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CHICAGO — The explosion of technological applications and the growth of data analytics is reshaping the insurance sector, a panel of industry CEOs said last week.
The introduction of artificial intelligence, robotics and other technologies will automate some work carried out by humans but will also allow companies and their staff and enhance their service offerings, they agreed during The Institutes’ Future of Risk conference in Chicago.
However, they diverged on what effect technology would have on employment levels in the sector.
“If technology is not part of every conversation, you’re not dealing with the subject correctly,” said Dave North, chairman and CEO of Sedgwick Claims Management Services Inc.
Technology pervades every part of the business, from basic office services to financial reporting to employment screening, he said.
Improved data analysis, in particular, is having a significant effect on companies in the insurance sector, said Janice Abraham, president and CEO of United Educators Insurance, a Bethesda, Maryland-based reciprocal risk retention group that provides coverage for educational institutions.
“Data-analytics is huge for us. It’s changing the way we underwrite, the way we prospect for new (clients), the way we handle claims. It’s the area we are looking to hire, it’s really changing the way we think about business,” Ms. Abraham said.
Twenty years ago, for example, United Educators’ application form for coverage was about 15 pages long. “Now, for the most part, we don’t need an application, we can price it from internal and external data,” she said.
Removing the need to manually gather basic risk information allows the insurer to focus on emerging risks, such as sexual molestation, Ms. Abraham said.
Two years ago, United Educators did not have a data analytics department, but now it has one with a staff of six, she said.
“There’s a huge amount of change, but at the core of what we do, the business stays the same: We take people’s risk,” said J. Patrick Gallagher Jr., chairman, president and CEO of Arthur J. Gallagher & Co.
“Data will allow us to specialize down to the minutest risk, it will allow us to have information about what are the risks out there that are emerging … so you will see a tremendous amount of change in how we do it, but the essence of what we do is going to stay the same,” he said.
One of the changes that technology allows is providing data to support insurance purchasing decisions for clients, Mr. Gallagher said.
Brokerage clients demand more information, he said. “They want to know ‘how do I know I’ve got a good deal’ … which is why being able to show them what’s going on in their vertical is really, really important.”
Employment outlook up for debate
While the executives on the panel agreed technology will improve productivity in the insurance sector, they offered different views on what it would mean for employment in the sector.
“I actually think we’ll be doing more with less people,” Ms. Abraham said.
Clerical tasks will be automated, so staff will need to be helped to develop new skills, she said.
But artificial intelligence, robotics and other technological advances will create better jobs for people in the business, Mr. Gallagher said.
Improved technology will allow staff to focus on solving problems, Mr. North said.
“I resist the notion that technology is going to replace human beings. I don’t sit in conversations saying, ‘That’ll be great, build that and we can replace 10 people.’ It’s 10 people that get to be more powerful, do more things, be more productive and be more benefit to our customers because of technology,” he said.
For example, about half of workers compensation claims cost less than $500, which are not worth spending much time analyzing and processing, Mr. North said. The handling of those risks can be automated, which would free people up to focus on more complex and costly exposures.
“We should stop worrying about stuff that our data says is just not going to be a problem,” Mr. North said.
People familiar with technology who use it regularly in their daily lives — the so-called digital natives — will likely accelerate the takeup of technology as they continue to enter the workforce, according to industry sources.