Insurers remain keenly interested in robotic process automation (RPA), big data, and low-code/no-code environments. RPA has been around for quite a while, but it is still evolving, keeping it in the realm of emerging technology. This has also kept it within the realm of insurer interest.
As is apparent from Novarica’s recent report on Emerging Technology in Insurance, RPA deployment has continued to progress despite the pandemic, especially among L/A insurers. RPA is a band-aid, as Jeff Goldberg and I explained during this week’s Insurer Client and Council Member Panel Virtual Panel on Emerging Tech. Still, RPA can provide significant returns on productivity in a relatively short timeframe.
One of the downsides of RPA is that, as manual back-end processes disappear, so does the institutional knowledge of those processes and why they were designed that way. This can be a hazard if something breaks. So, just as no one would want to wear a band-aid forever, insurers need to plan for what comes after RPA.
Jeff Goldberg also noted that the business case for RPA should focus on more than just cost savings since the repetitive tasks RPA replaces tend to be low-skilled. Instead, CIOs would do well to note the gains in speed and accuracy that also come with RPA.
Big Data, Low Code/No Code, and Blockchain
Another area of significant growth Novarica has noted is big data. As Mitch Wein pointed out, big data is gaining importance as data volume increases—largely due to the continued rise in digital processes, which generate large amounts of data. The tech industry is racing to develop and improve ways to process all that data to benefit underwriting, claims, fraud detection, and more. Insurers worried they are not investing in big data should also consider that the vendors they use probably are: Many are using big data to generate everything from credit to MVR CLUE scores.
Another area of interest for insurers is low-code/no-code solutions. These solutions are best for building custom front-end environments quickly with fewer IT development cycles. However, some insurers at our virtual panel pointed out that many insurers, if not most, still employ their IT staff to build low-code/no-code environments. This is probably for the best, given the sensitivity of front-end production environments. The best-case scenario for low-code/no-code may be that IT departments can deploy and update them faster than other types of environments and with greater customization. This scenario a huge win, even if business folk cannot realistically carry out the work.
Another interesting tidbit discussed during the panel was an area that insurers seem entirely UNinterested in: blockchain. It has gained limited adoption in direct reinsurance and ocean marine—areas where there is extensive paperwork from many parties. Blockchain’s very promise, the immutability of contracts and data stored within it, may also be its greatest weakness. Most parties to a contract would like to retain at least the possibility of renegotiation, if necessary. Moreover, growing data protection laws (e.g., CCPA) mandate that data be editable and deletable.
The Next Emerging Technology
Our panelists agreed that quantum is likely the next technology to emerge among insurers. “It will be the tsunami that changes everything,” Mitch Wein opined. Work on quantum is well underway: Microsoft is developing a new language for quantum computing, and AWS and Google are creating quantum services.
The biggest initial impacts for insurers are likely to come in stochastic modeling and security. In the former, the number of simulations it will be possible to run will grow exponentially, improving risk pricing and fraud detection. Regarding security, quantum threatens to break all existing encryption algorithms, requiring an entirely new approach to securing data.
What lies beyond quantum? Our panelists noted that advancements in biotech and synthetic biology are proceeding rapidly. While they may not immediately impact insurance, there are likely to be unforeseen knock-on effects someday.
Join us for our next Insurer Client and Council Member Virtual Panel on February 2: WFH Now That 2021 Is Here! What’s Next?
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