It was a record breaking attendance at the AIRROC Spring Membership Meeting on March 5 & 6. Hosted at the offices of Norton Rose Fulbright in New York City, members held meetings and also heard from great education panels. Read on for highlights for this particular session.
Richard J. Fabian (SVP, General Counsel and Chief Strategy Officer of Riverstone) and Huhnsik Chung (Partner at Stroock) presented on InsurTech in the Runoff Space. They provided insightful commentary and examples of how current and future deployment of technology is both innovating and disrupting the business of insurance, which will have a direct impact on the runoff space.
Richard and Huhnsik began the presentation by addressing how the current deployment of technology is occurring in two ways: First, internally to address pressure points for processes such as operational costs, claims, and underwriting, which directly impact financial returns; and second, in the form of startups focusing on external customer pressure points across the value chain through product innovations on pricing, ease of access, engagement, user experience, and focusing on unserved/underserved markets and the new market demographics of Gen Z/Millennials.
They went through examples of different technologies, which generally focus on creating efficiency, real-time transparency, accuracy, trust, customer acquisition, and better user experiences. They focused on the deployment of AI, Machine Learning, Big Data, Analytics, IOT, Digital Currencies, Cloud Computing, Telematics, P2P, and Blockchain, offering real-life examples in the Insurtech space. Richard then provided a company perspective on how he is deploying technology in his runoff operations in order to create efficiencies in claims handling and business value analysis, which would impact the pricing of business to acquired and would maximize shareholder returns.
One example that Richard provided focused on AI and Machine Learning in the analysis of Big Data in order to more effectively and efficiently handle claims. He addressed how duplicate claim payments by multiple insurers to the same claimant in the asbestos context can been routed out through deployment of this technology. Huhnsik then addressed how technology is being deployed in the underwriting, reinsurance, and capital markets in order to create more effective pricing and efficient access to capital. Richard and Huhnsik also addressed certain regulatory concerns related to the use of technology such as GDPR, use of private information, disclosure requirements, technology that may have a disparate impact on a class of customers, and the potential of a service provider being found engaging in the business of insurance.
In closing, Richard and Huhnsik addressed the use of blockchain in the insurance space by providing an overview of blockchain technology, which is in short a distributed ledger, and then providing actual examples of blockchain in insurance. They focused on the most important characteristics of blockchain that make it useful in the insurance sector, including: (1) prevention of fraud as each transaction is time stamped, immutable, and distributed to all participants; (2) tracking of property by verifying authenticity and condition through a recorded chain of title, along with other relevant information such as claims history; (3) creation of efficiencies and cost reduction as everyone has the same immutable and agreed upon distributed ledger through a consensus mechanism; (4) reliability and accuracy of the information in a secure, encrypted blockchain that cannot be breached, and; (5) maintaining privacy and improving user experience through secure data sharing, such as medical records. The last sample before the Q&A portion was a discussion of blockchain in the cannabis sector and its use in insuring this sector.
Refer to page 28 in Spring 2019 issue for the article. https://www.airroc.org/assets/docs/matters/AIRROC-MATTERS-Spring-2019-Vol-15-No-1.pdf
