Adaptability

October edition (looking at September), 2023

"What a time to be alive"

I hear this expression often, and in both of the ways it's normally delivered it always makes me think a little about where the person is at when they say it.

I can't help but ask myself if they are really seeing this as a moment that is unprecedented in history, positive or negative / sarcastic connotations aside.

And here's the thing - it's a phrase that gets used in the insurance industry a lot. I think this is because we are driving through a period of immense change. And as a recent report suggests it's set to grow . Firstly, this report made me think "I never think of EIS Ltd as an insuretech in any definition", but talking to a colleague who sees this as symptomatic of a widening understanding or misunderstanding of the term. This in turn made me reflect on Ed Halsey warning that we are in danger of it losing meaning. ?? Either way, we are at the vanguard of technology in insurance, and we are an ecosystem enabling platform and we work across all of the insuretech landscape, with some 1,300+ integrations and counting. So, I am probably being a little fussy in this instance. Secondly, that regardless of the above, it shows that there's still a lot to go at. "The global InsurTech (insurance technology) market is poised for substantial growth, projected to increase from $10.53 billion in 2022 to $14.37 billion in 2023 at a compound annual growth rate (CAGR) of 36.52%. Furthermore, the market is expected to reach $49.78 billion by 2027, with a CAGR of 36.42%." ??

I think the reason we will still see a lot of growth across various technologies, point solutions and even full-stack insurance businesses is because the insurance industry is driving through an important tipping point. Whether you call it the emergent dynamic insurer as Lisa Wardlaw rightly does, or if you are slightly less well placed, like me, and simply see adaptivity as a defining emerging competitive characteristic (same thing, I think) it's changing and changing fast.

And when things change and velocity of change goes up at the same time we see that exciting mix of winners and losers (customer and competitors) typically emerge and fundamental changes in capacity and capability with it. If you're coming into insurance for the first time, graduates at this time of year, or those in a career change or those building their careers generally. Welcome, we need you, you've come at the right time and if you can think it ?? we can probably make it ?? happen - lets go!

And one of those next leaps in change is and will continue to be driven by another all encompassing term also in danger of losing meaning Artifical Intelligence (AI).

Insurance is on a very human journey

If you think about what has happened over the lifetime of insurance it really is miraculous in many ways:

• Some consider the Code of Hammurabi to be the first example of insurance and transferring risk.
• The guild system emerged in medieval Europe, with members paying into a pool that covered their losses (a social enterprise).
• Ships sailing to the New World in the 1600's would secure multiple investors to spread the risk around.
• The Great Fire of London in 1666 was horrific, but it also gave rise to fire insurance.
• After the development of mortality tables, which helped predict longevity, Life insurance became more widespread and affordable.
• In 1930 the UK becomes the first country to introduce compulsory car insurance when it passes the Road Traffic Act.

To name a few. It's truly marvelous, enabling, evolving and essential. Insurance has arguably been one of the biggest influences or enablers of human endeavor. And as we enter this next wave of change I'd argue this continues, only the pace and nature of insurance is rising dramatically driven by key competitive forces:

1. Risk-removing
2. Embedded
3. Adaptive
4. Human-centric
5. Carbon Neutral

Something I've often referred to as The DNA of the Ambitious Insurer. And all of these will be impacted by AI.

To view this in context is important. Yes, each of the above provides an incredible economic and competitive potential e.g embedded insurance has an estimated $3.7tr of untapped economic potential (click here to see our views on this). And whilst the others are relatively self-explanatory, the one that stands out, and the one that is getting more than its fair share of "what a time to be alive" is number 4, and one that is closest to the topic of AI as well..

Human Centric

I define human-centric as a bucket of things that are about asking ourselves deep questions, principally how we use technology to transform and ensure it's better for the human.

Employee, customer, claimant, insured, however they are being personified or identified in their journey and wherever they are, one question is:

Is the machine serving to provide the best possible outcome and have we really maximised the value humans are getting from this?

And when people raise AI in this context, framing something like "look at all the bad things it could proliferate" some of them are of course justified. Like concerns that GenAI is typically spewing out very average written responses and threatening to lower the potential for us to read exceptional work written by another human.

However, for each of these there's an interesting counter-balance - what about when AI:

1. Frees human capital allowing us to focus on tasks of higher value
2. Models help us to determine new life saving medical prevention through diagnostics
3. In collaboration with other technologies, such as the Internet of Things (IoT), cloud computing and big data analytics, has significantly transformed the renewable energy sector

The key therefore is the ethical application of the technology, AI or any other. The question then is how do we make sure this is the case?

