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11 November 2022

How tech is transforming the world of insurance

Automation and digitisation are revolutionising the sector.

By Aidan O'Neill

Insurance makes things possible. It protects us against the risk of something going wrong with our cars, our homes, our possessions or our health. Insurance frees businesses to take risks – while managing the impact if trouble strikes. Technology is rapidly transforming the world of insurance. A new generation of insurtech businesses is reinventing traditional insurance processes, and even the most traditional insurers are getting to grips with a digital future.

Technology creates almost unlimited new possibilities. It’s not unusual now for insurance providers to offer cover by the hour, with premiums based on detailed location and usage data from in-car black boxes, smart watches, or drones. Meanwhile, our increasingly connected material universe, and the so-called Internet of Things, enables real-time monitoring of everything from the contents of your freezer to fire and flood risk.

My own journey on the path that led me to the intersection between insurance and technology began in Japan back in the 1980s. I travelled there from Ireland as a young man on a government-backed scheme to gain experience in the world’s most dynamic technology economy at that time. The years I spent in Japan left a lasting impression. They imbued me with a mindset focused on quality and service that’s informed everything we do at DOCOsoft to this day.

Since setting the company up 15 years ago, we’ve gone from providing document management software right through to the highly sophisticated insurance claims management systems we specialise in now. The combined commitment to innovation and engineering excellence that I encountered in Japan has helped us compete and win against far larger tech companies. As an independent company, with no outside investors to please, we’re free to do things on our own terms and remain completely focused on our customers.

We provide mission-critical back-end systems for global insurance carriers like Munich Re, Chubb, The Hartford and SCOR. More than 30 per cent of Lloyd’s managing agents use our claims management systems, reflecting £15bn in premium income. We processed around £10bn in claims payments during the 2021 calendar year, with roughly half of all claims messages in the London insurance market passing through our platform.

When a claim comes in from a customer, claims handlers need to check it against the relevant insurance policy and a range of other information to take a view on whether that claim should be paid. Our systems bring all the information claims handlers’ needs together into a single dashboard, making the whole process faster and eliminating manual errors. We find ways to automate routine tasks that are adding little value to the claims process. We apply artificial intelligence and machine learning to improve process efficiency and enable data-driven analysis and decision-making.

A lot of what we do in practice is about enabling our customers’ systems to integrate and exchange with other systems and market platforms. Using application programming interface (API) software, we can link to external applications, bringing in data from a broad range of sources to inform and empower the claims management process. In future, Open APIs will massively reduce the time it takes to link to external systems, building up different functionalities like Lego bricks to create systems that are greater than the sum of their parts.

For example, the topic of sanctions has been much in the news recently, and our claims management platform links to official lists of individuals and organisations that are subject to sanctions. This means that when a claim comes in, claims handlers can quickly see whether the beneficiary of any payment is on a sanctions list (in which case, the claim cannot be paid) without them having to leave their dashboard to check lists manually. This accelerates the process and removes the risk of mis-keying or other user error.

Cybersecurity is a huge and rapidly expanding area of risk for all companies and organisations. Insurance companies have stepped up to provide cover against such risks – but they face challenges. Premiums have risen dramatically with the recent increase in criminal and state-sponsored cyberattacks since Russia’s invasion of Ukraine, making cyber-risk increasingly hard to manage and, from an insurance underwriting perspective, to price appropriately.

The reach and potential impact of cyberthreats was vividly illustrated by the recent alleged cyberattack on Lloyd’s of London – an institution at the very heart of the global insurance market. We’re keenly aware of how crucial it is that our own systems are secure. Many companies still use outdated legacy systems. Older in-house hardware is particularly vulnerable, while the best-established cloud-based systems are better secured and supported. Ultimately, insurance companies need to focus on their core activity and outsource their technology to specialists like us, with their back-end systems hosted on the cloud.

Technology opens up a world of new possibilities, but insurance businesses need to take a long hard look at what they hope to use technology for – and the associated implications in terms of costs and benefits, risks and rewards. We collaborate closely with our insurance customers, helping them derive maximum value from a targeted investment in appropriate technology solutions. The insurance sector needs to embrace the potential of new technology, but it must do so with its eyes wide open. That way, insurers can maximise efficiency and profitability, while generating competitive advantage from providing outstanding customer service.

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