A handful of accelerating insurance technologies are poised to transform the insurance industry and its regulatory landscape. Over the last few years, new technologies have become more available and widely used by insurers, pension funds and regulatory authorities. Many have tapped artificial intelligence (AI), machine learning (ML) and software solutions to pursue the objectives of their digital transformation strategies. The ‘endless’ list of these intelligent technologies designed to revolutionize the insurance sector in multiple ways are collectively called ‘InsurTech’.
Just week ago, Europe’s Leading Insurtech Community gathered at Insurtech Insights Conference in London to learn more about the innovative technologies that help insurance sector actors to navigate the unique challenges of insurance development in emerging markets. During one of the sessions, participants witnessed a thought-provoking conversation between panelists and AI language model, ChatGPT. Discussing the ethics of AI in insurance, panelists have outlined that now we have reached an inflection point: 'AI won't replace human professionals, but those who use it will replace those who don’t'. For sure, it is a time when business, regulatory sector and different types of technologies go hand in hand to transform and scale the insurance industry ecosystem for good.
Developing tech solutions that already took their niche in the InsurTech universe and constantly expanding our services & products portfolio, at BR-AG we have always been taking a great interest in the latest tech innovations and their future impacts. Understanding the current impacts and anticipating transformative trends might be challenging and hard to predict. We decided to make it in an unusual way either and chat about the impacts of InsurTechs with the representative of the other side – technology itself, ChatGPT. It is a new AI-based chatbot that has gone viral since its release and quickly become the latest fad in tech.
Nowadays, it is a well-known fact that AI applications have myriad varieties and affect many industries. Will AI-based technology, like ChatGPT, create a massive impact on InsurTech? Soon we’ll see. Meanwhile, let’s discover where our conversation with ChatGPT about InsurTech impacts and key trends for 2023 got us.
Starting with the basics
‘InsurTech is a term used to describe the use of technology to innovate and improve the insurance industry. It combines the words "insurance" and "technology", and refers to a range of digital solutions, including mobile apps, data analytics, artificial intelligence, and blockchain, to improve the way insurance companies operate and interact with customers, as well as to streamline and automate their processes and reduce operating costs.’
That is an, admittedly, intelligent and precise response that we got from ChatGPT answering simple question – What is InsurTech?
Frankly speaking, insurance has long been viewed by many as laggard industry through the prism of new technology. Now, things have dramatically changed and the numbers of the latest statistics speak for themselves. The global InsurTech market size was valued at USD 5.45 billion in 2022 and is expected to expand at a compound annual growth rate of 52.7% from 2023 to 2030.
The main thing is to keep the main thing the main thing
Regulators and supervised entities of the insurance sector should remain insurance-centered first, each in its own direction. It means that cutting-edge technologies came to significantly improve their regular processes, while insurance industry actors may focus on the competitive strategies, core business operations and objectives - whether they are regulatory, supervisory, or commercial ones. Introduction of such technologies is mainly resulted in streamlining and automating the existing regular activities, like regulatory reporting, collection of data, regulatory change management and other, making them more efficient and less human-dependent, and, consequently, less time-consuming.
‘Overall, InsurTech has the potential to greatly benefit regulatory authorities by improving data collection and analysis, enhancing monitoring and compliance, increasing transparency and accountability, and facilitating more efficient communication and collaboration. For example, digital platforms can be used to facilitate information sharing and streamline regulatory processes, making it easier for all parties to comply with regulations and operate more efficiently.’, - ChatGPT said answering the question about how InsurTech helps authorities which regulate the insurance sector.
When it comes to regulatory authorities - The results achieved by the European Insurance and Occupational Pensions Authority (EIOPA) using metadata management and modelling platform ATOME Matter to manage the regulatory reporting requirements for insurance and pension funds sector in the EU, proved the success of powerful alliance of the authority and technology.
Read more about the results of such alliance in EIOPA’s Plan for reporting taxonomy releases at the link.
