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How will the insurance industry react to new tech risks?

A recent report has identified that the widespread adoption and integration of technology is creating a broad spectrum of new tech risks that many in the insurance sector are currently unprepared for. Digital transformation has been in the driving seat over the past year across all industries, largely due to the impact of the pandemic, which has divided workforces and made it difficult for businesses and consumers to connect. However, is the insurance industry really ready to react to the new tech risks already on the horizon?

How will the insurance industry react to new tech risks

What risks are in question?

While there has been plenty of discussion of the risks that insurers have to tackle as a result of digital transformation and moving to a more tech-driven approach operationally, it’s the risks that are presented by the technologies that require coverage in the years to come where there could now be a potentially significant gap. As technology continues to advance over the next decade it’s going to be necessary for insurers to create entirely new product lines to cope with the risks that are being created -is the industry really prepared for this?

What does the insurance industry need to focus on?

  • Questions around liability. New technology creates many questions around the idea of liability. For example, if a driverless car is the cause of an accident on the roads, who is going to be held liable for any damage that results from this? Insurers that don’t adapt to get clear on this kind of liability will struggle to remain competitive.
  • Opportunities to use existing knowledge of risk to advise customers how to better protect themselves. This could present new ways for insurers to connect with consumers.
  • A 360-degree review of new technology specific to certain areas of insurance. For example, Panasonic has developed a new display for drivers that displays information on the windscreen - key questions need to be considered, including how this will impact car insurance and how policies can incorporate augmented reality. Another piece of tech comes from Nobi and is a ceiling lamp that can detect irregular motion and falls - if it thinks it has detected a fall it will ask “did you fall” - where the answer is positive a caregiver is contacted. But there are big issues to consider around how this will impact risk, including who is liable if the ceiling lamp doesn’t notify anyone.
  • Streamlining and improving legacy tech. Current systems make it very difficult for insurers to update policies in response to new tech coming onto the market and that could be a real stumbling block. The only way for insurers to ensure that they are able to embrace all new risks that arise as a result of this innovation is to invest considerably in digital transformation themselves.

New technology offers opportunities for consumers to enhance their lives, create more security and safety and enjoy a more positive living experience. For insurers who want to continue to give customers what they want, staying on top of the risks these new technologies present is going to be key.

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