The Future of Commercial Sustainability | Alchemy Crew
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Thanking the ecosystem of companies supporting this initiative Sponsoring partners Data, analytics and ethics Responsible underwriting Disrupting the insurance model
Introduction Very rarely can we predict the future. Ironically, that’s what insurance should At the same time, our mobile devices create “50 years ago, be about when you think about it. The so much heat. Market research shows that we were told speed of invention, engineering, and the communications industry could use 20% plastic was the technological advancement has allowed us of the world’s electricity and create up to all to accomplish things that we might only 5.5% of the world’s carbon emissions by future. Now, have dreamt of 7 to 10 years ago. 2025, mainly due to storing and transmitting we’re trying to For example, just imagine what recent times data from billions of smartphones, tablets, do everything would have been like without the mobile and a rapidly increasing number of other internet. Mobile devices enabled us to stay connected devices. (source: Honest Mobile.) to part from it.” in touch with our family and friends despite Insurance involves predictions, contract significant distances. Still, who could’ve causes, risk transfer techniques, and loss predicted the emotional connection we’d reduction. Still, today the focus has moved have toward those handheld digital dreams toward protection and prevention. We all and the personalized engagement they could play a role in that process, which affects provide? Would any of us leave our homes how we predict, estimate, react, and protect today without a mobile device at hand? individuals, belongings, and assets from unexpected events.
Introduction “As insurance leaders, As insurers, we know But if there is one thing we all have a right, but very well the different e can do in 2023 and w also a responsibility, to impacts that climate beyond - regardless take action on climate change is having on our of where we are from change and make the food supply, where and or where we work and world a safer place not how we live, the local live - it is to collaborate just for ourselves but for and global economy, more and solve this generations to come. the environment problem together. and animal life, and It is not someone else’s even the emotional problem. It’s all our challenge of recovering problem. In fact, if from major events and all take steps to work natural disasters. Living together from wherever in Australia, we see this we are in the world, we firsthand, like in many can turn this challenge other parts of the world. into an opportunity for the future of planet earth.” Scott Gunther, General Partner, IAG Firemark Ventures
Introduction On 20th September 2022, a group of executives Our Thesis: and registered ITC Vegas delegates attended a three hour-discussion on the topic of commercial sustainability. The session was one of the most attended workshops on the pre-event day, which started ITC Vegas. The discussion was broken into three main topics: • Data, analytics, and ethics • Responsible underwriting • Disruptive business models At the same time, COP27 took place between 6 and 18 November 2022 to push global leaders to put promises into practice to achieve a zero-carbon future for all. The emergence for the next-generation innovations to solve environmentally-related problems are no longer nice to have. The COP27 discussion was about accountability and actions that should be initiated in 2023. Customers, whether individuals or corporations, are asking for institutions to take the required steps to deliver sustainable solutions that can achieve measurable accomplishments.
Why Commercial Sustainability? Why Commercial Sustainability? For us, Commercial Sustainability includes The term sustainability is broadly used to Commercial sustainability aims to accelerate two key terms: indicate programs, initiatives, and actions corporate alignment with more sustainable Commercial stands for commercial that are aimed at preserving a particular practices that improve how we operate lines insurance provided to corporations, resource and supporting the long-term using new economic methods and advanced including major industrial, commodity, resilience of others. It refers to human, social, technologies. Still today, 80% of the and energy companies that must today economic, and environmental considerations innovation remains environmentally focused. “energy transition” their business and –known as the four pillars of sustainability. Accenture, in collaboration with the World operational models. This was when circular economy business Economic Forum, showed that digital Sustainability relates to economic, models became popular to curtail the technologies, if scaled across industries, challenge economies and businesses created could deliver up to 20% of the 2050 environmental, and societal initiatives (and still create) from excessive reliance on reduction needed to hit the International and the crucial criteria associated with others’ resources. Energy Agency net-zero trajectories in the delivering more sustainable capabilities. Within commercial lines insurance, this entails energy, materials, and mobility industries. delivering sustainable value for commercial These industries can already reduce lines customers, employees, shareholders, emissions by 4-10% by quickly adopting and the communities at large in which digital technologies (source: The Economic organizations consume resources, operate, Forum.) and live.
