By David Hanley, Risk Control Technologies Inc.
Last week I attended the Insurance Disrupted Conference in Silicon Valley put on by the Silicon Valley Innovation Center in conjunction with Insurance Thought Leadership. It was an amazing event which hosted some of the most forward-thinking individuals on insurance and technology for an intensive 2-day summit on how technology will disrupt insurance as we know it today.
Some of the thought-provoking questions raised in the sessions included:
- How can insurers best respond to the new sharing economy (i.e. Uber, Lyft, AirBnB, etc.)?
- With autonomous vehicles on the relatively near horizon, how does this affect insurance offerings?
- As sensors and ‘The Internet of Things (IoT)’ continues to evolve, how does this affect risk?
- As more insurers embrace big data, what key insights are helping transform their business?
- How can insurers better engage with ‘the digital consumer’?
Certainly some of the broader questions posed by the various speakers got me thinking; for example whether Google or some other large technology player will completely change the insurance business altogether by raising the bar to a whole new level through technology.
Emerging Technologies and Loss Control
What really hit home for me, however, were some of the opportunities that emerging technologies present to the loss control and risk management space.
The Internet of Things
One of the major themes was that as technology continues to reduce overall risk, how does this affect the role and services provided by the insurer. For example, looking at property risks, the Internet of Things will allow risk to be much more easily identified and mitigated through the use of connected sensors installed within the insured premises. This has massive implications not only for property risks, but also business interruption, marine and even healthcare (think ‘Fitbit’).
As this technology continues to evolve, I couldn’t help but think how our clients may start to work these technologies into their loss control programs as an effective risk mitigation tool. Not only does it reduce their risk as the insurer and provide them valuable risk insight, but it also enhances their value-added services and affects account retention, making their offering more ‘sticky’ in a competitive environment.
New Levels of Risk Visibility
Recently there has been much discussion about the application of drone technology in risk management and loss control, and some insurers have already begun to leverage drones for pre and post loss imagery. Ironically, however, the implications of drones for insurers is a double-edged sword as they present potentially more risks than they can help in mitigating.
One conference presenter provided a picture of the future of satellite imagery which I found very compelling. Today, underwriters and loss control professionals will often preview a premises on Google Earth, Bing Maps or another imagery application in advance of (or even in place of) an on-site loss control visit. These images can be months and even years out of date in some cases, but today, lower cost satellite technology is making it possible to obtain much more up to date imagery.
In addition, the presenter gave us a view into the not-so-distant future, in which we will be able to have access to medium resolution satellite video (yes, video). Obviously the implications of this technology in terms of risk monitoring and assessment are absolutely massive.
Cyber Risk Control
Currently in the United States, only 0.2% of total written premium is related to cyber risk coverage. Today this market is largely focused at high tech firms and companies who conduct business online. As technology continues to infiltrate daily life – our homes, the cars we drive, the mobile devices we carry and more and more cloud-based services, inevitably every company becomes a ‘high tech’ business in some regard. Insurers have already started to respond by enhancing cyber risk offerings, but are they equipped to assess and mitigate cyber risks?
In the same way that insurers employ experienced loss control professionals today who are experts in property, engineering and workplace safety risks, will insurers begin to employ teams of technology risk professionals who will work with customers to beef up network security, encryption and disaster recovery?
I believe this will be the case, as it is imperative that as cyber risks continue to evolve at a rapid rate, insurers will need to better understand (and attempt to mitigate) the risks they are underwriting.
I left the conference really excited that the insurance industry is starting to not only realize, but embrace the changes that are coming rapidly down the pike. As a technology company, we are focused on how we can help our clients leverage these changes as opportunities as opposed to simply seeing them as threats to the status quo.