Exclusive: ‘Why insurers should stop fearing technology’ – Stephanie Smith, Allianz in “The Fintech Magazine”

Insurtech has the potential to offer new revenue streams and to even help restore the public perception of the insurance industry, as Stephanie Smith, Chief Operating Officer at Allianz, explains to financial data experts FinTech Global

The insurance industry is no stranger to using the latest technologies, giving rise to an entire new sector dubbed insurtech. The innovators in this industry are utilising blockchain, artificial intelligence (AI), natural language processing (NLP) and other new solutions to provide better services.

By doing so, they are not only able to help consumers find more personalised coverage, but also empower insurers to streamline and accelerate claims processing as well as, in some cases, even reunite clients with lost property. Clearly, technology has provided a wealth of opportunities for the industry. One of the people who has had first-hand experience of this technology revolution is Stephanie Smith, chief operating officer at Allianz, the financial services firm and insurance provider.

“Much more exciting is what we’re getting off the back of data and connected data, because it’s opening up new avenues for the industry,” she says. As an example, she points to how insurers can leverage geospatial data to identify land areas that are at high risk of flooding and how this enables personalised cover and better risk control.

Several insurtechs are already utilising this geospatial data in their offering. Tensorflight is one of them. The company provides an AI-powered platform combining geospatial imagery with machine learning algorithms to help insurers better understand their risks. It can account for building footprints, construction type, roof pitch, number of storeys and more.

This does not mean technology can only help small segments of customers – collating publicly available information can, for example, reduce onboarding times for everyone. Not only is insurtech providing customers with new services, but it’s also easing their current interactions with insurance firms.

“By connecting data available in the public domain, you can make customers’ lives easier,” Smith explains. “So, we don’t have to ask them a suite of questions. We can draw information from public sources to make that process much slicker and simpler.”

Big data, big money

Moving beyond publicly available data, technology has become ingrained into our daily life and is still finding more ways to play a part in what we do. Most of these interactions with technology can be turned into data and used by companies. Putting aside the fear that everything we do nowadays relies on technology and is hoarding information about us, there are a lot of new personalised services available because of this. Within the engineering inspection space, Allianz is using black boxes on wind turbines to help it take a more preventative position on risk.

“By looking at how something is performing, you can actually stop someone having to claim because you can give them guidance up front,” Smith says. “So, I think that technology, the proactive enablement piece, is quite exciting as well.”

Insurtech could also help insurers work on their image, which is something they seem to be in dire need of. A recent study from YouGov claimed that 68 per cent of Britons believe insurance companies would do whatever it takes to avoid paying out in the event of a legitimate claim.

Another area of grievance from consumers is the use of complex language. Making use of data to create personalised and simplified experiences for consumers can help with this. For example, automatically collecting geospatial data after a flood or black box information from cars can quickly supply information on a potential claim. Not only will this ensure claims are paid out when needed but it will alleviate the stress on claimants.

“I think it’s important to remind ourselves of the fundamentals of why we’re here,” Smith adds. “It’s about giving people the confidence to get on with their lives and look to the future. That’s the bit that is core to what we do and it won’t change. But I think, if you look at the technology capabilities, you’ve got to help speed up that engagement, make people feel more comfortable and more confident, have a preventative focus as well, using things like the Internet of Things. In the future, insurance will be more technically enabled, but will never eradicate the need for us to support our customers and provide an assisted service for them.”

Still, she points out that embracing and adopting new technology is not something that is done overnight. For Allianz, it has been a long process to welcome new innovations, which is understandable given the company is more than 100 years old and has a global presence. While this might have slowed down the insurer, it has not stopped it.

Allianz has made efforts to embrace new technologies, even establishing a handful of investment arms which are taking a keen interest in the fintech sector. One of these is Allianz X, which has a total fund size of €1billion to invest into startups across the mobility, property, health, wealth management, data intelligence and cybersecurity spaces.

As an example, the firm recently invested in the German open source software platform SDA SE Open Industry Solutions. The company supports the digitisation of businesses, enabling clients to integrate existing IT systems with new digital services. Through this, insurance firms can deploy new services quickly and bolster customer touchpoints. Smith says that Allianz is looking for partnerships where it can couple its traditional skills around underwriting with new thinking coming through the fintech community. Such partnering with new insurtech startups can help incumbents re-engineer their customer interactions and create an environment and architecture that lets them put an interaction layer between customer activity and legacy systems.

“I think the challenge for all businesses is that you don’t want to be a laggard,” adds Smith. “You’ve got to get with the programme and not be a Kodak where you sort of deny the fact that technology is changing and moving at an incredible pace. For Allianz, as a leader in this environment, it’s about getting the best balance between running the business day to day and investing in the future. And that is a not an easy balance to strike.”

Allianz’s efforts are a sign that the anxiety about the fintech wave replacing traditional players has died and organisations are working together to evolve insurance. A few years back telematics was being heavily publicised as the new revolution in car insuranceand it did change the segment, but in a niche way. There was no a dramatic overhaul. Realising this coexistence could be why insurtech has not witnessed the same crash as the dotcom bubble did. Investors’ interests have clearly been piqued, with more than $13.5billion being invested into the space since 2014, according to FinTech Global’s data.

Smith reminds insurance companies that their role is to make consumers feel safe. “And in order for us to deliver that service, we need to make sure that it’s hassle-free and gives customers security,” she says. “So, from my perspective, if you keep true to those core principles of why we’re here and what insurance is about, actually, there’s opportunity that comes from tighter regulation and real focus on demand from our customer. Embracing that is the key.”


This article was published in The Fintech Magazine: Issue #15, Page 112 & 113.

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