Why Commercial Sustainability? While the agenda is significantly diverse, we decided to focus on three emerging risk areas:
Why Commercial Sustainability? 1. Climate risk Climate risk refers to formal Around US$500 billion of costs The group also reported analyses of the consequences, are rated between ‘likely’ to cumulative gains from realizing likelihoods, and responses of the ‘virtually certain,’ with higher business opportunities related to impact of climate change on operating costs linked to legal climate change at US$2.1 trillion, people, cities, and countries and and policy changes making up with the majority on track as how society adapts to it. A group a significant risk. In addition, almost certain with a significant of the world’s biggest companies companies report a potential shift in climate-friendly products representing nearly US$17 trillion US$250 billion in losses due to and services from the world’s in market capitalization, has stranded assets. largest companies valued the climate risks to their These include fossil fuel These opportunities also include businesses at almost US$1 trillion assets that may no longer increased revenue through - with many likely to hit within offer economic returns due to demand for low emissions the next five years. market shifts associated with products and services (such as Over 80% of these companies the transition to a low-carbon electric vehicles) due to shifting see significant climate economy or companies that consumer preferences and impacts, including extreme are significantly exposed to increased capital availability as weather patterns, rising global the physical impacts of climate financial institutions increasingly temperatures, and increased change. favor low-emissions producers. pricing of greenhouse gas emissions.
Why Commercial Sustainability? 2. Supply chain risk Supply chain risk relates to the In Q2 2022, Apple had difficulties Still, only 11% of these “Supply chain implementation of strategies meeting demands for the iPhone, organizations are monitoring disruptions will cost to manage both everyday iPad, and MacBook Pro due to their supply chain risk. Individual an organization an and exceptional risks along supply chain constraints getting consumers are aware of supply the supply chain based on worse in Q3 2022. This extended chain problems in a way they average of US $182 continuous risk assessment to to Q4 2022 for the iPhone14 have never been before, and million in average reduce vulnerability and ensure Pro. Apple CFO Luca Maestri supply chain management has annual costs. Still, continuity. In December 2021, said that Covid disruptions in become a hot geo-political Walkers was at the center of a China and silicon shortages and social topic as well as an only 11% of these crisp shortage. make it difficult to make enough economic one too. Corporate organizations are Yet, the problem had nothing to products to satisfy customer risk managers are struggling monitoring their supply do with congested containers, demand. with unprecedented supply chain lack of lorry drivers, or our The supply constraints will cost disruptions and only sometimes chain risk.” pandemic-filled world supply Apple US$4 to US$8 billion, know how to deal with those Interos chain issues. The issue was depending on how long it takes effectively and rapidly due to caused by a computer glitch suppliers in China to get back gaps in the information supplied. following an IT upgrade made up and running. Supply chain by its parent, PepsiCo. This type disruptions, according to Interos of situation warrants a new type will cost an organization an of risk transfer and mitigation average of US$182 million in strategy. average annual costs.
Why Commercial Sustainability? 3. Urban risk Urban risk combines two However, the speed and scale of Almost half a billion urban factors: On one front, location urbanization bring challenges, residents live in coastal areas, and exposure to hazards, and including meeting accelerated increasing their vulnerability to on the other front, increased demand for affordable housing, storm surges and sea level rise. vulnerability due to poor local well-connected transport In the 136 biggest coastal cities, governance, environmental systems, other infrastructures, there are 100 million people – or degradation, and the and essential services, as well as 20% of their population – and overstretching of resources within jobs, particularly for the nearly US$4.7 trillion in assets exposed urban cities. 1 Billion urban poor who live in to coastal floods. Around 90% of Today, some 56% of the informal settlements to be near urban expansion in developing world’s population – 4.4 billion opportunities. Cities consume countries is near hazard-prone inhabitants – live in cities. two-thirds of global energy areas and built through informal By 2045, the world’s urban consumption and account for and unplanned settlements. population will increase by more than 70% of greenhouse 1.5 times to 6 billion. 20% of gas emissions. Listen now the population lives in coastal Cities play an increasingly Jonathan Jackson cities. With more than 80% of important role in tackling climate & Dr. Avi Baruch global GDP generated in cities, change because their exposure Predicting and urbanization can contribute to to climate and disaster risk preventing sustainable growth if managed increases as they grow. Think flood risk well by increasing productivity, about floods and wildfires. allowing innovation and new ideas to emerge.
