The road to digitization – what’s holding back commercial lines insurance?

In conversation with Insurance Business America, he highlighted that one of the biggest disappointments he has seen is the propagation of APIs, which he believes do not serve the customer, the broker or the carrier across a full policy lifecycle.

The opportunities presented by generative AI

On the other hand, he pinpointed generative AI as the technology that has the potential to be truly disruptive for the industry. Collier noted that he – and the wider team at RPS – are spending a lot of time exploring the opportunities presented for generative AI to redefine the business. That’s not to say there aren’t challenges and areas of concern around generative AI, he said, particularly around the question of how to programme out inherent biases.

“But overall, I’m very bullish on generative AI over the next 18 to 24 months,” he said. “For those who have the capability and aptitude to harness it, generative AI will be a game changer for their businesses. So that’s probably the one overarching technology that I think will have the most impact, much more so than the API preponderance that we see nowadays.”

How might generative AI reshape the insurance landscape?

While assessing some of the key ways in which generative AI might impact the insurance market, Collier highlighted that there will still be the requirement for the “firing of synapses” from human brains because, by its nature, insurance is very complicated. However, he believes that this technology will be equipped to handle most of the process. Looking back to his days as an underwriter, he said, he was able to map out maybe five or six correlations when accessing a risk.

“With generative AI, you can look at hundreds of correlations, even 1,000s of correlations,” he said. “… And it’s when you’re going through hundreds of different permutations of correlations that you get these eye-opening moments that are not something a human would find. Generative AI has that capability for day-to-day tasks, so we’re pretty excited about that.

“As an industry, insurance is working to develop the aptitude to harness generative AI, which it doesn’t currently have, in order to best utilize it. So, that’s the challenge facing the sector which is why we [at RPS] have developed teams to try and figure out use cases and put them into practice.”

What’s impeding innovation in insurance?

Collier believes that this challenge is being further compounded by how insurance has fallen somewhat behind its financial services industry peers when it comes to embracing technology. That’s not a blanket statement, however, he said, as personal lines insurance has actually reached a par with the wider industry while commercial lines insurance is flagging behind.  

Personal lines insurance has largely followed in the tracks left by the banking sector, he said, which though once renowned as stodgy and almost prehistoric in its philosophies, has embraced the efficiencies and enhanced customer outcomes made possible by new technologies. Similarly to how a bank’s customers no longer need to drive to a bank to deposit a check, personal lines customers are now able to purchase their insurance policies quickly and easily through the application of technology.

“Commercial lines just isn’t there,” he said. “Part of that is the complexity piece and part of it is the  belief that technology cannot do what we do. Technology can do what we do. I think the commercial insurance sector doesn’t believe that technology can be as smart as we can – and I just don’t think that’s true.”

The advance of technology is running into the human factor that people who have been working in the industry for years do not want to be relegated to the sidelines. Additionally, he said, some of the leaders investing in technology today are being very careful about those investments and potentially shying away from the long-term benefits of technology as weighed against the initial investment required. 

Changing mindsets – the key to embracing digitization

A mindset shift is needed to open up the commercial insurance market to the potential of fully embracing digitization and Collier shared his thoughts on what might be holding it back. One of the challenges is knowledge, he said, and how to share and transfer knowledge in the interests of creating a more engaged marketplace.

“So how do we overcome the impediment?” he asked. “A lot of it is through education, and getting out there to show and tell what technology is capable of. A small pilot or proof of concept goes a long way in showing the success.

“Getting this right comes down to education and knowledge transfer. And I think the industry really needs to start looking at hiring people from outside, who have other philosophies, beliefs, and ideas on how to overcome these challenges.”

Looking at how RPS is navigating this landscape, Collier noted that the firm faces the same challenges as the rest of the market. However, within RPS, he said, there’s a core group of people who are always pushing for change and laying the groundwork to create a strong foundation for future growth, aided by technology.

“It’s up to us to really be the stewards of change by driving that education and knowledge transfer,” he said. “And we recognize the need to put more investment in the ideas and creativity behind some of the solutions that are at our fingertips.”