The use of artificial intelligence, big data, Internet of Things, cloud computing and blockchain technology all have the potential to reshape the industrys value chain, but are experiencing differing levels of acceptance in the insurance industry. According to an A.M. Best survey of its rated entities on innovation, a majority of insurers are aware that technology is not one of their core competencies and are willing to make investments and form partnerships to get up to speed.
The survey results are part of an extensive Bests Special Report on innovation, titled Insurers Agree Innovation Is Critical for Future Success, which incorporated responses from more than 450 insurers. Nearly nine out of 10 survey respondents said that innovation was moderately to extremely critical to their organizations success.
The use of machine learning and artificial intelligence techniques in predictive modeling for better risk selection, pricing, and claims are being incorporated at different rates across the property/casualty, life and health segments. When it comes to actual implementation, 61% have invested or are planning to invest in cloud computing, which was a major factor in the increased growth and importance of big data and continues to gain momentum ever since Amazon introduced its Amazon Web Services in 2006, while 13% have made or are planning to make investments in blockchain.
Insurance companies recognize that their expertise lies not in technology, but in insurance, said Edin Imsirovic, A.M. Best senior financial analyst. However, they also realize the power of technology to transform the insurance industry on a large scale, and have thus partnered with or invested in insurtech companies that are more attuned to the development and monetization of new ideas.
WANT TO BUILD A FINANCIAL EMPIRE?
Subscribe to the Global Banking & Finance Review Newsletter for FREE Get Access to Exclusive Reports to Save Time & Money
By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
Survey responses regarding new technologies include the following:
- Insurers appear to be optimistic about the prospects of big data and machine learning/artificial intelligence, with 41% of respondents saying big data would have a significant impact over the next three years, followed by artificial intelligence/machine learning at 30%.
- Blockchain ranked last among the technologies insurance companies thought would have a significant impact over the next three years, at 8%, reflecting a lack of maturity compared with the other newer technologies and concerns over security and performance.
- Survey respondents expressed cautious optimism toward the Internet of Things, or IoT. More than one-quarter of all respondents thought it would have a significant impact over the next three years. However, health insurers are ahead of their peers in other sectors as they recognize the utility of preventive care and monitoring through telehealth devices and other innovative products and processes.
Other report sections focus on overall survey results on companies innovation efforts and plans; how respondents from each of the primary industry sector, as well as emerging markets, view innovation; how innovation may impact insurance regulation; and answers to frequently asked questions regarding A.M. Bests innovation initiative. As a next step, A.M. Best will be developing a new criteria procedure focused on evaluating innovation and also will be reviewing where a more explicit assessment of innovation fits into Bests Credit Rating Methodology.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=278448.
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.