Why Commercial Sustainability? Each of these economic, environmental, and societal risks creates an additional layer of risk. Sustaining innovation risk: The risk of not fulfilling existing and future customer needs with the products and services they seek. Operational risk: The risk directly linked to the usage of emerging information technology, data usage, or application development that negatively impacts business operations. This could cover a range of scenarios, including software failures or power outages. Energy transition risk: The risk associated with a business model unable to adapt to the current environmental and societal changes such as infrastructural, flooding, or wildfire risk. Let’s dive into each session we ran at ITC Vegas 2022. An extremely well-attended set of workshops that still remain today a platform to build better and greater for 2023.
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Data, analytics, and ethics Data, Analytics, and Ethics This panel, led by Lisa Wardlaw, featured Sean Rider of One Concern, Rosie Smith of MIS, Ernest LeGrand of Maptycs, and Philip Youell of GWT Insights and discussed the use of data in the context of analytical modeling and data ethics. There is a lot of data out there. We have so much data that we need help figuring out what to do with it. The fundamental issue with that data is that we still are working out what parameters and criteria are the most relevant to protect companies and individuals and deliver innovation in risk assessment, pricing, fraud detection, and loss reduction able to deliver new sources of competitive advantage. Still, most companies need help when using data to evaluate known unknowns.
Data, analytics, and ethics As Deloitte highlighted in how to walk the A day in data talk by treating insurer data as a strategic asset, data and analytics are enablers in the quest to solve the protection gap challenges. “As a result, many are stuck 500m 28PB 95m in the early stages of data tweets are sent to be generated photos and videos are management maturity—still out every day from wearable shared on instagram Twitter devices by 2020 Instagram Business striving to make data more Statista accessible, shareable, and 294bn 4TB 462EB actionable.” Insurers are drawing new sources of data billion emails are sent of data produced of data will be created to improve the quality of the services they Radicati Group by a connected car every day by 2025 deliver across the insurance value chain, Intel IDC from customer segmentation to enhanced acquisition strategies to claims management. 3.9bn 4PB 65bn This is owing to the proliferation of sensors, analytical models, and the growing people use email of daya created by messages sent over WhatsApp availability of external data aggregators. Radicati Group facebook including 350m and two billion minutes of photos and 100m hours of voice and video calls made video watch time Facebook Facebook Research The exponential growth of data is undisputed, but the numbers behind this xplosion - fuelled by internet of things and the use of connected devcies – are e hard to comprehend, particularly when looked at in the context of one day.
Data, analytics, and ethics Yet, many insurers need help to maximize “Insurers buy data sources the total value of data, despite current and integrate them into their technological advances due to legacy business models, but we have constraints and siloed systems. Making data more accessible, shareable, and actionable not yet built up the components remains a work in progress for most and is required to create repeatable still limited to efficiency and cost control value-generating insights. We’re initiatives. Are there too many point solutions? leaving value and insights on the While convenient to deliver on particular table by analyzing data sets in operational problems, insurers still need to be isolation.” willing to integrate those data sources within Sean Rider current systems. When we combine point One Concern solutions through data cooperation to get a more robust image of an event or situation, insurers access more valuable integrated insights than if they relied on a few single- point solutions. Steven Abel explains this principle eloquently in the podcast below. Listen now Steven Abel Why is EPAM the best kept secret?
