Wearable gadgets alerting workers they are in danger of causing themselves long-term physical harm, and driverless cars erasing the need for $20 billion of insurance, are among likely impacts on the insurance sector from advancing technology.

A glimpse of how insurance technology, or InsurTech, is reshaping the insurance and reinsurance sector, was presented at the 2016 Bermuda Reinsurance Conference.

Martha Notaras, a partner at XL Innovate, said the attractiveness of the sector to technology providers was easy to understand. Referencing the $5 trillion insurance industry, she said: “People on the outside see the figure $5 trillion; that there is a market there not being well served by technology.”

Panel discussion moderator Jamie Yoder, PwC Global Insurance Advisory practice leader, said: “We have seen unprecedented levels of innovation and investment occurring. How technology and data is being applied and developed and changing all aspects, from how we engage with customers and how we understand risk insights, to improved efficiencies.”

He said that in the insurance industry during the last few years there has been a five-times increase in the level of technology investment.

Aspects of how InsurTech is impacting the sector were discussed by a four-person panel at the conference, held at the Hamilton Princess and presented by S&P Global Ratings and PwC Bermuda.

Robert Bauer, managing director, commercial strategy and innovation with AIG, gave an example by showing how technology can be applied by oil, gas and construction-related companies where work-related lower back injuries and such like are an issue. He said workers can now use technologies such as “wearables” that give biometric data feedback.

“Wearables can sense and give you some reading indicators, and you don’t have to wait for claims to develop,” he said.

“They can send the worker a signal on a regular basis to make them realise that if they move 20 more times in a certain direction today, and 20 more times tomorrow, then 20 years from now they are going to have an injury; you can help them realise that today.

“Not only does it help the worker, it decreases hospital bills and also aligns the interests of the worker, employer, the insurer and the reinsurer, and genuinely decreases risk.”

Mr Bauer wondered how long it will be before insurers and others differentiate themselves from others on the basis of “not making those bad things happen”.

Highlighting the disruptive nature of technology on past industry models, Kevin Shearan, chief information officer at Chubb Ltd, said: “A lot of this does reduce risk. That gives us a bit of a dilemma, because the last time I checked we charged for taking risk.”

He said that as the extent of technological changes becomes apparent and brings changes to the industry, the question would be: “How do businesses that we support move from an exchange capital relationship to a fee-based relationship?”

Meanwhile, Mr Bauer gave a further example of the impact of technology on the insurance sector, when he said that by 2022, some 99 per cent of new cars in the US will have automatic braking as standard. He said another report predicted autonomous vehicles will take “as much as $20 billion out of the insurance market”.

“So insurers and others have a choice. We can either be enablers and figure out how can we join with customers and the customers’ customers that will need to experiment to get 99 per cent of new cars to have automatic emergency brakes,” said Mr Bauer.

“Think about the component manufacturers that are going to be experimenting, think about all the service providers, all the sensors, all the components in this value chain that will need to be experimented with. And think of all the risk that is involved with that and the shifts that are happening.

“We think if we are not learning with our customers and being part of this, we are going to be left out.”