The focus on data and using it to change behaviour is where JLT Group’s Chief Marketing Officer, Doug Turk, sees the big opportunities around InsurTech.
Everyone is talking InsurTech, bracing themselves for the disruption it threatens and trying to secure a place for themselves in the digital future.
For many traditional players in the insurance market, this is a challenge but, for JLT, it is an opportunity it is embracing with genuine enthusiasm.
“We’re open to disruption,” says Doug Turk, Global Chief Marketing Officer for JLT Group.
This disruption will go much deeper than processes and operational efficiency, which is where many InsurTech initiatives are currently focused, says Turk.
“InsurTech starts with the risk. It is about enabling better risk management, risk mitigation and risk transfer using technology and data. The big opportunity is to change behaviour and improve risk.”
This is why Turk feels a risk specialist such as JLT is well placed to be a major player as InsurTech is developing.
“There is a lot of technology that is chasing solutions, and one of the primary gaps in many of the alternatives that are out there now is a lack of business understanding.
“There is an acute lack of understanding about why and how a particular product line – property, casualty, marine – has developed in the way it has.
“A lot of technology companies that are optimising processes and who are thinking about how to use technology in insurance have an Achilles heel – and that is what you need to understand the market,” adds Turk.
This has led to a focus on processes, which is bringing benefits but is not really unlocking the real opportunities.
These are about changing behaviour to improve risk.
InsurTech risk improvement
The motor/auto insurance market offers a prime example of how InsurTech can move from process to risk improvement, says Turk.
“Many of the solutions have started with the efficiency of the transaction rather than the risk itself. Think about the pay-per-mile insurance options.
“At their core, they are about transactional efficiency based on how much you are driving.
“The feedback from that doesn’t necessarily go towards changing risk behaviour. It goes to the risk transaction.”
The big step will be taking all the data from the growing array of vehicle monitoring systems and using it to control the behaviour of the vehicle, which Turk acknowledges will be a big step because it will mean the driver giving up control of many aspects of vehicle performance.
He says: “In the future, the monitoring system in cars will have controls in them that actually limit revs, limit speed or your ability to take a quick turn.
“When all these sensors can come together, they can fundamentally change behaviour and the risk profile of that vehicle.”
The pros of being proactive
Part of the challenge is to move people from a reactive to a more proactive mentality.
For example, says Turk, motor fleet managers have plenty of monitoring systems available already but these are largely used for recording data that can be used to analyse accidents.
This improves the efficiency of the claims process but doesn’t really influence driver or vehicle behaviour.
This focus on collecting data, aggregating it and using it to change behaviour is where JLT sees the big opportunities around InsurTech and it already has several projects underway to exploit that potential.
In Australia, it is working with the developer of a ‘Fitbit for machines’, which will monitor the performance of equipment, shutting it down when critical levels of performance are reached.
“That is good as far as it goes but what we want to do is take the data output of all that monitoring and aggregate it so we can understand better if one variation in performance is a predictor of failure elsewhere.
We can then change the way the machines are operated.”
This approach is already being adopted in a collaboration between the major US agricultural producer Western Growers, tech developer Altumai and JLT.
The team is currently piloting the use of a wide range of wearable devices in the testing environment of large-scale agricultural production where the workforce is widely dispersed and often working in difficult conditions.
Using specialist wearables that can measure a range of biometrics – how workers bend at the waist, how they are walking, how high they are working and so on – the project aims to improve the risk profile by changing behaviour, says Turk.
“Each of these sensors has its own output so if we can see that someone’s body temperature has jumped we can tell them to take a break and rest in the shade.
“That has an obvious benefit. But the real challenge is in interpreting it and no one has really thought about how those outputs can be tied together.
“We might, for instance, be able to see that a change in someone’s gait combined with data on how they are bending at the waist is a predictor that they are lifting something that is too heavy.
That is when we can really start to impact behaviour.”
Working with risk managers
JLT acknowledges that, in this proof of concept stage, it is vital to work with risk managers.
“For us one of the key drivers is a recognition of the speed at which the world is changing and understanding that we have to change with our clients. We have to work with them to innovate together.
“One thing we are not going to do is assume we know all the answers. We know what we don’t know and continually challenge ourselves,” says Turk.
He also acknowledges that it will fundamentally change the nature of insurance broking.
“The broker of the future is an information broker. It is a company that has the ability to aggregate as many data sources as possible, interpret those sources and then provide an output to someone who is willing to take the transfer risk.”
The implications for the processing side of the business are profound and could happen very quickly: “The gap between the risk and the mitigation is going to get very, very narrow.
“It is going to come together. Then the distance between the loss and the claim is also going to come together,” says Turk.
Beyond that, it is all about using the data to change behaviours and improve risk and that comes back to the marriage between the technology innovators and those who understand the insurance business both in terms of external partnerships and skill sets within JLT.
“We need very good data scientists and that is an investment we are going to make.
“We need them to make sense of the data but then we need the risk specialists to apply that understanding.
“Our data scientists are going to stand shoulder-to-shoulder with those who understand risk.”
For further information, please contact Graham Edwards, Regional Director of Sales and Marketing at Graham_Edwards@jltasia.com