Data, analytics, and ethics Startups, in general, emphasize the Data ownership, the right attached to it, importance of putting data front and center and data ethics will become paramount as as a core asset and building the business we use larger and larger volumes of data infrastructure, and enabling proprietary sets. Analytics companies are taking in insight to be generated. The latter allows significant volumes of data daily without both an increase in the speed of decision- a clear understanding of who owns that making around those criteria and the long- data and how to use it effectively. The fines term monetization of that data to help incurred due to breaches show us so. As new with new revenue streams. Particularly with regulatory guidelines are on the horizon, we products that are already widely embedded will see an impact of those modifications within market participants’ current systems. on data providers’ business models. Data With better data sources, analytics, and risk viewers will now need to know the origins of assessment techniques, we can reduce the the data they use, and data providers who protection gap by ensuring that data sets can be as secure and transparent as possible are used to produce ethical and unbiased will gain a competitive advantage. insight and, by the same token, ease the deployment of better pricing, facilitate Listen now insurance affordability, and deliver relevant Iain Wilcox outcomes for underserved market segments. Why IoT for commercial property?
Data, analytics, and ethics Should we look at insurance monetization Most carriers surveyed are in the early-to-middle data analytics maturity stages in different ways? Few responding insurers consider themselves advanced ‘pioneers’ Insurers still stand at the very early stages of the opportunity to take advantage of emerging data monetization services. The majority of these use data to automate repetitive tasks, reduce costs and then improve top lines through more real-time evaluations and engagements. The most sophisticated insurers are, however, using data insight to build new revenue-generating mechanisms working alongside ecosystems of data partners to deliver new customer- centric offerings. Listen now Jeff Williams Discovering Kayrros’ geospatial data
Data, analytics, and ethics While we all have seen the advantages of Respondent maturity is highest on core claims, underwriting, and actuarial operations. usage-based insurance and now dynamic More carriers lag on sales/marketing, segmentation, and distribution functions. algorithmic underwriting through InsurTech innovation, more and more re/insurers Data/analysis maturity by operating function are taking a more vested financing lens and demanding that young ventures Fraud detection 42% 44% 14% consider more seriously the economics and fundamentals of insurance. They now aim to find new ways to embed recurring revenue Sales/marketing 50% 38% 12% models within their walls alongside their main revenue streams. Claims 30% 46% 24% Actuarial 36% 42% 22% Underwriting/pricing 28% 50% 22% Distribution 46% 40% 14% Customer segmentation 46% 48% 6% Explorers Source: Online survey of 50 insurance company data/analytics executives, Deloitte Center for Adopters Financial Services, April 2022. Deloitte Insights www.deloitte.com/insights Pioneers
Responsible underwriting Responsible underwriting Matt Ferguson led the Responsible Underwriting discussion, which featured Deana Murfitt of Artificial, Matt Stein of Salient Predictions, Jonathan Jackson of Previsico, and Arash Ghauss of Live-EO. The panel covered how underwriting will need to take a more holistic approach to ensure that techniques solve issues for the many rather than the few. The insurance industry may seem slow to change. Still, lots of work is being undertaken to enable systems to ingest new types of data sets while ensuring compliance with data regulations. With better incentives to provide more comprehensive and compliant insurance products and services, the sector wants to identify ways to underwrite risks more fairly and responsibly where client companies and individuals feel safe, secure, and protected against the unexpected despite the visibility of more profound insight.