The human in the loop

When we think about AI in insurance a lot of questions come up about its ethical use, which I always find reassuring. In fact, despite 15+ years looking at, working with and applying this technology in its current form (a whole different topic of discussion) I've never not had the tough ethical questions come up, in any sector.

Looking back at various interactions this becomes reassuringly apparent, here's some examples:

• Here's a paper I wrote a while back call Autom8 (I know clever title, right?)
• Created a successful BSI PAS 440 for Responsible Innovation
• And recently a LinkedIn Live on looking beyond the Hyperbole of GenAI

The key here is to remember we/us should be in control, and if we aren't or don't feel those control points exist then we should probably stop and look to solve that before we move forward.

Another good example of this is the work 谷歌 is completing with its Google Cloud Vision API for celebrity recognition, where they not only involved human rights bodies, they then ultimately recognised a bias in skin tones (high error rates), which they then subsequently corrected.

To some of course these examples offer as much concern as they do reassurance.

"What about the other companies that aren't as trust worthy?"

OR

"What happens when this isn't picked up by these practices, there's always a chance it doesn't work?"

OR INCREASINGLY (and sensibly)

"What happens when the machine is given more free-will or ability to train itself, how will this be monitored and checked?"

These are all very sensible questions, and one's we need to keep asking, for me there's not been enough discussion or action yet to provide the kind of answers we need.

The handshake with the machine

A while back working with Marcin Remarczyk during my time establishing and leading 高知特 Cognizant Digital Strategy UKI capability (a while back now) he pulled me into a discussion about this on one of his consulting engagements. And after a good session together unpacking this he coined the term "the handshake with the machine". This was really about making sure that people receiving the now automated or machine driven outcomes felt they could trust what the machine was doing. And the reason to do this is because all too often we could see cases where this trust didn't exist and ultimately to "validate" the machine output they would repeat the task and kill any efficiency gains, or worse often through human error raise issues that didn't exist or need resolving.

This was really about making sure that people receiving the now automated or machine driven outcomes felt they could trust what the machine was doing.

Equally, when machines are generating outputs at scale or on mass, and using more open methods or even ways we don't all understand (most won't know the difference between an adversarial neural network or any other deep learning method) what tells us this has been validated in some way? How can we trust what is being provided to us? Why should we accept this and use it in our endeavors or allow it to act in the world in some way?

For me this is a now a critical set of questions. My answers at this stage are broad, and I've provided these in various publications:

• We need accredited professionals that we can recognise as understanding ethical AI practices and enough acumen to operate certain AI driven tasks accordingly
• We need a way of validating that the use of AI has adhered to "standards", which ultimately becomes a form of regulation acting on all industries
• And we need to know what the consequences of using this technology and the wider intended outcomes are, so we can ensure it is used in an ethical way as well

Here's some of the articles I've written and participated in recently:

Here's Bard's view on how we mitigate some of these concerns

Is it time to introduce licensed AI companies?

How we can best look at regulation

Whatever view you have right now, and to be reassured, I strongly believe the adaptive insurer will continue to navigate this path successfully, making the most of AI technologies and continue on its very human journey.

More on this upcoming in the Insurance Post Podcast lead by the incredible Emma Ann Hughes with the exceptional Bijal Patel and Phil Evans as mic warriors. Don't let that chair squeak whatever you do!

"What a time to be alive!"

Insuretech Partner in the Spotlight

RightIndem have been a partner of ours over the past year, successfully working on a client together. And it was particularly pleasing to read that once again they scooped an award at the Insurance Times Tech & Innovation Awards in the 'Best Use of Technology for Customer Experience – Claims' category. Here's their celebratory post the morning after .

The experience / efficiency paradox. ??

I've long wanted to use this word in a published article. Paradox is such a great word after all. It conjures up a wonderful set of scenarios in people's minds.

?? And in this article for Insurance Thought Leadership I was lucky enough to get to write about how insurers are uniquely placed to gain efficiencies whilst improving experiences. ??

KEY TAKEAWAYS:

?? Insurance, like most industries, often sees a clash between the desire to be more efficient and the desire to provide a great experience for customers and employees. But there doesn't have to be a tradeoff.

?? Rethinking how data is updated, for instance, can create great efficiencies for the insurer while providing a much better experience. Why make customers and employees update three policies with a single insurer when one update could flow into all three?

?? The challenges to resolving the efficiency/experience paradox used to be technological but now boil down to having the right mindset.

Click here .

