Digitalisation: An enabler of insurance's enduring ambition

A decade ago, many predicted digitalisation would swiftly disrupt insurance. Our industry has clearly changed, but its technological transformation remains a work in progress. For Swiss Re's Robert Burr, digitalisation is first and foremost an enabler for delivering on our industry's enduring ambition: Providing peace of mind to more people by offering them the right protection at the right price.

My first job at a UK life insurer was hand-delivering claims cheques to people after a tragic loss. As a 21-year-old, the experience was sobering and enlightening. It gave me an up-close glimpse of insurance's power to help people amidst a crisis. Throughout my career, I've carried this formative professional experience with me: Insurance is a product with a purpose.

As head of iptiQ, Swiss Re's digital B2B2C insurance company, my view hasn't fundamentally changed. When bad things happen, we step into the breach with financial support. What has changed, however, in the intervening years is ever-more powerful computers and global adoption of the internet have given insurers opportunities to adapt processes, leverage data, create new products and reach new customers in more efficient ways.

In Swiss Re Institute's (SRI) latest sigma publication, "The economics of digitalisation in insurance: new risks, new solutions, new efficiencies", the team assess 29 countries' progress in establishing the technology foundations necessary to drive the digitalisation of insurance forward. SRI experts also take stock of some of the changes that digitalisation has already brought to our industry.

For instance, more than 40% of consumers in advanced markets and 50% in emerging markets have bought insurance online. More and more standardized tasks like data collection or even post-sales customer engagement are being automated. As our ability to incorporate new data sources into our underwriting increases, insurers are also deploying digital tools to wring savings from across their value chains, everything from claims and marketing to distribution and administration.

This, in turn, helps to make insurance products more affordable.

Despite these significant advances, however, I would contend insurance has yet to experience its "Uber moment," an expression borrowed from the ride-hailing, food and freight delivery company to describe big, digitalisation-driven leaps that lead to dramatic shifts in human behaviour. As SRI's sigma points out, potential gains from digitalisation for insurance are far from exhausted.

In other words, our Uber moment remains a work in progress. There are several reasons for this, including key features of the insurance proposition that make change more difficult in our industry than the shift the shook up the taxi business.

For one thing, insurance remains something many people don't wake up thinking about buying. People often buy insurance because they have to, such as for their cars, but put off voluntary covers even if they have a real need to protect their families from potential hardship. We may have shifted from analog to digital, but behavioural and psychological obstacles to buying coverage remain.

The insurance industry is also highly regulated. This may make sense, as policymakers look out for consumer interests. But it sometimes takes longer to disrupt a regulated industry because some of the limits we face can also act as a brake on our innovation efforts.

And finally, in our very traditional, centuries-old industry, insurance companies may be operating many legacy platforms, making it difficult -- and costly -- for them to introduce new technology platforms themselves. That's why it's hard for them to be more agile.

With these challenges holding back swifter adoption of transformative digital tools in the insurance space,  we must ask ourselves a key question: How can we deploy technology in the right ways, so it plays a more meaningful role in engaging prospective insurance consumers?

First, digitalisation in isolation isn't sufficient. But used thoughtfully, it can form the basis of powerful enabling tools to collect, organise and analyse data. This can be used to provide insurers with fresh insights into their customers' broader protection needs, while helping make their clients and partners' digital journeys more rewarding and robust. 

Ideally, tech-led insurance solutions like those we offer via iptiQ support brokers, agents and call centers in helping automate and accelerate insurance transactions, as well as reduce costs. We aim to remove obstacles that have led to some prospective clients abandoning the traditional application process. We enable insurance intermediaries, insurers, and consumer brands to deliver multi-channel insurance buying and servicing experiences to their own customer base more efficiently.

Digital solutions are also well suited to helping overcome the challenges many traditional insurers face because they are encumbered by legacy systems built around individual products. iptiQ's proprietary digital platforms been constructed around customers, allowing our partners to identify promising additional opportunities across their product portfolios to build deeper insurance relationships and boost growth.

Another essential ingredient to the effective deployment and acceptance of technology is digital trust, a topic I've been passionate about for years. There's no single data point to define digital trust. Still, building consumer confidence by focusing on explainability and transparency of technologies such as artificial intelligence or machine learning is also a key means of cultivating regulatory support for further insurance innovation.

Looking across the tech-enabled insurance space in 2023, I see many companies at a common juncture. There's a sharper focus on taking the lessons learned from a decade of digitalisation and applying them to specific areas where technology is best suited to help solve our industry's historic challenge: protecting more people with the right products at the right price.

This was the proposition behind iptiQ when we created it nearly 10 years ago, and it remains front-and-centre. For re/insurers, benefits of digitalisation promise to expand access to fit-for-purpose insurance that addresses needs of groups we have long struggled to meet.

The value of unprotected exposure for all property, life and health risks, like when a breadwinner dies, hit a record USD 1.8 trillion in 2022. Though digitalisation is changing how we pursue the goal of narrowing this insurance protection gap, the fundamentals I learned on my first job remain intact: Making sure we can deliver checks to more families when they need them the most.