Bermuda: Insurtech Will Reshape Risk Industry
May 26, 2020
Insurtech will continue to transform the risk transfer industry. But to understand how that will happen it is important to consider how the industry has changed in other important ways up to this point, as Natalie Neto and Peter Dunlop, partners at Walkers (Bermuda), tell Bermuda:Re+ILS.
To properly understand just how much insurtech is shaping the Bermudian reinsurance landscape, it is important to consider the extent to which the industry has changed in the past 25 years, says Peter Dunlop, partner in the re/insurance practice at Walkers. He says that several key things have changed in that time.
First, the industry has achieved contractual certainty, which gives the industry and policyholders the comfort to properly understand the terms on which coverages are underwritten. This has reduced the number and nature of re/insurance disputes.
Second, since the financial crisis of 2008, with lower investment yields available, the reinsurance industry has been forced to strive concertedly to achieve combined ratios under 100 percent and, therefore, consistent underwriting profits and reduced expenses. That is no easy task.
Finally, in Bermuda in particular, the insurance-linked securities (ILS) industry has exploded, offering insurers access to new third party capital with the associated diversified investment returns for investors and a lower cost but efficient risk transfer platform with varying alternative loss triggers for insurers.
"Against that background it is plain to see that, above all, insurtech in Bermuda delivers the industry's continued efforts to deliver products more efficiently, to a wider customer base, at lower cost with a greater return on quality data," says Natalie Neto, partner in the corporate practice at Walkers.
"Insurtech will continue to cause creative destruction of existing industry processes," adds Dunlop.
Neto says that Bermuda's re/insurance companies and intermediaries have gone through the process of evaluating how they are currently using, and how they need to deploy, technology and innovation in their own processes and customer delivery.
"There is now a very clear expectation of digitisation of processes, from submission to placement to claims, from the customer end point as more people become used to the capabilities and use cases of digital ledger and artificial intelligence (AI) technologies: customers require a more customised experience and increased use of the internet of things (IoT)," she adds.
"As re/insurers reach more customers, more efficiently, they are able to capture and analyse data from a greater variety of sources in real time meaning that model inputs are higher quality and allow for a shift away from a protection-based model towards a preventive-based model."
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