By Michael F. Rellosa
It seems everything that we do now involves some aspect of technology, unthinkable the year I was born when things were much simpler and slower. However fast forward to the present where everything is needed ASAP, and where instant gratification is the norm, we need technology to make that happen. Don’t get me wrong, admittedly I hanker for the old times but given todays issues of inclusivity, scarce resources huge populations and an environment rife with risks, we need technology in almost all aspects of our lives.
Let me zero in on Insurance, my area of expertise for over 40 years. We are aware of the dismal 2% penetration rate (and that already includes the life sector) that the Philippines has as compared to the rest of the world or even amongst its ASEAN neighbors. The response, greater inclusivity. How do we make the underserved (read poorer) sectors of society see and benefit from the protection afforded by insurance when in technical aspects they may be higher rated risks and therefore more expensive to write?
This is where technology can help. Let me share some of the more obvious ways in which it can.
Financial inclusivity means opening the market to a larger segment who will only be able to afford a fraction of what traditional insurance costs. Technology allows Insurers to adjust pricing and coverage through predictive analytics by identifying potential risks and trends in real time.
This also means having to administer a huge number of customers and their needs from policy issuance, policy maintenance, premium collection, claims adjudication and servicing among others, at a reduced cost and with greater efficiency. Again, there are existing plug and play solutions that answer each the pain points in each of the operational areas. Solutions that utilize algorithms to make processes faster and less tedious. Tech based Insurers now even boast of paying claims in minutes if done digitally end to end.
The Insurance industry being hundreds of years old, are weighed down by complex legacy environments from its own systems to new stricter and more transparent reportorial requirements. Again, Technology can be a major part of the solution via a long-term Cloud Strategy. The sense of Urgency is there but to move the behemoth insurance industry to change overnight is going to be difficult to say the least, perhaps by hyperscaling, but not every company can do this on their own and would need a service integration layer. This may be something to look out for in the not-too-distant future.
Non-Life Insurance has many different products with its own unique set of issues, however there are commonalities in the servicing and administrative phases. There have been well publicized creation and rolling out of specific digital platforms for a class of business such as Microsoft’s relationship with AXA to launch a digital health-care platform which later became the backbone of Microsoft and Allianz’s plug and play platform that works across the different kind of non-life products.
And the last most important point I want to bring across is Big Data and AI possibilities. As the industry has gathered and is in possession of hundreds of years’ worth of data across a wide range of subjects, Insurers have a scant idea of how valuable this data is and how it could be utilized for the betterment of society. I would not even dare hazard a guess how this marrying of data and AI would end up, scary but exciting as well.
This is the reason why PIRA, the non-life industry’s trade association is collaborating with PLIA (Philippine Life Insurance Association) and Digital Pilipinas in mounting the Philippine Insuretech Festival. Watch this space for more information.