“The future is here; it’s just uneven.”

Introduction:

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Legacy-powered firms with outdated infrastructure struggle to attract talent.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.

“The future is here; it’s just uneven”