integrate new solutions without disrupting existing models.

“Insurtechs foster digital transformation by focusing on a specific problem, or set of problems, and then plugging into a traditional insurer’s workflow. Although this does require care when it comes to setting up the API integrations, it has the benefit of allowing insurers to try out new technologies and test and learn more quickly.

“Insurance companies have historically relied on one-on-one relationships between agents and customers to sway customer sentiment”

How is (P&C) insurance becoming more digitalised today?

FPT Software’s Truong discusses digitalisation happening in the property and casualty (P&C) insurance space today.

“AI and the expansion of instant messaging platforms have heralded the arrival of human-like chatbots; systems that allow businesses to serve millions of customers at the same time. And self-service solutions are streamlining activities such as policy administration, claims handling, and customer interaction. In a world where consumers consider phone calls cumbersome and time-consuming, chatbots have become a real necessity for business.

“Usage-based insurance (UBI) programmes that use telematics are enabling more personalised and effective P&C insurance. Telematics encourage safe driving behavior, resulting in fewer accidents and claims payouts. While there is sometimes an aversion to ‘big brother’ type technologies, insurers get a better picture – or digital proof – of accidents to more accurately understand incidents and avoid any legal wranglings.

“While AI and automation technologies are already used for underwriting and risk management, photo and video inspections and analysing properties, its use has extended to pricing policies based on risks, particularly for commercial lines. In claims management, AI is being used to assess photos of losses, and weather patterns, identify potential fraud and streamline workflow processes.”

“This way, it enables insurers to overcome the challenges of evaluating and curating proven insurtech solutions themselves. This also circumvents the logistical obstacles and costs related to technical and operational integration.”

Truong concurs, saying the onus is on the insurer to know which transformation best suits its current model and needs. “Ultimately, you need to know what transformations will push an organisation forward and priortise what’s most important and urgent – not everything can go digital overnight.

“Some digital transformation initiatives do not necessitate a complete rebuild. Most strategies can start with a pilot then broaden with incremental changes and where possible, tested out on a small part of the business before a larger rollout.”

Stuck behind the curve: How do legacy insurers modernise?

So, with it now seemingly easier than ever to transform legacy systems and architectures, unilaterally bringing insurance into the digital age, what must legacy insurers still behind the curve of transformation do to catch up?

“Insurers need to build an API layer that can seamlessly integrate their systems with those used by retailers” TIM QUEEN HEAD OF INSURANCE CONSULTING, COGNIZANT

Our Next Chapter

If you ask Cognizant’s Head of Insurance Consulting, Tim Queen, the rate of transformation may be far slower than widely perceived, citing a report suggesting “only 50% of insurers think that adopting new technology would have a major positive impact on generating or retaining new business”.

He continues: “Much of the time, this is the result of larger insurers and incumbents relying on poorly designed apps or websites from digital retailers to interact with their new customers, which are not able to fully capture the wealth of data that can be generated in a transaction or product search.”

The solution is simple for Queen: “Insurers need to build an API layer that can seamlessly integrate their systems with those used by retailers. By doing so, insurers can create more value both for themselves and for their clients. Having a more granular understanding of their customers would allow insurers to personalise individual experiences.”

And for those legacy players that have accepted the need for a digital shift, building API layers and integrating other innovations including automation, Queen cites a 67% approval rate from senior executives who claim adopting technology has led to a significantly positive impact on customer experiences.

Despite this, Queen says less than a third of insurers are using data to guide decision-making processes. “Executives need to develop a comprehensive strategy to maximise their companies’ use of the abundant valuable data available to them.

“By doing this, they will be able to uncover more insights, improve customer journeys and develop a system in which teams can share important information seamlessly between themselves.”

What is holding insurers back?

One thing that may be holding insurers back from digitalisation is a fear that too much automation could detract from personal

interaction and perceived quality of care, according to Peter Pugh-Jones, Director of Financial Services at Confluent.

He says: “Legacy systems inevitably place a heavier burden upon human interaction. With exceptional service the way to a customer’s heart, insurance companies have historically relied on one-on-one relationships between agents and customers to sway customer sentiment.

“Therefore, automation and human interaction is a tricky balance. Worstcase scenarios force customers to repeat conversations with multiple agents, each of whom is behind the curve as their legacy system fails to keep pace with updates to a customer’s account – or what their colleague has just heard.”

For Pugh-Jones, the first step to digitisation, without fear of losing a personal connection between agent and client, is for insurers to introduce a data streaming approach into their analytics.

This includes introducing “entities in the stream, gathering context-awareness

and triggering new alerts when there’s immutable evidence that a certain event has taken place, then sharing relevant information as a result”.

He adds: “Data streaming will play a big part in giving insurance companies realtime access to all kinds of data so that goals they have now – personalised customer

“Insurers must decide why they need to innovate in the first place; digital transformation without a plan serves no purpose at all”

RENE SCHOENAUER DIRECTOR OF EMEA PRODUCT MARKETING, GUIDEWIRE

experience, improved pricing, real-time notifications, targeted offers – will be much easier to achieve.

“The capabilities event streaming makes possible are profound, from enabling realtime claims notifications to omnichannel policy quotes and friction-free customer service touch points.”

Digital transformation: what insurers must consider While data streaming represents an effective way to introduce digital processes without impacting the human-insurer relationship – it cannot be denied that this is a consideration insurers have when the word digital springs to mind.

And it certainly isn’t the only one. Guidewire’s Schoenauer says insurers’ first port of call is “to decide why they need to innovate in the first place; digital transformation without a plan serves no purpose at all.”

He continues: “Insurers must also think about the technology platform that already provides a curated marketplace of preintegrated solutions and consider whether that works for them. Cloud-native solutions, for example, mean fewer siloes and increased opportunities for cross-functional collaboration, which serves to streamline the insurer’s internal systems and make their processes more efficient.”

But above all else, it’s a clear idea of what an insurer needs that should inform its decision to leverage technology of any kind for digital transformation. Should they choose the path of transformation, insurers must find, evaluate, curate, and select the right insurtech for their needs. As Schoenauer reaffirms: “Insurers must have a clear idea of the reason behind their drive to innovate.”