“The future is here; it’s just uneven.”
- Bill Pieroni, CEO of the Association for Cooperative Operations Research and Development (ACORD), discusses the vital role of risk managers in the ever-changing insurance industry.
- Pieroni emphasizes the significance of understanding the customer’s role and digital maturity in shaping the industry.
The Role of Risk Managers in Shaping the Industry:
- Pieroni highlights the customer’s role in insurance and the influence of risk managers as buyers.
- Digitally mature carriers are experiencing faster growth and higher profits, mainly due to risk managers’ decisions.
- ACORD’s annual study shows that highly digitally mature carriers outperform others in growth, combined ratios, customer satisfaction, and shareholder returns.
ACORD’s Contribution to the Insurance Industry:
- ACORD has developed data standards defining key insurance elements, supporting 1,200 standardized transaction types across various stakeholders in the insurance industry.
- Data and connectivity are essential in the insurance industry, enabling efficient and effective operations.
Uneven Distribution of the Future:
- Pieroni notes that the insurance industry’s future is unevenly distributed, with highly digitally mature carriers outperforming others.
- The COVID-19 pandemic accelerated digital transformation in the industry, impacting digital laggards negatively.
Challenges in Attracting Talent:
- Attracting high-skill talent is crucial for insurance organizations, especially as the industry faces an aging workforce.
- Insurance ranks low as a preferred profession among recent graduates, making it challenging to attract top talent.
- Legacy-powered firms with outdated infrastructure struggle to attract talent.
Focus Areas for Insurtechs:
- Pieroni advises insurance companies to focus on improving claims adjudication and underwriting processes.
- Claims and underwriting represent significant expenses in the insurance industry, making them critical areas for innovation.
- Addressing these areas can lead to greater efficiency and effectiveness in handling premium dollars.
AI as Applied Statistics:
- Pieroni views artificial intelligence (AI) as applied statistics and believes it will augment, not replace human roles.
- He emphasizes that AI is transformative but should not be feared and likens it to other technologies that enhance productivity.
- The key to AI’s success lies in improving individual productivity.
Addressing the Underinsurance Gap:
- Pieroni suggests that regulators should support insurance in emerging markets to promote stability.
- He notes that there has been more growth and profitability in mature markets over the last decade.
- Risk managers should prioritize understanding their insurance providers’ financial stability and claims-paying ability.
The Darwinian Evolution of the Industry:
- Pieroni describes the insurance industry as a “Darwinian evolution” where natural selection plays a role.
- Competent risk managers prioritize value over the cheapest price, contributing to the industry’s evolution.
- Pieroni encourages risk managers to understand their role in shaping the industry’s future.