While the industry has changed a vast amount in the last decade in favor of flexibility, operational agility, and customer experience and satisfaction, “the initial challenge wasn’t so much an aversion to new technology as it was about skepticism and resistance towards disrupting proven business models that have been in place for years,” as stated in PropertyCasualty360. Though the industry has worked away from outdated business practices, we find the same dilemma happening now with the shift between on-premise core platforms to cloud-based computing. 

Where the Industry Lags

Origami Risk CEO, Bob Petrie, recently shared his insights on the topic of the insurance industry’s innovations during the virtual “Innovation Amid a Global Health Crisis” panel, as part of the Business Insurance 2020 Virtual Innovation Awards & Conference. 

Joined by other industry leaders including Justin Gress, Director of Strategic Operations-North America Insurance of AXA XL, Sean Ringsted, EVP, Chief Digital Officer and Chief Risk Officer of Chubb, and Stephanie Pronk, Senior Vice President of Aon in a discussion moderated by Jennifer Reno, Global Risk Manager of QVC, Petrie stated:

The insurance market is digitized in the sense that brokers, insurance companies, and TPAs all have computers and use them. Policies are rated and generated, and claims are handled on electronic systems rather than on paper. But, the insurance industry lags behind many of the registries in developing industry-wide technology standards in an efficient way to share and use information broadly between an insurer, broker, and insured.

Here’s a couple of examples. Insureds often have open claims on multiple insurance companies and TPAs, but there’s no standard layout or code set that would make integrating data easy and cheap. RMIS centers have made combining this data set possible, but it's expensive. 

One example [of this] is that TPAs charge between $12-15 a year for a data feed. It’s just data moving from one place to another. That just costs pennies in many other industries, and it’s very expensive in ours. Many insurance companies don’t offer data feeds at all and some offer their claims data only as a PDF, not in data form. So they have computers, but they export that data to customers either as paper, images of paper, or as data that can't really be readily consumed by customers and by the supply chain.

Petrie’s sentiment, specifically one in which a cloud computing insurance technology could help to solve, is one that’s been echoed across the insurance industry for years. “Given its history as an industry built on paperwork, as well as one in which almost all processes and activities must be documented,” an Insurance Business America article acknowledges that insurance organizations are likely to exceed the numbers cited in a BPI Network study, which “found that 91% of business professionals said the pace of document creation would either increase or stay the same within their organizations.”

So where does that leave the industry to go?

Insurance’s Path Forward

“The insurance industry has got to put its head together around how to work together and build standards and processes that allows us to share information much more efficiently, and regrettably, in the 25 years that I’ve been in this space, there has been very little progress,” Petrie shared with the panel. 

As the industry continues to face new dilemmas, including the ongoing effects from the pandemic and a forced hand to shift the way they assess risk and interact with customers due to topics like climate change, social justice movements, and more, PropertyCasualty360 assesses that the innovation needs of the industry have accelerated by almost five to 10 years, adding further fire to the need for an industry-wide shift to updated standards and processes.

When asked by the moderator what other technological changes are on the horizon that will affect risk management, Petrie added:

Cloud computing isn’t really on the horizon. It’s been here for the last 14 years[…], but the insurance industry is way behind many other industries in [the] adoption of this technology and others[...]. [Cloud computing is] a relatively recent change that the insurance industry, I think, would really do well by adopting [to at] a little more quicker of a pace.

In terms of other technology changes, there are a number. I think mobile and the use of mobile technology to manage risk is still in the early innings. We haven't invented everything yet, but there are lots of experiments out there and interesting ideas. Telematics is going to be increasingly important for modern safety. And AI is clearly going to be a big part of the story in both claims and underwriting at automating many routine tasks. So those are the next set of technologies. 

But the industry needs to start with the building blocks of a modern extensible, cloud SaaS infrastructure that can be connected to the rest of the industry. Adding new technology bells and whistles on top of an aging platform is not a recipe for success in this industry. And I think you are going to continue to see the InsurTechs and start-ups around the edges becoming more and more mainstream [for] as long as the core of the industry doesn’t recognize this and begin [to adapt] a little more quickly.

What Cloud Enables

As the panel moved beyond on-premise versus cloud computing insurance technology, a conversation around mobile began to take shape. When asked by the moderator for his thoughts on mobile risk management, Petrie said:

I think we’re still in the early innings of this [...]. Our default behavior on business activities [...] is [that] we need a big screen, we need a big keyboard. But as people [become] increasingly [more] comfortable using our phone to do all sorts of things, we are seeing business behavior changing as well. 

For example, in the case of an audit or a self assessment, do you go walk around the facility writing notes on a pad of paper or are you carrying your phone and/or ipad with you and snapping pictures and recording the assessment [...] as you go? On incident reporting, if you are a truck driver or a bus driver, are you waiting until you get picked up and back to a screen before you report the incident, take the photos, note the intersection, the other vehicles, any emergency workers, all those sorts of things? Retail and hospitality, again—you walk into an Apple store [and] they check you in with a phone right in front of you. Why aren't incidents, small minor incidents, being handled routinely by apps? I think there is a big opportunity on that front. 

As leading Telecom giants continue to push for widespread adoption of 5G, conversations around cloud computing and mobile risk management will continue to take shape and gain further calls for adoption across the industry. Though, without cloud-based systems a more integral part of the insurance industry, genuinely effective mobile workflows and further technological advancement across the industry will have limited momentum.

To learn more about Origami’s cloud-based SaaS solutions for insurers and related, visit our insurers industry page. If you have questions about making the move from on-prem systems to the cloud, reach out and start a conversation with us.

To hear more about Bob Petrie’s insights, watch the full BI Innovation Awards Innovation Panel, which starts at 21:40.

In 2020, Origami Risk won a BI Innovation Award for our groundbreaking COVID-19 Digital Solution Suite. Pandemic mapping, tracking, communication, and audits are features that alleviate issues impacting business operations & employee health and safety. Watch our COVID-19 Digital Solution Suite video to learn more about our innovative solution we implemented for our clients at the onset of the current pandemic.