Disruption is coming to the insurance industry — and for those who fail to adapt and innovate, it will be disastrous.

That was the consensus among a panel of experts who spoke at a conference in Hamilton yesterday.

They described how a transformation of the industry is already under way, driven by cutting-edge technology including blockchain, robotics and big data.

Delegates at the EY Global (Re)Insurance Outlook in association with The Insurance Insider heard how modern consumers want to buy their insurance online with minimal complication and how many companies were offering such services.

However, Jed Rhoads, president and chief underwriting officer of global reinsurance for Markel Re, said the more complex the policy or contract, the more difficult it would be to “disrupt” — although all parts of the industry could expect to be disrupted eventually.

“Direct consumer products will be disrupted quicker because they’re simpler,” Mr Rhoads said. “Then it will be small commercial, large commercial, industrial and then reinsurance — it will flow up the complexity levels of the products we are selling.”

The complexity was the reason that reinsurance, in particular, would be more complicated to simplify to the kind of straightforward online transactions being seen in other financial services.

“We are not selling a rental home, a car, or a mortgage,” Mr Rhoads said.” Our product is complex. We are in the claims-paying business — people have losses and we are expected to cover those losses.

“We employ legions of claims people and legions of attorneys, because of the question, is this claim covered or not?”

Kathleen Faries, who heads Tokio Millennium Re’s Bermuda operations, posed the question of whether the complexity within some insurance products was “self-serving”.

“How do we differentiate ourselves?” Ms Faries said. “It’s in this area of complexity. Maybe if there were less complexity — and buyers were willing to give up some of that complexity in exchange for a cheaper product and quicker claims payments — then maybe we could get to something that’s easier to distribute. Maybe blockchain will lead us there.”

She added that reinsurance was largely a syndicated product and so broad buy-in would be needed for blockchain to have a meaningful impact.

The panel also touched on millennials and their likely impact on the industry, both as employees and customers.

Ryan Mather, CEO of Ariel Re, said the industry was attracting more talented people than it used to. “These days we have Oxbridge and Ivy League mathematicians coming in,” he said. “They understand things better and quicker. The industry has more brainpower than ever.”

Ms Faries said that as more millennials became embedded within the industry, they would question the old way of doing things and the duplication of tasks by reinsurers, brokers and cedants. They would help to bring about greater efficiency and an improved experience for customers, she added.

Mr Rhoads said that while millennials were comfortable dealing with large amounts of data that were becoming increasingly available to the industry, he said they would still need to learn about the qualitative side of the business.

“It’s not all numbers,” Mr Rhoads said. “You’re still going to need a few grizzled reinsurance executives who’ve stepped in a few puddles during their career and learned from it.”

He added that attracting millennial talent was not proving to be as difficult as the industry had feared after surveys suggested young people considered the insurance industry “boring” and lacking in purpose.

“We are flooded with resumes of graduates right out of college,” Mr Rhoads said. “Perhaps we are attractive because we’re dealing with big numbers and we fit into their comfort zone of using a piece of electronic equipment.”

Chris Maiato, principal with EY, said millennials were now becoming buyers of commercial insurance and tended to buy policies tailored to very specific items — and they wanted convenience in purchasing.

Mr Maiato said: “They are thinking, ‘I want to insure my commercial premises online in ten minutes and I don’t want to speak with a broker. And if I can’t do that with you, I’ll go somewhere else’.”

All panellists agreed that disruption was happening, whether the industry liked it or not — and that it was a positive thing for the industry.

“It’s brilliant for the consumer and a complete disaster for those who don’t innovate,” Mr Mather said.