Insurtech revolution is on its way
Technology is changing the retail insurance landscape and it’s only a matter of time before it impacts the “big-ticket” business written in Bermuda.
That is the view of Thomas Dawson, a partner at US law firm Drinker Biddle, who will speak on a panel at a seminar in Hamilton today.
As new ideas emerge for delivering insurance products to an increasingly tech-savvy population who demand convenience, tech entrepreneurs are running up against regulators still trying to adapt rules to the rapid change.
Mr Dawson said Bermuda’s regulators were far more accommodating to innovation than many other jurisdictions, such as the US, where insurance is regulated at state level.
“Some US states are more progressive on technology than others,” Mr Dawson said.
“The Bermuda Monetary Authority has created a regulatory sandbox for the testing of insurtech products — no US state has formally done that.
“There is a mindset at the BMA to support blockchain and insurtech ideas and to foster innovation. Bermuda is a step ahead.”
The focus of today’s event, presented by Drinker Biddle’s Insurance Regulatory and Transaction team and the Bermuda Foundation for Insurance Studies, is “Insurtech Innovation in the US — Current Regulatory Pressure Points”.
He gave some examples of how technology was changing the insurance industry and how regulators were struggling to keep up.
“Regulators don’t like big data,” Mr Dawson said, referring to the mass storage and analysis of reams of information that the advancement of technology has made possible.
For insurers, such a tool is valuable in evaluating risk and in identifying opportunities for new types of coverage. But some regulators fear insurers may use big data to exploit consumers, Mr Dawson said.
He mentioned a company called Trov, whose investors include Munich Re and Sompo Holdings. It enables consumers to buy insurance for specific products and for specific amounts of time, through their smartphones. It uses data from multiple internet sources to estimate the value of the products insured.
Another example is Hippo, a California start-up providing home insurance by leveraging big data, including satellite imagery and municipal building records, to provide rapid quotes and convenience for the consumer.
Centres of technology innovation, such as Silicon Valley, are driving insurtech innovation. But before these ideas can enter the market, they have to be vetted and licensed by regulators — and that is where Drinker Biddle advisers like Mr Dawson are spending a lot of time helping the tech entrepreneurs.
While the delivery of retail insurance is where insurtech is making its biggest mark for now, it will not be long before the commercial insurance and reinsurance written out of Bermuda also feels its effects, Mr Dawson said.
“Bermuda is a wholesale insurance and reinsurance centre and I think insurtech is beginning to hit commercial insurance,” Mr Dawson said. “It’s just a matter of time before such products appear on the market and insurers improve the way they deliver products. It could be already happening but we don’t know about it because it’s proprietary information.
“And you would be surprised at the number of reinsurers with innovation units. Munich Re is at the forefront of insurtech.”
Reinsurers could also benefit from this trend by partnering with insurtech firms, he added.
Today’s event is expected to attract about 100 people and will feature a panel discussion involving Mr Dawson and fellow Drinker Biddle partners Parimah Hassouri, John Mulhern, Michael Byrne and Michael Halsband.
The event will be held in the Trudeau Ballroom at the Hamilton Princess, with registration from 4.30pm. The discussion will run from 5pm to 6pm, with a reception to follow. For more information, e-mail firstname.lastname@example.org
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