The world of commercial insurance has undergone many changes over the past three years. The most notable of these developments is the rapid pace of digitisation, with insurers embracing innovations like artificial intelligence (AI) to streamline their operations, provide higher levels of customer service and conduct more accurate risk assessments. Going forward, the adoption of digital technology will continue to be the key to navigating the commercial insurance sector’s greatest challenge: complexity.
Commenting on this issue is Alicia Narainsamy, Business Head of Digital Distribution at SHA Risk specialists, a division of Santam Limited. In her opinion, the belief that commercial insurance has significantly lagged behind personal insurance, in terms of digital transformation, is a misconception.
As she says: “Underwriters at SHA have been working diligently behind the scenes to employ the use of digital tools to increase our capacity for offering specialised cover for emerging risks and to further streamline operations. We’ve covered much ground with regards to ensuring that our insurance products evolve along with businesses and their needs in a digital world.
For example, we’ve turned to emerging technological tools such as data analytics to unravel the complexities of risk. We’ve also collaborated with insuretech start-ups to develop solutions that are aligned with what the future holds for insurers, their clients and their advisers. Over the COVID-19 lockdowns alone, we saw digital tools like our Pocket Underwriter, grow significantly in terms of the volume of users. Digital tools such as these have the potential to unlock great opportunities and benefits for small business owners as well as brokers,” she adds.
Predictive analysis: an insurer’s window into the future of risk
Talking to the nature of some of these opportunities, Narainsamy says that AI technology in particular, can be a powerful enabler in terms of its ability to help underwriters and insurers make better, more informed decisions. By utilising advanced algorithms and the broad functionalities of machine learning, AI can process and analyse lager amounts of data more efficiently.
As a result, AI is able to identify patterns, anticipate change, make trend forecasts and flag potential risks that may have previously gone unnoticed. By harnessing AI’s predictive capabilities, insurers can apply a proactive approach to assessing new and emerging risks and develop tailored solutions that are innovative and futureproof.
While AI cannot replace human expertise entirely, it can augment decision-making processes by providing data-driven insights and predictions. It can also be used to equip insurers with a deeper understanding of their clients’ risk profiles and insurance needs.
Advancements in fraud detection
A further advantage of digitisation, as Narainsamy explains, is the role of digital technology in combating fraud.
AI, for example, has the ability to collate customer information, claims histories, real-time transactions and policyholder activities. By analysing this information as a cohesive dataset, digital technology can help insurers to identify patterns and anomalies that may be indicative of fraudulent activities.
Furthermore, digital platforms also streamline communication between insurers, brokers, underwriters and clients. This enhanced connectivity enables better information sharing and collaboration, which can in turn help the relevant parties identify fraud at every level of the insurance value chain. In this regard, digital technology equips insurers with the capabilities to detect fraud more timeously.
Empowering brokers to do what they do best
Technology has also enhanced the way in which brokers service their clients. Processes involving extensive paperwork and administration, data entry and policy management were once wholly manual processes that were resource-intensive and time-consuming. Now, by using automation to streamline these tasks, brokers can utilize their time more efficiently toward building customer relations and understanding their client’s needs.
This is immensely beneficial in terms of building customer trust and offering a service that is personalised and specialised. In the long-term, technology is a vital contributor to how effectively brokers can gain and maintain a competitive edge,” says Narainsamy.
Challenges to look out for
The challenge for commercial insurers is to reduce their reliance on traditional methods and legacy systems. Transitioning from these systems to modern digital platforms requires a significant investment of time, resources, and infrastructure.
In addition, given the sensitive nature of customer information, involved in insurance transactions, ensuring robust cybersecurity measures is a crucial factor in the successful and sustainable implementation of digital solutions. For commercial insurers, employing adequate cybersecurity policies and procedures will continue to be a priority as the pace of digitisation continues to accelerate.
As Narainsamy concludes: “The complexity of commercial insurance poses a significant barrier to pervasive digitisation. Commercial insurance involves intricate policies, underwriting procedures and claims management, which can be challenging to translate into a fully digital format. As such, we have invested heavily in finding ways to simplify these complexities and develop user-friendly digital solutions that cater to the unique needs of our customers.”