Responsible underwriting Responsible underwriting stands for We all know that profit is king. This entails underwriting quality. Quality underwriting using internal and external data sources aims to move corporate practices away alongside sophisticated and ethical modeling from underwriting volumes for the sake of techniques to evaluate exposure, whether it volumes or to acquire market share for the be climate, weather events, and catastrophic sake of market share to move towards more loss, to ensure a more accurate evaluation of responsible practices. risk across different categories, product lines, “New practices that ingest and territories. more relevant data sources are Responsible underwriting is about planning for a resilient future where we can better increasingly associated with protect vulnerable communities from current individual and segmented risk and emerging risks. Responsible underwriting profiling and pricing. Today, benefits insurers and reinsurers while also fundamentally improving our ability to deliver many insurers and reinsurers the core principles of insurance - to protect recognize even more strongly customers and society. that they must manage risk Take, for example, the impact of flood through strong underwriting risk. Such risk is not insignificant in today’s disciplines and deploy consistent society. In recent months, we have seen more dry days on average on earth, but pricing and risk selection when there’s a wet day, the intensity is more procedures to reduce losses pronounced. across lines.” Deana Murfitt Artificial
Responsible underwriting “An estimated 20% of people These facts highlight the need for insurance are at risk of being flooded right solutions to better predict the likelihood now. The stark reality is that of an event occurring for insurers to take precautionary measures faster - whether by 2050, this will rise to 50%. triggering alerts to communities proactively, The direct impact on people’s deploying emergency responses, or personal lives is obviously huge, implementing preventative scenarios planned. but the economic impacts “It becomes critical to are equally alarming: 40% of forecasting weather events businesses never reopen after using a variety of risk factors flood damage, which kills accurately. Those must use employment in communities. quality data to drive that People impacted by floods are accuracy. The appropriate depth nine times more likely to suffer of data, whether on-land or off- mental health problems (and land, has become an essential understandably so) building weather-prediction criterion for measures to ensure and support insurers and adjacent industries this growing population is too.” an example of responsible Matt Stein underwriting.” Salient Predictions Jonathan Jackson Previsico
Responsible underwriting Responsible underwriting is also about For InsurTechs that take ethical issues “Access to multiple data sources declining to underwrite or invest in specific seriously, it is an exciting time to innovate allows us to solve complex fossil fuel–related activities which represent with data combined with ethical and fair challenges and deploy solutions an unacceptable path to a net zero economy analytical practices. (e.g., extraction and production of energy “Imagine if you could predict that address the current from thermal coal and reducing involvement protection gap. We’re finally in coal mining). The process also requires weather risk by just evaluating able to address longstanding a more accurate evaluation of risk and the ocean’s patterns from 2 to up application of new condition-based exclusion to 52 weeks in advance? Salient problems with better technology clauses. and engineering. Still, there is One of the most prominent risks still remains Predictions just do that.” a long way ahead to get to the the identification and quantification of Matt Stein exposure accumulation to individuals, Salient Predictions outcome though.” companies, sectors, countries, and products Arash Ghauss - particularly those that materially extend Live-EO across or correlate between business units, functions, and divisions, including the balance sheet requirements associated with those, and the adequacy of the governance practices being deployed.
Responsible underwriting By ingesting new forms of data and We understand the shift from fossil fuel to getting comfortable with probabilistic data an energy-efficient world is more than a modeling techniques, specifically within destination. It is a journey, and we recognize the environmental and societal spaces, the role the insurance industry plays in we’re enabling underwriters to make more supporting that evolution for users, buyers, sustainability-friendly decisions. and service providers. Environmental We also saw a spike in investment in sustainability, and the impact of climate and sustainable solutions, over US$60 Billion urban change, have been a critical focus in 2022. This is especially important as of many insurers for some time, as several we consider the future of the business of have been reducing their environmental insurance. impact and making responsible choices in their underwriting and investment decisions. Looking forward, it is also a topic that Much has been done, but much is left to do, will have growing significance for future and ultimately answers still need to be found customers, employees, partners and users. to understand how to predict and prevent Gen Z employees care about environmental emerging risks affordably. factors, and they support missions that What was clear was that market participants promote sustainable practices. The sense likely need a combination of the ‘carrot or the that ‘we attract top employees when we do stick’ to speed and scale the change required meaningful work’ was shared by many of the to deal with the environmental emergency. corporations we talked to. It seems unlikely That said, Deana Murfitt’s quote summed this sentiment will reverse when Gen Alpha up the feelings of many “Why on earth do comes of age. we need a stick anyway?” highlighting the fact that with well-understood and known risks, company boards simply should become more proactive in driving change.
