Half of IUA Companies Cover Emerging Technologies
More than half of companies polled in a new International Underwriting Association (IUA) survey are already providing insurance for devices linked to the ‘Internet of Things’ and unmanned aerial vehicles (UAVs). The research shows how London Market companies are developing new products to cover emerging technologies, with around 30% of firms already insuring smart medical devices and artificial intelligence.
20 companies were represented in the survey, conducted by the IUA’s Developing Technology Monitoring Group (DTMG). The results show how coverage has expanded significantly since a similar poll in 2018. The proportion of firms offering policies for autonomous vessels, for example, has risen 400%.
Tom Hughes, secretary of the DTMG, said: “Emerging technologies can present a real challenge for insurers due to a lack of historic data upon which to base risk assessments. The results of our survey, however, show that many firms are stepping up to this challenge, working with clients and technology providers to develop effective solutions.”
Ten emerging technologies were identified in the IUA’s research, including electronic sports, virtual and augmented reality, e-scooters and cryptocurrency. On-demand insurance solutions are available for 70% of the ten technologies surveyed. The survey reveals that companies’ distribution channels are aligning with evolving exposures. Systemic risks are now considered a major threat. The Internet of Things, artificial intelligence, smart medical devices, autonomous vehicles, and cryptocurrency rank high as the biggest threats.
When it comes to emerging technologies a big question that needs to be answered is whether there are effective regulatory frameworks in place to support their future use. The answer is that seven out of ten technologies listed saw less than 30% of respondents agreeing that regulation is adequate.
According to the IUA: “Only UAVs, esports and smart medical devises recorded scores of around 50%. In addition to regulation, the availability of trusted data for risk assessment and public perception of risk were cited as key obstacles limiting the development and adoption of new technologies.”
The IUA has completed a daily series of seminars, exploring new risks and opportunities associated with the evolving technologies identified in the survey. The DTMG conference concluded on the 9th March with a panel debate involving expert speakers from client, legal and underwriting backgrounds.
As DOCOsoft has outlines in a previous blog, predictive analytics is part of the future of underwriting. The winners in the new insurance landscape will need to marry insurance expertise with technology knowhow to survive and thrive. We need more digital skills, and knowledge of new technologies. A blend of insurance expertise and technology is the recipe for success. We need to ensure that everybody who works in insurance has a grounding in technology.
CII training, data science and AI insurance should all go hand in hand and hopefully, one day, this will be something that will be accessible for everyone. Insurers must get closer to the original risk, to better understand emerging risks. The ability for a firm to understand tranches of their portfolio and cohorts of their client base is something that the (re)insurers can really sink their teeth into. The objective is to evaluate risk at a much more granular level rather than relying on a ‘mystery box’ for pricing.