Insuranceciooutlook

How is Technology Empowering Reinsurers?

By Insurance CIO Outlook | Wednesday, October 16, 2019

Reinsurance businesses are blossoming, and thanks to some of the advanced technologies that have enabled consistency and better risk management.   

FREMONT, CA: Advanced technologies have become disruptive forces in the reinsurance industry today. Reinsurance providers are in a position to take advantage of the technological solutions and expertise to achieve streamlined and intelligence-driven business operations that guarantee better outcomes. A couple of technologies like blockchain and real-time analytics are expected to make a majority of the difference in the reinsurance landscape. With innovation-driven insurtech startups and technology companies providing reinsurance-oriented software solutions, the industry now has the opportunity to enter a realm of improved efficiency and robustness.

The demand for reinsurance firms has risen steadily in the run-up to the ongoing digital transformation as insurance firms look to transmit risks. Insurance companies are under a spell of rapid digitalization, making their operations vulnerable to financial and cybersecurity risks. Reinsurance companies offer risk transfer mechanisms that are integral for effective management of risks. Blockchain and real-time analytics are playing a valuable role in helping reinsurance companies deliver the best services. Here's how.

• Reconstructing Reinsurance with Blockchain

Blockchain technology is extremely meaningful for the reinsurance industry. From making transactions faster and safer to decreasing the administrative workload, blockchain can do it all. Blockchain, otherwise known as distributed ledger technology, has many desirable features like smart contracts, decentralized transactions, and immutable records. These features make it highly appropriate for reinsurance companies that require accountability and transparency in operations. Given that contracting parties are able to access data, peer-to-peer processes get a boost, reducing the need for involvement of third-party players and unnecessary administrative bottlenecks.

When adopted, blockchain technology is expected to have a wide-scale impact. It will facilitate secure digital contracts among multiple parties and will be recorded in auditable ways, reducing the risks of mismanagement and frauds. Owing to accurate recording, communication will be streamlined, subsequently reducing the costs of functioning for reinsurers. A report by PwC has stated that reinsurers will be entitled to cost savings amounting to more than $5 billion. Another statement made in the same report talks about how claims leakage will reduce, bringing down current expenses by 15 to 25 percent. Several international consortiums of insurance and reinsurance providers have acknowledged the potential of blockchain and are looking forward to its wider adoption, according to verified sources.

• Inducing Intelligence with Real-time Analytics

The insurance and reinsurance firms are already making use of data analytics solutions in various ways. Real-time analytics is the next big technology that is going to disrupt reinsurance business. While data analytics is powerful enough, it does not provide immediate results. In a market that changes in dynamic ways within seconds, businesses miss out on several opportunities due to the lack of real-time insights. With insurtech companies offering tools that enable reinsurance companies to make real-time analytics a reality, business prospects are being revolutionized, and risk selection is becoming better. By applying real-time analytics, reinsurers can instantaneously calculate the impact of market scenarios and make necessary changes to prevent losses. Planning and strategizing get an edge of intelligence that is crucial from the perspective of competitiveness. Reinsurance companies can create unmatched business opportunity by infusing real-time analytics into operational systems. 

Technology is increasing the capability of reinsurance firms to absorb risks in an efficient and intelligent manner. Reinsurance companies can provide services at lesser costs while ensuring better customer satisfaction. Overall, technologies are propelling reinsurance players forward on the growth trajectory. 

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