Since the new millennium, the re/insurance industry has not seen major changes in its use of Information Technology that would or could be game changing. Timeworn legacy systems which were designed a few decades ago are still an important part in the operation today.

The challenges of modernizing these systems were not only limited to dealing with the complex infrastructure, but also because the systems were written in older computer program and programming languages, making it difficult to find specialist suppliers and partners to help support or enhance them. There was also a lack of a push factor on companies’ end as they do not see significant reduction in operating or IT expenses.

While there are some recent technological breakthroughs in recent decades, such as the launch of Client–Server architecture, the use of the Internet and the rise of Business Intelligence; the core processes of systems and solutions used in the re/insurance industry have remained largely unchanged.

However, as the industry is experiencing a growing pressure on profit margins and growing risks, such as cyber risks, this might no longer be the case. At Peak Re, we are exploring new technology which would be able to cater for this development.

What options are available and how could they impact our business?

With technology innovations in the past years like Big Data, The Internet of Things, Blockchain and Smart Contracts, Machine Learning and Artificial Intelligence, the re/insurance industry is currently reviewing its basic processes and trying to identify how to make the best use of all the new technologies and to quantify the benefits it could bring.

Below are some possible applications:

Big Data has been getting more and more attention over the years. The experience in Business Intelligence solutions in the past decade seems to be paying off now as more and more data becomes available. Organisations are now able to make use of the data to streamline costs, assess the risks they want to underwrite, identify and then approach target customers.

Closely related to the Big Data development is the Internet of Things (IoT), this area is gaining interest from various industries as more and more information becomes available about how, where, when and by whom and what is used. Insurers are already applying IoT to enhance the business efficiency, i.e. devices to track motor vehicles and drivers’ behavior. The technology is likely to drive further evolution in risk assessment and claims.

Blockchain is a technology that functions as a data exchange platform through a distributed ledger that sits outside of the organization. For most Blockchain, it is closely related to the topic of Crypto Currencies such as Bitcoin or Ethereum. In fact, this is just one of the many uses for Distributed Ledger Technology. Its capability to handle transaction information similar to the Statement of Accounts could be widely applied in re/insurance industry. It could streamline accounting and claims handling processes, through increased further automation, thus reducing operation and IT costs as well as the manpower requirements.

There are definitely more possible applications for Blockchain and Distributed Ledgers. By using Smart Contracts on top of the Blockchain or by providing more precise and up to date information for reserving requirements and time to process claims payments could eventually be shortened to mere seconds.

As you can see, the technologies mentioned so far are all focused on data collection and data exchange at a speed never seen before, in a secure and reliable way (at least with regards to Blockchain).

With the massive volume of data collected, Machine Learning and Artificial Intelligence would be able to contribute to automation of data processing, triggering follow up processes without any further human input.

In the re/insurance industry, there are currently numerous initiatives and projects being executed to identify possible uses and their impact to the business. Some are in the prototyping stage while few of them are already available in the market.

If we take a look at the current development of reinsurance programs, they are becoming more and more complex. The technology can help identify the margins needed, the speed of data processing provides up-to-date information, and reinsurance programs can be constructed more and more complex to only cover what is really required. Being capable of offering to these developments the appropriate technical solutions for interacting is to be considered an important factor for future business development globally.

At Peak Re, we have been evaluating various applications for prototyping new solutions built on the above- mentioned technologies. It is one of our focus areas to improve the exchange of data between our customers and partners as well as the way we handle claims, in order to achieve fast and accurate execution of Cash Calls with the use of the Distributed Ledger Technology.

This means that existing systems need to be enhanced to cater for the next generation of digital business and be able to fully understand and provide the best possible solutions to all of our partners. Therefore, we work closely together with InsurTech companies globally to ensure the best possible integration in our existing platforms.

For us, this is not about disruptive technology but rather the potential opportunities that are available for all market participants. It is crucial that the use, especially of the Distributed Ledger Technology, is carefully considered and implemented, so as to ensure that the industry benefits as a whole.

This can be a win–win situation for all. With the advent of all these new technologies, giving rise to new capabilities and improving on many of the existing processes, it should not be forgotten that in the end, product development will remain in the hand of our reinsurance specialist. Utilizing technology to build on our infrastructure, the ultimate goal here is for us stay competitive and move the focus back to the business.

Property & Casualty