PRODUCED BY:
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INTERVIEW WITH
Vanessa Jones
Head of Catastrophe Risk
Innovating Insurance: Understanding Emerging Risks in an Uncertain World
Are insurers making the most of new technology available to them?
If used correctly, technology has significant benefits for our industry. However, at industry level, insurance is not as advanced as it could be in adopting new technologies. The key advantage is what new technology can bring to our broad understanding of the environment in which we operate and to the mitigation of risk. For instance, the earlier an emerging risk is highlighted, and appropriately managed, the more advantageous it is for all parties involved. Applied properly, technology should also help ease the pressure of reporting burdens. Automating basic reporting enables industry professionals to focus their attention and experience on more important matters that add value.
So, while it’s no secret that new technology can lead to several positive outcomes, its successful application in ‘real world’ situations is not always straightforward. Not ensuring they address this issue successfully can hold insurance firms back, putting them at a competitive disadvantage. One of the main reasons for the slow adoption of new technology is the difficulty of retrofitting it and integrating it into older systems and, of course, concomitant data-related legacy issues.
At an industry level, insurance is not as advanced as it could be in adopting new technologies
A solid ESG plan should be based on a risk-analysis matrix.
How can an ESG plan help insurers to invest more responsibly?
Many insurance firms have only recently created an ESG plan. Consequently, while some targets may have been set, it is hard to evaluate how realistic they are: there is, as yet a lack of comparative historical data. A solid ESG plan should be based on a risk-analysis matrix. This will enable review of each portfolio’s exposure against set criteria. Once you have a benchmark, you can set targets for how you would like each portfolio to perform. Over time, this enables you to assess which investments satisfy the criteria of your ESG plan, and you can monitor your strategy and progress.
What is the biggest challenge facing the insurance industry and how can insurers overcome this challenge?
There is no single greatest challenge facing the insurance industry, but rather several interrelated challenges. These have created a complicated and uncertain environment. The nature of the challenges we face is highlighted in the World Economic Forum reports, which demonstrate the interconnectivity between risks. Climate change, geopolitics and pandemics are obvious examples; all create uncertainty in the market but there is no clear ‘winner’ for the title ‘biggest challenge’.
Fundamentally, the future looks less like the past. This creates a challenge for modelling and prediction based on historical data. As a consequence, it’s incredibly important to ensure that your workflows are as efficient as possible, and your data sources are as complete as possible to enable effective decision making. Your data needs to flow cleanly and accurately from its original source to your reporting endpoint so engaging with all the new technology available is critical.
Fundamentally, the future looks less like the past. This creates a challenge for modelling and prediction based on historical data.