Industry already challenged by over-regulation prepares for the onslaught of robo-advisers.
The General Data Protection Regulation (GDPR), which comes with hefty fines for data breaches, is the major tech challenge keeping practitioners in the insurance industry awake at night.
According to a new study by PwC, GDPR – which will be going into effect in May 2018 – is the top business disrupter according to nearly three out of four respondents (70pc).
‘Organising and accessing both internal and external data to derive insights should be high on the change agenda’
– DARREN O’NEILL
Other key business disrupters are changes in distribution channels (67pc), and changes in core and emerging technologies including insurtech.
These trends are also seen as opportunities, said Darren O’Neill, data analytics partner at PwC.
“Following an extended period of relative turbulence and volatility, insurers are now better positioned to look to the future.
“Investing in capability to improve competitiveness and customer experience and address the challenges that disruption and technology innovation will bring should be a key focus.
“Organising and accessing both internal and external data to derive insights should be high on the change agenda. Leveraging data as a strategic asset can help insurers develop new and improved proxies for risk pricing and selection as well as deliver greater insights into customer behaviour.”
Analytics and robo-advisers are an assured thing
According to the study, this is a step-up in the perceived opportunities presented by emerging technologies such as data analytics, artificial intelligence and robotics in 2017 when compared to 2016.
For example, 87pc see the value of data analytics compared to 70pc last year, half see the opportunities presented by artificial intelligence compared to a third last year, and 43pc say robotics and automation will bring opportunities compared to just 20pc last year. One in two also see the value of insurtech.
The role of innovation, including the utilisation of insurance technology, is increasingly evident with CEOs seeing the value, including the use of personal health devices and home technologies. The utilisation of these technologies is primarily being driven by operational efficiency, customer demand and competition.
The top challenges for the Irish insurance industry right now are over-regulation (70pc), cyber-threats (66pc) and skills availability (53pc), although globally these challenges are of much greater concern.
Over a quarter (27pc) of Irish respondents admitted to having experienced a cyberattack in the last few years.
Nearly three-quarters (73pc) reported that the Irish regulatory regime is more demanding when compared to other EU territories. The most competitive international regulatory regimes relative to Ireland were noted as Luxembourg, Bermuda and Frankfurt.
Although nearly two-thirds (63pc) see it as a business disrupter, some recognise Brexit is an opportunity with 26pc of respondents whose companies have UK operations saying their organisation is considering relocating some or all of their operations to Ireland.
The respondents did note challenges to realising Brexit-related opportunities in the form of regulation, infrastructure and accommodation, high personal tax and the availability of talent.
“Insurance and re-insurance in Ireland have undergone significant changes in recent years but these findings show a sector keen to expand through investing in staff and new innovative capabilities to meet customer needs,” said Kevin Thompson, CEO of Insurance Ireland.
“It is also clear that Ireland is in the frame for Brexit-related investments which can enable our continued growth as an international hub for insurance and sustain the 28,000 people employed directly and indirectly in the sector. Insurance Ireland is working with the Government and others to address policy challenges and ensure the sector realises the opportunities available.”