Responsible underwriting Does the future need to be dynamic to “Algorithmic underwriting, become more responsible? which automates aspects of Would more precise insight into the impact the underwriting process, for of data on underwriting yield more interest instance, is part of this emerging in dynamic solutions? This is an important question as this would mean looking at embedded intelligence practice. technology enablers in new lights. Embedded It forces organizations to gain Intelligence (EI) is where systems start to an increasingly better lens of a monitor themselves to drive fairer and more responsible outcomes. EI relates to portfolio’s performance on one systems that analyze their own operations single screen and automate the as they also interact and integrate with activities of all those risk profiles others. EI is often inherent in business processes, automation programs, or task- and segments that represent based resources. Using EI, companies are considerable, but also limited getting more thoughtful about deploying risk.” the most relevant and company-compliant technologies in an interconnected enterprise Deana Murfitt environment. Artificial Listen now David King Using AI for algorithmic underwriting
Disrupting the insurance model Disrupting the insurance model Surrounded by panelists Henri Winand of AkinovA, Ori Cohen of Parametrix, Leandro Dallemule of Planck, and Yann Barbarroux of Otonomi, Sabine VanderLinden led a discussion on how to disrupt the traditional insurance model. The current insurance model was designed over 335 years ago in the coffee house, which became Lloyd’s of London. While some insurance companies make money from underwriting today, many more rely on their investment strategies to deliver consistent shareholder value. And today, the conversation is moving towards a better understanding of capital usage, efficiencies, profit from underwriting, and how to ensure that tangible assets, intangible assets, and the emerging risks surrounding them are evaluated constantly and accurately.
Disrupting the insurance model There is a significant loss of information “In the past, insurers would look We must remember that between the risk being underwritten today at 5 of the exact same criteria information asymmetry still and the capital which covers it. We need a when underwriting workers’ exists. Some insurers can take better way to align the two, and change can only be effective when exposures are aligned compensation. Now, the criteria advantage of that asymmetry, with the real risk customers want to cover. have changed. They are new, in particular, greenfield carriers more unique parameters linked with no legacy or emerging to the insurer’s risk portfolio to MGAs. Think about adverse (1), eliminate poor risk profiles selection. This is required in and (2), manage underwriting insurance. Some insureds pay profit and the top line. The higher premiums than others, question which remains relates which are estimated based on to the relationship between behavior. My view is that an underwriters and claims insurer should not underwrite managers, where insurers must $1 and then lose $0.20 on every continuously optimize data risk that he underwrites. But this quality, risk management, and happens. We see it in our field risk transfer decisions. all the time.” Leandro Dallemule Planck
Disrupting the insurance model We witnessed the economic importance “In insurance, we must certainly These types of platforms are of insurance peaking in the mid-80s, and address almost 40 years of good because they digitize despite the decline since then, we’re seeing decline. If we want to really the transparency of risk another opportunity for growth. This growth opportunity is about our immediate focus disrupt our industry, we have to underwriting and also help us on intangibles, including digital assets. activate capital, resources, and look more closely at the edge This means looking into new products and innovation to get clients what cases. We have a tendency services that do not exist today — the insurance industry has been doing a lot of they want and need. Our thesis to forget that the insurance the same for a long time, and it is time to at AkinovA is that the market industry was created by a group evaluate emerging risks more seriously and must evaluate the benefits of entrepreneurs 335 years ago. evaluate more relevant parameters to ensure optimum customer vs. risk alignment. provided by marketplaces more Today insurance needs to work Listen now seriously. harder at aligning customer risk with available capital.” Henri Winand Henri Winand veloping AkinovA De an electronic marketplace
Disrupting the insurance model It is where both Ori Cohen from Parametrix “Today’s business is built on a This continuous monitoring and Yann Barbarroux from Otonomi shared variety of tech service providers. allows us to tailor more relevant views on the value of parametric models If something goes wrong with products that businesses want from two different angles. While Parametrix applies parameters to cloud downtimes, one of these service providers and need while aligning the Otonomi directly enables suppliers to and they fail to deliver expected payout with their business evaluate, control and mitigate their supply cloud services, your business performance, peak hours, and chain risk more transparently. Parametric insurance describes a type of insurance will likely suffer. But most of seasonality.” contract that insures a policyholder against us would not know where the Ori Cohen the occurrence of a specific event by paying problem is coming from. It is Parametrix a set amount based on the magnitude of the event, as opposed to the magnitude of where parametrized approaches the losses in a traditional indemnity policy come into play. At Parametrix, (NAIC). we continuously track the availability of these service providers.
