Martin Sarjeant, global solutions leader for insurance at FIS, explains how IFRS 17, cloud adoption and automation are shaping today’s insurance landscape
What has changed in the past 12 months with regards to the introduction of IRFS 17?
When we spoke last year, the IFRS 17 standard had only recently been published and our solution was one of the first to the market. Since then we have been enhancing our IFRS 17 solution and rolling it out globally, enabling us to incorporate local requirements and continuous feedback into our ongoing updates.
For example, in Australia some regular premium life insurance contracts may be treated under the premium allocation ppproach (PAA) due to specific terms and conditions and options, unlike other regions. This led us to ensure our libraries have all the different models and the flexibility to meet individual markets’ needs.
We have found that we are one of the only vendors that provides IFRS 17 solutions for life, health and general insurance on a single platform. Insurers increasingly don’t want to deal with multiple platforms for risk management – with FIS, they gain one system, one set of tools and one set of data that can be easily automated and deployed in the cloud.
Speaking of the cloud, how quickly are insurers adopting it?
Three years ago, companies were very wary of putting risk data into the cloud – there was plenty of scepticism about its viability and security. However, risk management is actually ideally suited to cloud computing, as the associated processes typically introduce specific computational peaks.
If you have on-premise hardware to cope with these peaks, that represents a significant outlay for kit that is lying idle for much of the year. With our managed cloud service, insurers pay for what they use and nothing more, making it around 30% less expensive than a traditional in-house data centre.
We offer our managed services based on both Microsoft Azure and Amazon Web Services, so that we can make infrastructure available at the touch of a button and guarantee reliability, security and full management of application and infrastructure.
Security is always an ongoing concern – how are insurers coping?
Security issues present a real barrier to digital innovation. In our annual Readiness Report, which surveyed more than 300 senior insurance executives, we found that concerns around security were slowing the adoption of cloud technologies.
However, it is important for insurers to partner with fintech specialists such as FIS who take security incredibly seriously – from the way we build our products to how we deploy and manage our applications in the cloud. Our research shows how partnerships of this kind are helping the fastest-growing insurers better manage risk and remove obstacles to innovation.
How will AI and other innovations play into the insurance industry?
AI and machine learning are interesting because they can transform risk management when used in conjunction with automation. We now see bots increasingly take on human tasks – retrieving assumptions from websites and populating tables or forms for example. That enables quicker and more accurate processes.
Although general insurers appear to be further ahead with adopting new technologies such as in-car telematics, life and health insurers are starting to catch up. Many now support innovations such as wearables that can monitor customer activity and offer incentives or rebates for good behaviour.
AI can combine with these technologies to provide a faster, less expensive, more accurate view of vast amounts of data. So, when it comes for example to managing a car accident claim, AI can analyse telematic data from prior periods and make connections that no human ever could. This is already transforming areas such as fraud detection. Using AI and machine learning will ensure more fraudulent activity will be caught much sooner and genuine claims get paid faster.
What about big data – how can we handle that when many are still using spreadsheets?
It is true many insurers are still using – and pushing more and more data into – spreadsheets; increasingly asking them to do the same tasks as a database but without the flexibility, scale, speed or governance. As the volume of results generated has exploded over the last 10 years, insurers have moved progressively, albeit slowly, to database technologies.
We have spent considerable time promoting the use of databases to turn this vast universe of data into meaningful information. The next stage will be distributed databases and big data – IFRS 17 is actually a big driver of this and a catalyst for change.