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Futureproofing the Insurance Industry

Insight Sep 06, 2022

Panel Information

Speaker: Abdul Halim Jantan – Group CEO at Sterling Insurance Brokers, Malaysia

The New Order of ‘The Smart Insurance Organization’

  • Concept – It must begin with the concept that each and everyone in the organization has the duty to make the organization a success story.
  • Business model – The insurance business model should be profitable and sustainable.
  • Value creation – It should provide creative solutions, sustainable economic benefits (including ESG), long-term community service, and make the world a better place. 
  • Relevant – Speed and automation, access and reach, heightened awareness, and the concept of sharing are must-haves for an organization in today’s world.

Processes where digitalization is a game-changer

  • Client engagement – When it comes to client engagement, it’s almost typical for salespeople, developers, management, and marketers to get excited when there’s a potential deal. But once the deal is signed and the premium is paid, the clients are forgotten until a claim is made. This is where digitalization can help insurers improve client communication through the use of a continuous engagement model.
  • Portfolio review – A major defect underpinning the insurance industry is that insurers solely rely on past insurance claims data during the portfolio review process. Based on these past claims data, they develop an underwriting structure and assign a new renewal rate. But today, with digitalization, data analytics, and big data, the underwriting of a new portfolio is based on the premise of predictive modeling.

Principles of Industrialization 4.0

  • Networking and interaction – Improving communication with systems, methods, and technologies, among other things.
  • Transparency – Making insurance transactions traceable or accountable through concepts like blockchain.
  • Decentralization – Modernizing technology to offer independence and the ability to work remotely, leading to an increased focus on teamwork. 
  • Real-time decision-making – Improving speed and responsiveness because of increased access to big data, which results in informed decision-making.
  • Modularity – Allowing system replication and maximizing the scaling potential, while making room for the most critical skill among employees – creative thinking.

IR 4.0: The tools for the future

  • Machine LearningUnderwriting & Robo-advisory
    Robo advisory work is becoming increasingly popular to deal with simpler policies such as personal accident (PA) insurance policies, fire insurance policies, etc. But more complex insurance policies still require manual intervention.
  • Robotic process automationTransactional Automation & Administrative efficiency
    Robotic process automation helps insurers handle repetitive tasks.
  • BlockchainClaims Automation & Information Verification on Blockchain
    With smart contracts handled through automation and verification, everything has become traceable and transparent. 
  • Internet of Things – Risk assessment & real-time information

A Modern Customer Journey

  • Erosion of the broker’s role
    In today’s customer journey, the value and role of insurance brokers are eroding. Most of the work previously done by insurance brokers will soon be replaced by automated tools, which are scalable because they can be executed and completed faster than humans. 
  • Distribution channel under attack
    • Active investment by insurers – Insurers are investing money to find smart technologies that can disrupt their own businesses and recreate their existing models.  
    • Robotic Process Automation (RPA) – based administration
    • Unjustified brokerages – When insurers optimize their expenses using technology, high brokerages become unreasonable.

Futureproofing: Insurance Brokers in a crisis

  • Purpose – As insurers become more tech-savvy and evolve their business models, the role of insurance brokers is under threat. The only way for insurance brokers to futureproof themselves is to purpose themselves by understanding the risk within the organization and facilitating risk transfer, management, and mitigation. They can also help the organization increase its appetite for calculated risk by using the available tools. 
  • Industry knowledge – Insurance brokers have the edge over artificial intelligence (AI), machine learning (ML), and data analytics when it comes to industry knowledge. They have access to global markets along with in-depth insights into complex insurance processes that need engagement, knowledge, and intellectual capital.
  • Client engagement – Using IR 4.0 tools, brokers can transform their approach strategy and right-size risks.

Implementing Futureproofing

  • Integrate new systems/methods/controls (tools and talent) – Maximize market reach and improve internal efficiency. E.g., digital transformation. 
  • Move up the value chain – Do away with the information monopoly and develop specialized products and services.
  • Transform to an advisory model (tools, talent, and target) – Eliminate trust deficits from a transactional approach and ensure long-term collaboration to create sustainable value.

The key takeaways

  • Insurtech is inevitable and disruptive.
  • Embrace change and be entrepreneurial. 
  • Ensure a sustainable business enterprise.
  • For competitive advantage, leverage the 3Ts – tools, target, and talent.
  • Leave behind a “better world.”