The insurance model must change Ori also reminds us that the purpose of “The more complex the risk, Within the transportation insurance is to transfer risk, and its current the less likely the customer space, we have learned that a delivery models still rely heavily on historical will understand what is under parametric platform set up as claims data. For new tech-related risks, such as Cyber and Cloud Outages, collecting contract. This often results an MGA can deliver the most large amounts of relevant data is the key to in policyholders selecting transparent insight into supply creating sustainable and profitable products. the wrong coverage or self- chain disruptions via one single Listen now insuring altogether. Operational trigger, limited conditions, and Yann Barbarroux logisticians do not know that relevant provisions while getting Scaling Otonomi they could be covered for late rid of manual overheads. In this shipping or cargo supply chain way, we are decentralizing and risk, for instance. simplifying access to smarter sources of capital from more active and intelligent market players.” Yann Barbarroux Otonomi
The insurance model must change The insurance model must change. There is a tonne of new data sets that are The insurance model needs to evolve out there, but they are costly to access. further. Leandro Dallemule from Planck The impact will be achieved by matching was explicit. The model has advanced over newly designed products to the market’s the past four years. It now ingests new affordability requirements. This will require data sets to manage current information for us to use new tools and prediction asymmetries, but more must be done to techniques to refine assumptions in a world ease more dynamic pricing and frictionless that is far more real-time to ensure that all engagement. parties see that their interests align. We understand that new drivers are This means access to fairer, simpler, and affecting the world of risk mitigation. These more explainable advanced analytical were highlighted loud and clear. These models. This is likely to call for deeper included current information gaps, the analysis and consideration of partnership need to consider more seriously transfer opportunities with a multitude of tech players risk opportunities for intangible assets, and to build highly relevant insurance ecosystems. ways to protect those more affordably while bringing the capital closer to the risk it intends to insure. This will require reliance on more trustworthy, responsible, and transparent models.
Conslusion Conclusion “While insurance is a mature and established industry, we also know that insurance is both in need of… and bad at change.” shares Bill Pieroni, President, and CEO of ACORD. The stats back it up. Two out of three innovation initiatives still fail today regardless of industry, including the risk-averse insurance sector. This is because of the sustained capability gap affecting all actors, whether we consider accumulated legacy systems, continuously evolving regulatory frameworks, or the current skill gap impacting businesses, large or small. In a market where shifts occur at lightspeed and where uncertainty has become a permanent state of play, businesses must identify new ways to deliver sustainable growth. This means new practices to help build flexible, adaptable, and resilient business models.
Conslusion The future of commercial sustainability in This will mean the consideration for more insurance relies on the work that a multitude real-time practices, the evaluation of new of insurance practitioners have initiated to revenue models, the appraisal of more integrate data, new rating factors, advanced dynamic exchanges, and the participation analytics, and emerging technologies in in structured open ecosystems and less order to deliver enhanced underwriting structured networks. All this will require a capabilities while facilitating the adaption redesign of current digitization strategies and and reinvention of less mature insurance a re-allocation of resources and budgets to procedures. There is a cost to this. We must outcome-centric transformation initiatives. match intent with capital as we transition This is why many are looking today at our industry towards more sustainable, fairer, new business models to accelerate their ethical, and dynamic methods. interactions with tech companies to estimate, As we evaluate further how the insurance create and deliver value most effectively to business model evolves, we must recognize all key stakeholders involved throughout the that we need to leverage a highly complex value chain. number of lego blocks, each one able to reinforce the value created by the other to build new business infrastructures that endures the test of time.
