The IIG had the pleasure of hosting another Insights session on the 25th July 2019. This theme of the session was, the 4th Industrial Revolution which is extremely topical and relevant as the speed of this revolution is forcing us to rethink how we shape our organisations for the future and how we develop solutions in this complex converging environment.
Our host, IIG Deputy President Darryl Grater kicked off the morning event at Hogan Lovells. IIG President Carla Jordan, IIG council members and attendees were welcomed. Our sponsors of the event, Bryte, Chubb, Discovery and Munich Re were thanked for their contribution in making this event possible.
Our presenters of the day:
Alexandra Blair Schudel – Head of Financial Lines at Chubb
Alexandra’s presentation covered Industry 4.0, the Internet of things as well as Artificial Intelligence.
The scene was set by looking at where we come from:
1. The 1st Industrial revolution which was about mechanisation and the use of hands
2. The 2nd Industrial revolution was about the advent of electricity
3. The 3rd Industrial revolution was about the use of computers and automation
4. The 4th Industrial revolution puts it all together. It’s the digitisation of manufacturing, using interconnectivity, human minds and computer. It about connecting all the data with senses and then asking ourselves how we can use this data and what are the possibilities.
To demonstrate just how far we have come, Alexandra played a video of the Kiva robot used by Amazon. This robot helps Amazon with their packaging, the system has improved their inventory without Amazon having to reduce their workforce.
The Internet of Things
In just 5 years the number of connected devices has jumped from 18.2 bn to 42.1 bn. The internet of things has brought tremendous change to the way we do things, this is visible in manufacturing, smart buildings, logistics, agriculture, home automation, etc. The example of home automation used was Alexa. With progress comes risks, and one of the risks highlighted was cyber risks. With risks comes regulatory change and Alexandra highlighted the development of regulation across the world, including South Africa to protect the personal information of customers. The next generation of regulations will focus less on privacy of personal information but rather on the security of systems, standard setting for organisations to limit and manage systemic cyber risk across economies.
Artificial Intelligence (AI)
AI is focused on Big Data, visual perception and speech recognition. Computers are trained to accomplish tasks by processing large amounts of data and recognising patterns in the data. AI relies heavily on machine learning that trains a computer to perform human-like tasks, such as recognising speech, identifying images or making predictions.
Whilst AI in underwriting is not widely utilised, it is possible to automate the entire underwriting process. Some companies offer software that provide more accurate and cost-effective underwriting using machine vision and price analysis based on individual risk factors. AI can be used to improve the speed and accuracy in the claims management process. Examples provided were Naked Insurance and Lemonade to demonstrate the use of AI in claims processing. In Financial Lines AI is being used by Wealth Managers who manage up to $128 bn in assets.
Regulation in AI is currently only UK and USA based which is all about how information is inputted, processed and reported. Penalties for coding errors have been awarded. Data integrity and model errors put companies at risk. The risks are around Civil Liability, Transparency, TCF and Cybercrime.
In the future, for the insurance industry, AI will be used more for underwriting and claims. We will see behaviour-based insurance and increased regulation and enforcement.
Jonathan Walker – CEO of Granadilla (in partnership with Bryte).
Jonathan came into insurance by accident after a bad experience trying to claim for his stolen laptop and cell phone. His vibey presentation on his company Granadilla demonstrated how the company aims to bring excitement back into insurance. Granadilla is a tech company doing insurance and not the other way around. Their category of insurable items includes tech gadgets, gaming, travel, jewellery and home gadgets which is a single offer solution which affords the customer to tailor made their cover. The insurance solution is fully digital and seamless. What makes them even more interesting is their BOT, Nandi, who is integral to what they do. Interestingly was the fact that Granadilla do not employ any actuaries and they are able to easily detect fraud early on to minimise fraudulent claims. Granadilla aims to give all their customers a tailored language and culture experience.
Keith Hewer, (Head of the Global Consulting Unit: Johannesburg) &
Natalie Pakiri (Head of Innovation) from Munich Re: – Digital Transformation.
Keith and Natalie’s presentation highlighted the transformation that can be seen in the industry. The insurance industry is in the midst of digital transformation alongside other industries who are changing with the evolution of their customers expectations. The disruptors in our business are Insurtechs, Insurance startups, Big Tech and large corporates. Graphs were used to demonstrate the need for innovation. With transformation comes risk and opportunity, our speakers highlighted the rise in cybercrime and gave some interesting examples that touched home.
Munich Re as an organization is pioneering the transformation of insurance and our speakers shared some awesome insights into what they are doing. Munich Re have a global FTE network that is invested in research and projects that will enable them to pioneer the transformation of insurance in the digital world. There is currently huge investment in acquisitions based on strategic fit and performance/scalability. Their innovation activities are capitalizing on some major external trends and Munich Re have formed some interesting partnerships such as InsurTech Drone, Plug & Play and Insurtech Vertical. Looking ahead our presenters shared some interesting facts about motor insurance and how and the way people and goods will move in the future will be fundamentally different to how we currently understand it to be.
Matt Smith from Discovery
Matt had the graveyard shift, but his presentation certainly kept us present to what he was sharing.
He had us all gasping when he explained that 1 zettabyte = 1000 billion gigabytes. Matt also explained what machine learning means, however, he emphasised that machine plus human makes for better results. Matt explained supervised learning, which is much like Netflix. It uses regression and classification techniques to come up with predictive models. Unsupervised learning is when natural patterns within the data are identified. Matt gave a good example of the Pampers and beer isle at Walmart. The rise in popularity of machine learning can be seen in the growing use of Facebook, Uber, Netflix, Google and Siri.
Matt did well to explain the mechanics of machine learning to us. He emphasised data preparation, which removes duplication and inconsistent data, to applying algorithms to the data to deploying the chosen model. Companies and executives are interested in Big Data, over 75% have started to invest in it. 85% of customer interaction will be driven by big data in the future. There is a massive potential for machine learning in insurance, areas of opportunity include customer experience, policy servicing, distribution, product development, claims and new business and underwriting.
The benefits of machine learning are improved risk assessments, reduction in fraud, enhanced process efficiency, efficient allocation of resources and customer value. As we anticipate the growth in commercial insurance, we must gear up for technology-enabled risk assessment.
There was a Q&A session after every speaker, each speaker dealt with a number of questions showing that the audience was kept engaged and interested at all times. The audience also had an opportunity to engage with the speakers at the end of the session over coffee and a cup cake.
This was a fully packed Insights session with 5 speakers and a very exciting theme covered. Our presenters did a fantastic job in presenting the audience with a diverse presentation on the same theme. The session was closed by Daphne Peter, head of education at the IIG and the sponsors where thanked again for their support.
Article by Tshepiso Choco