The future of the reinsurance industry is set to be dominated by technological advancements – specifically around generative AI. Accordingly, EY’s Global Insurance Outlook 2024, 52% of insurance CEOs plan on investing significantly into AI this year, with 59% adding that any jobs impacted by AI will be counterbalanced by new roles.
Speaking to Re-Insurance Business, Thom Smith (pictured), executive vice president at G. J. Sullivan – Reinsurance, said that while it’s always a challenge to predict future trends, the impact of new technologies on the industry is most likely a given.
“As an industry, we’ve begun to embrace things like machine learning and blockchain technology,” he said. “But I think we really need to delve more deeply into artificial intelligence, because it has the potential to create a much broader impact. It can help us enhance our underwriting processes, claims management and customer interactions. At GJS Re, we’re anxious to learn how AI can help enhance our business and provide new opportunities.”
Artificial intelligence as a force for good
Smith isn’t alone in his predictions. According to EY’s report, despite employee anxiety around AI stealing their jobs, 58% of insurance CEOs believe that AI is a force for good. For Smith, a commitment to understanding the right ways to implement AI has culminated in him serving as an advisory board member for a newly launched program at the University of San Francisco’s School of Management – the Strategic AI Certificate Program.
“I’m among 25 other advisors but I’m the only one from the insurance world,” he told Re-Insurance Business. “So, I hope to be able to not only learn how other industries and intellectuals view AI and its applications to the real world, but also figure out how AI might help the insurance business. The goal is to be able to share what I learn with clients and with industry associations.”
Another emerging trend Smith sees is the increased collaboration between insurers and other industries – specifically technology companies, healthcare providers and product manufacturers.
“We think these partnerships will provide tailored and more comprehensive insurance solutions,” he said. “We call them ecosystem partnerships. You look at all aspects of a particular business and try to determine who the players are that can help that business improve in whatever areas are needed to make them more insurable.”
For example, Smith said that GJS Re has worked with a software think tank who helps identify and categorize harmful environmental chemicals in industrial operations and consumer products, serving as a valuable resource for underwriters.
“Their data also helps companies improve their processes which can make them more insurable while also benefiting the environment,” he said. “Another aspect is emerging risks. If you see how much new risk has been created by the COVID pandemic, electronic vehicles, evolving technology or even changes in our climate, you begin to understand how valuable the financial protection is that can be offered by insurance to all affected consumers and in all of these industries.”
Getting ahead of new risks
As an industry, Smith acknowledged that it’s traditionally taken a long time to understand new risks – how best to protect the client and at what price. However, he believes that insurance professionals need to consistently ask whether it’s possible to accelerate that process in order to thrive in 2024.
“New insurance products may be required that change the structure of traditional insurance, but we should be willing to search for and adopt those unique concepts,” he said. “A good example is parametric insurance coverage, which is coming into its own. It pays out based on predefined parameters such as weather conditions or seismic activity. It can provide faster claims payments and reduces ambiguity of coverage. We have several clients where this product is a perfect fit for their needs.”
And looking ahead to the future of the sector, Smith thinks there’s a lot of interesting developments on the horizon – and a lot of success for companies willing to adopt them.
“Many people believe the insurance industry is boring,” added Smith. “But there are exciting things happening today and in the future. And if one makes the effort to participate in helping manage risk, it can be quite interesting and rewarding. GJS Re continually surveys the landscape and tries to embrace new information that can help our clients achieve excellence.”
ReInsurance Business – How technology will reshape reinsurance