How are tech and data paving the way for the future of insurance?

In this blog post, we are going to share with you a summary of important points obtained from a webinar from AXA called “AXA Future of Insurance: How are tech and data reshaping the insurance sector?”. 

What is tech and data applied to today’s insurance industry? 

Hassan: Technology and data make people’s life easier every day. They have opened our minds to the number of opportunities available in the insurance industry.  With the availability of new technology, we are now able to do things that would not have been achievable before.  

Customers are now expecting an Amazon experience in the way they interact with us. Technology and data are a huge opportunity for the insurance sector to rejuvenate itself and meet new customer needs.  

How are tech and data mitigating insured risks? 

Data is nothing new. Many insurers have worked with data for many years. The things that are different and will be much more different in the future include the amount of data, the availability of data and the accuracy and the actuality of data.  

Data that comes from a company’s history will be combined with external data to increase predictability, accuracy of pricing and other services.  

Technology and data help us focus on the expensive human being interactions so that people can talk to each other and that insurers can talk to their clients and support them in important situations. 

There is always the question: “Are technology and data the end of insurance employees?” Definitely not. There might be a small change. However, human beings, as port of insurance, are still the core. 

Regarding risks, cyber risks and health demand increase have a huge impact on the future of insurance. Insurance companies need to be very careful and able to manage that in order to remain relevant and to keep the situation where customers can afford their insurance cover. 

The Importance of Tech and Data in the Insurance Sector 

A precise example of how technology and data affect the insurance industry is in Africa, agriculture remains a huge part of African economies. When there was a change in weather which impacted farmers, pricing risks was extremely difficult in the past, given that data was very limited.  

Currently, AXA Africa has a team working on “parametric insurance”, which mixes weather data with a specific piece of land and knowing exactly the risk profile of that piece of land in a much more accurate way than in the past. 

This allows AXA to price risks better and allows many more farmers to manage their risks better. Therefore, policyholders will be better protected against those risks with prices that we would not have imagined a few years ago.  

That makes the data more precise and pricing is better for them.  

With advanced technology and data in the next five to ten years, will insurance still exist as we know it today?  

Insurance will remain because now there are so many risks which an individual or a company can never fully cover. For example, Zolgensma is a very powerful medication. However, it costs about two million euro per treatment and is able to heal spinal muscular atrophy. 

Imagine you need to pay that from your private wealth. Perhaps, for all of us, it is impossible to pay. However, for a group, a society or a company who covers many people, that is possible. 

Insurance matters in a situation where an individual cannot cover a specific risk, but the group can. This will remain. This will not change at all. The only large insurance companies can stay relevant is that they do more than only paying the claims.  

The future of insurance will remain more by being more service-driven where even risk will become a byproduct of the service. The service itself will be what people are comparing or buying.  

The fact of only buying risk will completely disappear. 

How are future competitors challenging the insurance sector?    

Today competitors of insurance firms are not the traditional ones. The insurance is sold on a more embedded basis than before. For instance, many people buy an AppleCare or an Amazon Prime which are new forms of insurance.  

They are not even labelled as insurance but people are still purchasing them. In the future, it is not just about buying insurance as we know it today but it is a form of protection that is embedded within a customer experience that meets much more specific needs. 

Not only the regulatory insurance but also the demand-driven insurance are the future of the insurance industry.  

Are there any special issues that insurance companies should consider in the area of data privacy and cybersecurity? 

How insurers is protecting the information of their clients and how they use the information of their clients in order to provide their clients a better service are the key issues. 

It is very important to explain to everyone if insurers do not use people’s data they can never give them a better service. Also, using people’s data does not mean that they are providing data to other parties 

It means that these insurers are using their clients’ data internally to understand what they are doing, what their habits are and what their needs are and to make sure that they are creating better products that are adjusted to what would fit them in the best way. 

Is data ethics the same everywhere in the world? 

As a matter of fact, when it comes to data privacy, Europeans are much more sensitive than those in Africa or Asia. However, what is common is that people want a trustful service based on the data they provide insurers with.  

If they can get a benefit out of it, then they’re happy to share their data and even share more data than what is expected because the owner of the data is the client. It’s the customer who owns their data. They use it as they want to and they get benefits from it as they want to.  

For instance, poeple put their work address and their home address on Google Maps voluntarily because Google provides them with a faster way to reach their destination by avoiding traffic. This is exactly what the relationship should evolve into the future. 

How will healthcare be transformed by tech and data? 

Technology and data will come into play to support the doctors, not replace them in that they help the doctors discover what the real issue is, the real illness and the best treatment. 

There is a number which says that only 5% of a specific theme complex within the medical space can be adopted by a human doctor and 95% is somewhere else.  

It’s still in a database but it has never been received by the doctor. The only way to support the doctors with AI tech and data is to bring the data sources together because today, every kind of medical data is stored somewhere.  

There are different data standards, different places. They are not connected to each other and unable to communicate to one another. The data sources should be brought together in order to improve the healthcare sector. 

This improvement has 2 effects. First, it will improve the quality of delivering healthcare. On the other hand, there is a risk for the insurance side because the question is do we need to pay more? Will it be more expensive?  

In addition, for insurers, there are three key technologies that will change the future based on three criteria:  

1. What is the extent of it becoming green? 

2. How is it going to be accessible to the people in reality? 

3. What is the potential impact on people and healthcare? 

The three key technologies are as follows: 

1. Health trackers, wearables that are currently available everywhere. You can do an electrocardiogram (ECG). All of us have trackers such as Apple Watch that take much more vital signs than you could ever imagine.  

2. Artificial Intelligence or specifically genome sequencing.  

3. There is also a health pod or digital box where clients can enter without meeting any physical doctors. A screen will open and they will be able to take vital signs on their own with a glucometer, a blood-pressure device. an ECG, breath respiration. Now the patient is the point of care. 

Who is responsible for the treatment made by AI? 

This varies from country to country. In some countries, it is a digital kind of medical asset. The same law applies for a pharmaceutical firm. That is why medical providers are liable for that.  

Technology such as AI should be a supporting instrument for the doctor. The doctor remains reliable for this kind of treatment. At least at the end, the doctor should decide. He needs to get the support from all the sources that are theoretically available. But today they are not. 

This is one of the major drivers that things will change in the future. 

How do tech and data help insurers meet the customer expectations of Gen Z? 

Gen Z kids care a lot now about companies that authentically care that is not by creating a foundation and not by doing nice slides next to your business. They care about companies that are genuinely very keen to something interesting.  

They want insurers to be more responsible to this.  

How do tech and data affect employees in insurance companies? 

The younger employees are advised not to fear the change of technology and data. Those who are doing repetitive jobs should think twice because they can be replaced by machines. 

However, creativity, warmth, empathy, innovation, human ability to interact, physical ability such as laughing, crying will not be replaced by machines.  

Any repetitive process will be changed. But your creativity in making this faster, better, cheaper, quicker for your customer is not going to change. The creativity behind controlling those machines will always be with you.  

For that insurance companies need their staff to study algorithms. The insurers need people who are data scientists, developers, process engineers and who are more creative and more innovative. These are areas that the new generation should focus on.