Trust - The Buzzword at Insurance Innovators Nordics 2023
May 16, 2023
“There is something rotten in the state of Denmark”… Marketforcelive with their great Insurance Innovators event reappeared in Copenhagen in mid-March for the Nordics version after a first (just as great) event in London in the beginning of March. I had the pleasure to attend the event and this time the conference revolved around InsurTechs with some of the top topics being:
Sustainability and ecosystems,
Embedded and open insurance: open APIs and data sharing
AI, Web3 & the metaverse.
All very exciting topics in relation to the future of insurance, and just like FRISS’ trust automation solutions, they all have one thing in common to thrive: trust.
Why Insurance Companies Must Focus on Sustainability and Ecosystems?
As we all know, cutting CO2 emissions is one of the top focus points (if not the top focus point) nowadays. EU countries have committed to reducing greenhouse gas emissions by at least 55% by 2030, and the overall goal is to make the EU climate neutral by 2050. For that to become a reality we all have to chip in, also the insurance companies.
This topic played a role in all three days of the event.
Insurance companies such as Gjensidige Forsikring (Bente Sverdrup & Berit Nilsen) and Trygg-Hansa (Mats Dalquist) told about how they focus on building decentralized ecosystems and solutions that evolve around repairing instead of replacing and on predicting and preventing customers in making insurance claims. If nothing breaks, to begin with, there’s also nothing to repair (or replace).
What’s So Special About Embedded Insurance and Open APIs?
To be able to move forward with creating ecosystems, and partnerships to establish these ecosystems, sharing data via open APIs and embedded insurance comes into the picture.
Embedded insurance is insurance you buy directly and with the product you purchase. The advantage of embedded insurance is that it benefits all stakeholders involved. The customer will benefit from lower premiums, and the insurance and non-insurance companies will benefit from lower customer acquisition costs, lower distribution costs and better loss ratios.
How Do AI, Web3, and The Metaverse Play a Role in Insurance?
During the whole conference, there was obviously also a lot of talk about AI and ChatGTP. Multiple speakers made use of ChatGTP to look up and explain definitions of insurance terms, which were impressively precise and correct.
Also in terms of fraud detection, AI was brought to the table. Can and will AI fully take over the insurance employees’ tasks (claim handlers, SIU investigators, etc.) or will they always be needed? Everybody was in line and agreeing on the latter, but the belief is that it will move more towards an 80/20 rule, where the AI will take care of the 80 percent. This will create time for the claim handlers and investigators to focus on the most important cases and provide better service to those in need. However, there will always be a need for the final human touch.
On the last day of the conference, a more unusual topic in terms of insurance (at least if you ask me) was on the agenda: Web3 and the metaverse.
Evangelos Avramakis from Swiss Re spoke about the potential of the metaverse for insurers. The metaverse is combining the virtual world with the real one. For example, in the metaverse that Nike has created you can virtually buy a shoe that your avatar can use which is unique and one of a kind. Just like you are able to insure an expensive collector item shoe in the real world, should we then also be able to insure the non-fungible token (NFT, the virtual shoe)? He discussed questions like these and also tried to provide some answers to them. It might all seem pretty far out there, but he brought up an interesting comparison: 30 years ago there was nothing called e-commerce and look at where we are today in terms of that. However, his main message was that the key to these things becoming more in the future than just a hot topic today is generating trust.
How This All Relates to Trust
How are we going to have a CO2-neutral EU by 2050 if we don’t trust and believe it is possible? If we don’t trust our insurers to do their best in doing their part, how will we ever reach the goal?
As Sara Forsberg from Omocom presented during the event, for ecosystems to work “trust is a necessary enabler. Insurance will enable trust in renting and purchasing platforms for used products and assets. 68% of consumers state that warranty information is key to buying refurbished”.
With embedded insurance, the consumer gets to buy insurance with a party they already trust and normally “work” with: “They will look to purchase cover from the organizations they know, like, and trust – those they already interact with in their daily lives.” However, if the customer doesn’t believe the embedded insurance to be the best option and the cheapest way to do it, then no trust will be generated and embedded insurance will only ever be a buzzword for today.
By letting AI take over and control the show, the consumer might not trust that the insurance company has their best interest at heart. At the same time, letting AI do some or most of the work will let the claim handler have time to show the empathy and care that in some cases are needed and which is where their passion lies: helping the customer.
For ecosystems and embedded insurance to fully work as the seamless real-time user-friendly experience that it should be, where both the insured trusts the insurer and the insurer trusts the insured, real-time fraud detection is needed: trust automation. This was also part of both Franck Pivert (Wakam) and Sara Forsberg’s (Omocom) presentations at the event.
Well, back to Shakespeare: to trust, or not to trust, that is the question. I believe that if people instill trust in their mindset, processes, and automation, a bright future within insurance is ahead of us. And at FRISS, that's what I and my colleagues strive for every day.