Pedal to the metal

I was lucky enough to be interviewed by Fiona Nicolson of Insurance Post on How insurers are putting the pedal to the metal for mobility trends ???? “I don’t believe frequency of claims will decrease.

From the ABI data for the first quarter this year, there’s been a massive increase in claims, compared with last year. “The overall number of motor-insurance claims settled was 599,000 – up 14% compared with the same quarter last year, and that’s during a period when all this new technological development has been advancing.” ??

Click here .

Inflated views in a national newspaper no less

I was lucky enough to be interviewed by Grace Gausden for the i news on "why car insurance became so expensive and what will happen next". In essence this is a complex topic, car insurance pricing and the associated costs and risks are interwoven into so many aspects of both economic and human related changes. Grace has opened up the topic in this article and started to unpack some of this complexity and what else can be done to mitigate the price rises. ??

?? “This is a far more complex issue than merely simple economic inflationary impact and needs addressing at a government level. There are things insurers can and should do, but there are things that need addressing elsewhere. The time for collaboration is already overdue.” ??

Click here .

The Diary of a Software Executive

My colleague Ian Betley got to share his week in the Insurance Post Diary of an insurer. Here's a teaser "Gingerly treading around the toilets...", the rest is a little more insightful. Pretty sure you can't pack more into this time period that's for sure! Click here .

Winner winner

RightIndem were delighted to announce their victory at the 2023 Insurance Times Tech & Innovation Awards in the 'Best Use of Technology for Customer Experience – Claims' category. ??

We are proud to partner with them on clients, and this once again goes to prove why. And long may the awards haul continue Oliver McGuinness and team!

Mentorship is a powerful force for good

I got to attend a session by Startup Sherpas and listen to the insights of Herman W Stewart - The Mentor’s Mentor , Tor Jackson Harry Craggs , Phillip Paige and Chelsea Abili at the Startup Sherpas Maximising Early Careers event hosted by Aviva last week.

Areefih Ghaith was there and obviously summarised it better than I could here .

LEADERSHIP SPOTLIGHT by Insurtech Insights

Don't miss their latest exclusive executive interview with Lisa Wardlaw ??

For me Lisa is authentic, an industry wide sponsor, a positive force for good and a great Keynote speaker, panelist and thought leader. And she has an exceptional vision. If you don't know Lisa this article is probably a good introduction to a clear stand out you never knew you needed in your life and a pioneer of Adaptability for sure.

If Gen Z remains a mystery...

... Emma Ann Hughes as got some insight for you. What will it take to attract fresh talent to the insurance industry? Insurers need to ditch the marketing spiel and demonstrate what they are doing about artificial intelligence, climate change, and inclusion, if they want to appeal to Generation Z, according to iCAN: The Insurance Cultural Awareness Network , which polled individuals working in the insurance industry born between the mid-1990s and the early 2010s on what it takes to attract, retain, and harness the talent of their generation. Click here .

Next stop for claims

Last week Altus Consulting launched a timely White Paper 'Service Disruption and I agree with everything Righindem say in this post .

Altus have been providing insights and structure to the insurance industry for some time now. They apply a series of thoughtful well researched POV's and tooling. And I love this quote: "The claims handling capabilities of insurers have not evolved as quickly as the world around them, largely due to the broad spectrum of complexity across claims, and the fractured nature of how #claims are managed both in-house and externally." Which to me beautifully sums up why adaptivity is the defining competitive characteristic of the modern insurer today. It also makes the point that an ecosystem is needed around the insurer to manage customers through a rich tapestry of interactions & experiences managing a variety of downstream services in the process.

I've said it many times before, and I will say it again: Claims is the moment of truth.

And you can download the paper here .

And lastly but not leastly

I had an interesting exchange with the ever brilliant Matt Gilham on one of his fraud posts recently. If you don't know Matt I thoroughly recommend giving him a follow. An SME in fraud, for sure, but undoubtedly an advocate of our whole industry. And often a very good example of adaptability in action. This particular interaction sparked an interesting dialogue. We got chatting about his experiences with law enforcement, reflecting on Police officers inane ability to spot patterns and anomalies, which mostly turned out to be right. And I mentioned our second brain, our gut instinct built up through learnings and how tuning into this gives us this special power. This lead me to refer to my friends who are pioneering the Uncertainty Experts ( Sam Conniff ? Katherine Templar Lewis ?? Adam Day-Lewin ??). Part of being adaptive is certainly about dealing with uncertainty, and these guys can provide a huge amount of direction and personal tooling to make this a super power. Well worth a look!