In particular, ATOME supports the European Insurance and Occupational Pensions Authority (EIOPA) in the process of production of data models (DPM) and XBRL materials, enabling users to cross-check their understanding of data requirements which is crucial when changes and updates are planned and introduced in subsequent cycles of reporting.
When it comes to insurance companies, ChatGPT emphasized – 'By leveraging technology, insurers can stay ahead of regulatory changes and focus on their core business operation'. Going deeper into streamlining the insurer’s data management processes with InsurTech, ChatGPT focused on the undisputable benefits arising from the automation of regulatory reporting, the complexity of which has significantly grown.
Moreover, we were quite impressed with ChatGPT’s answer regarding the benefits brought to the Regulatory reporting cycle by InsurTech capacities. Follow its fascinating thinking with us:
‘One of the ways that InsurTech can help with regulatory reporting for insurance is by providing solutions that automate and simplify the process of collecting, analyzing, and reporting data to regulatory bodies:
Data collection and aggregation: InsurTech solutions can be used to collect and aggregate data from multiple sources, including internal systems and external data providers.
Compliance monitoring: InsurTech solutions can help insurers monitor their compliance with regulatory requirements by providing real-time alerts and notifications when certain thresholds are met or exceeded.
Reporting automation: InsurTech solutions can automate the process of generating regulatory reports by pulling data from multiple sources and populating the necessary forms and templates.
Data analysis: InsurTech solutions can also be used to analyze and interpret the data that is collected for regulatory reporting purposes.’
Definitely, regulatory reporting in the insurance sector is one of the areas that can benefit greatly from intelligent technologies. Regulatory reporting software, like ATOME Particles, that automates the collection, sourcing and management of data to report, performs the data validation, transforms it to the required formats, e.g XBRL, and runs quality checks against tried and proven validation rules to achieve ultimate regulatory reporting compliance.
Analysing the InsurTech trends in 2023 together with ChatGPT
In 2023 the insurance industry is likely to witness the beginning of the final stretch of digital transformation accompanied by greater use of the software capabilities for regulatory reporting and change management, APIs, hybrid cloud architectures, AI and ML applications, as well as emerging but still nascent technologies like blockchain and digital twins.
These technologies are constantly evolving, therefore keeping up can be a challenge. Moreover, in some cases, it is harder than ever to distinguish hype from real value.
One thing is clear, and here we agree with ChatGPT’s conclusion, that generally, all the introduced or planned technologies are about to bring more clarity to data, enhance its tech-driven management, streamline operations and automate highly labor-intensive and time-consuming processes – enabling insurance sector actors to complete thousands of hours of manual work in mere minutes with reduced or no human involvement.
Unexpectedly, ChatGPT has also emphasized the increased focus on ESG factors in the insurance sector. New sustainability impact requirements integrated into Solvency II and IDD frameworks that came into force on August 2, 2022, have demonstrated that ESG ambition is actually translating into action.
Earlier, EIOPA presented key areas of its activity on sustainable finance for 2022-2024. It is important to note that integration of the ESG risks in the prudential framework of insurers and pension funds, promotion of sustainability disclosures and a sustainable conduct of business framework are listed among others, that make insurers to sharpen their lens on sustainability factors either.
Recently, EIOPA has also issued an opinion on the first draft set of EU Sustainability Reporting Standards (ESRS) being developed by the European Financial Reporting Advisory Group (EFRAG) to outline requirements for detailed corporate reporting on a broad range of environmental, social, and governance (ESG) issues. We have also written about that here.
On March 13, 2023, the European Central Bank and the European Supervisory Authorities issue a statement that should encourage disclosure standards for securitised assets with additional climate data requirements. Read the statement here.
ATOME Platform was designed by BR-AG experts to cover the broad spectrum of the insurance sector incumbents’ needs supporting regulatory data management, automated data collection and data validation, as well as regulatory reporting processes. Combined with in-depth expertise and consulting services, ATOME technology helps both regulators and supervised entities within the insurance sector drive efficiency, effectiveness, and productivity along their data value chains.
Reach out to us to discover more about how ATOME may support your needs: