7 WAYS

TECHNOLOGY IS
REVOLUTIONISING
THE INSURANCE
INDUSTRY
 Traditional general insurers could be losing
relevance for customers because their products
and services are failing to keep pace with rapid
technological development in the connected world.
DELOITTE
Every day, new technology emerges that completely changes
the face of a whole industry, and insurance is no exception.
With big data and the Internet of Things, insurers have
access to an unprecedented amount of data but if they don’t
have the technology to turn it into actionable insight, they
risk being eclipsed by faster-moving, tech-savvy competitors.
BENEFITS
The benefits of investing in innovative technology are numerous. It helps firms:

 Meet customer expectations. The insurance industry must adapt to

support consumer needs in an always-on, app store, Amazon age. For
example, delivering mobile-ready apps, more intuitive websites or
personalised, instant quotes. And the benefits are there for more than just
the customer, too, as one insurer in the UK ‘eliminated around 20 million
calls per year by introducing an app that allowed customers to make direct
changes to their policies,’ according to McKinsey.

 Comply with regulation changes. The regulatory compliance environment

is ever-changing and becoming increasingly complex. With the
introduction of the General Data Protection Regulation (GDPR) this year,
insurance companies must look closely at how they use and store personal
information.

 Grow faster. Despite past difficulties with growth in insurance, recent

years have seen considerable global growth. But legacy systems will only
take you so far. New technology, especially cloud technology such as
Microsoft Azure, makes it easier and cheaper for insurance firms to scale
their IT infrastructure to meet growing demand.

 Remove performance bottlenecks. In a time of such technological

advances, completing portfolio analyses or running risk models over a
period of hours, or even overnight, is just not necessary – or wise. If the
answer is important, you need it now, not tomorrow.

 Make better decisions. The insurance industry depends on models, for risk
analysis, pricing and more. As insurers tap into more and more data, the
models grow more accurate but also more complex and time-consuming to
run. Insurers need to find ways to run their models faster if they want to
make the best possible decisions with the best possible analysis.

Of course, implementing new technology doesn’t happen for free but embracing digital
disruption can work out significantly cheaper than resisting it. For example, fully
automating a quoting process is expensive in the short term and may require complex
integrations. But in the long term, by improving customer service and giving real-time
insights, it will cut costs and increase competitiveness.
1. OMNI-CHANNEL CRM
"70 percent of insurance retailers have listed the
omni-channel customer experience as a top three
priority,’ says Daryl Henwood, CRM Industry Lead for
Financial Services at Hitachi Solutions, ‘and there is
a grand total of 800 people with “ multi-channel” in
their job title in the UK.’

In insurance, there are a lot of moving parts for every customer – lots
of information that can impact a quote. Without a decent CRM
system in place, it can be hard to maintain a single view of the
customer or use it to close more business. That is why omni-channel
Customer Relationship Management (CRM) is becoming a serious
game-changer.
With omni-channel CRM, you can track and monitor ongoing
customer interactions, contact information, unresolved complaints
or requests in one place; whether you interact with the customer
online, on mobile, via social media or in person.
2. MACHINE LEARNING
‘Actuaries and statisticians have used historical
data to recognise patterns in claims and predict
future losses for over 100 years,’ says George
Argesanu, Global Head of Advanced Analytics at AIG.
‘The level of sophistication and tools has changed
over time and I look at Machine Learning and AI as
transformative for the way we try to solve the same
problems while also gaining insights from places
where traditional methods fail.’
No matter whether it’s B2B or B2C, people are always looking for the best deal,
especially when it comes to insurance. If another company provides a better
quote, even loyal customers will jump ship. To combat this, insurance
companies have to do everything they can to provide the best for their
customers. Enter machine learning.
With machine learning, insurance companies can move away from static
datasets to something far more advanced that humans alone would be
incapable of:
‘We have always tried to find patterns in data,’ says Monika Schulze,
Global Head of Marketing at Zurich Insurance Company. ‘What we can
do now is automate that pattern finding. Then, we can be more
sophisticated and use more complicated algorithms than humans
do.’
3. INTERNET OF THINGS
Gartner, Inc. forecasted that 6.4 billion connected things would be in use
worldwide in 2016 and there will be as many as 20.8 billion by 2020. As more
and more devices join the rapidly growing Internet of Things ecosystem, the
opportunity for insurance companies to take advantage opens up.
The sheer volume of data that these devices provide is staggering, and if put
to use in the right way it can revolutionise the way insurance companies
produce quotes. For example, wearable devices collect a whole variety of data
such as heart rate, calorie burn, sleeping pattern and daily activity.

‘With supplemental GPS data, wearables could monitor and

report on compliance to the rehabilitation protocol of a
disability claimant,’ says Vik Renjen, SVP at Sutherland Global
Services. ‘Improved compliance would shorten the time until
return to work…The plan sponsor, employees and carrier all
benefit from improved understanding of risk, more accurate
pricing and reduced claims cost.’
4. TELEMATICS
In a similar vein to the Internet of Things, telematics allows
insurers to take real-time, situational data and use it to make
better decisions when handling quotes and claims.
By 2017, 44 million Europeans are expected to have telematics
devices (Black Boxes) fitted in their vehicles. With these devices,
insurance companies gain access to information they could only
have hoped for previously, such as speed patterns, distance
travelled, road type and reaction speed.

‘Current black box systems for accident reconstruction

are difficult to review and specialists are needed,’ says
Ernie Bray, CEO of ACD. ‘With newer applications coming
into the market, data will be easier to parse allowing
adjuster access to information they never had before
such as speed, location, braking, exact moments in time.’
5. AZURE CALCULATION ENGINE
Insurance is all about risk management, so the better an insurer
is at calculating risk the more competitive they can be with their
pricing. To accurately manage risk, however, requires more than
what humans or basic computers can achieve – and it takes far
too long at best.
For more sophisticated policies, the majority of insurance
companies have to run their actuarial modelling in Excel in
batches over several days, which takes away the potential of real-
time analysis.
With the Azure Calculation Engine, insurers can make these
complex models less time-consuming by distributing the
processing power across multiple computers. So, instead of taking
100 hours to run a model on one computer, it can take as little as
one hour to run the same model on 100 computers. It’s a game-
changing technology for companies that have complex Excel
spreadsheets or other models at their heart.

CASE STUDY: TELEREAL TRILLIUM

As one of the UK’s largest property companies, Telereal
Trillium needed to re-develop its forecasting system to
leverage modern cloud-based technologies. Using ACE and
modern statistical computing languages, it was able to
consume more cloud computing power “on demand”.
Read the full case study.
6. CLOUD MIGRATION
Cloud spending is projected to rise from $317bn in 2016 to
$535bn by 2020, according to Microsoft. Cloud adoption has
risen so fast that it almost doesn’t seem like revolutionary
technology anymore, but there is no denying the opportunities
it can present for insurers.
Beyond the obvious benefits of reduced infrastructure cost and pay-
as-you-go pricing, migrating to the cloud can also help insurers
build a more flexible and customer-centric business model.
However, despite the huge benefits, more than half of insurers are
not interested in adopting cloud storage and only two percent had
plans to start using cloud within 12 months.
Of course, it’s important for insurance companies to bear in mind
the regulations around storing personal data in the cloud, which will
impact the decision to go private or public, and thus affect the cost.
But, so long as these factors are considered, insurers have no
excuse not to embrace the cloud.
7. SOCIAL MEDIA
In 2014, insurers identified 130,000 cases of fraudulent insurance claims
amounting to £1.32 billion. It’s no surprise that insurers invest a great deal of
time, money and resources into preventing insurance fraud, and social media is
another tool in their arsenal.
For example, in 2015, a claim from a man supposedly suffering from whiplash
after a car accident was found to be fraudulent when he later tweeted pictures of
himself completing a marathon and climbing Mount Snowdon.

‘What [social media] can do is offer a real-time account of

people’s activities,’ says Mark Allen, manager for fraud and
financial crimes at the Association of British Insurers.
‘Insurers are not snooping, they are not spying on anything
private nor are they checking social media as a matter of
course. However, it is a useful tool in certain circumstances.’
The time is now
‘Data is a fundamental part of this digital revolution
across the insurance industry,’ says Keith Misson,
former digital innovation director at Aviva. ‘In the
past five years the explosion of digital information
and the technology used to exploit it means
insurers now have vast amounts of data available to
understand consumers’ requirements and
behaviours; the best digital insurers will use this
data to benefit consumers.’
For insurers willing to step up and embrace the technology available to them,
the opportunities are vast. For those with a wait-and-see attitude, by the time
you’re ready to step on board, the ship may have already sailed – or at the very
least you’ll be starting behind of all your competitors. Technology is already
revolutionising the insurance industry and the time for embracing it is now.
How RedPixie can help
Taking advantage of the latest technology not only requires a
constant finger on the pulse of change but also in-depth
knowledge about what your company needs to succeed. For
insurers who are already very busy, having a clued-up third party
provider is key.
At RedPixie, we understand the cloud because we were born in it.
We navigate the complex world of data analytics every day and
helping organisations achieve more with technology is what we
live for.
info@redpixie.com redpixie.com/contact-us @redpixie