Written by Rob Bauer, leads AIG’s Innovation and Sharing Economy Group
The biggest change to risk management in the last three to five years is the power we’ve developed to know more about risks than ever before. It also links directly to why AIG is looking forward to working with the insurtechs chosen to join this year’s Fintech Innovation Lab.
At AIG we want to work with insurtechs who can help us sharpen our knowledge of risk in six areas where information is increasingly available and connected. Those six areas—connected workers, connected auto fleets, connected cybernetics, connected property and buildings, connected industrial ecosystems and connected supply chains—cover a range of property and casualty insurance underwriting. Whether it’s workers’ compensation, business interruption, property damage or auto liability, those six connected areas extend through just about every product line.
There’s a sea change underway in insurance where insurtechs have an integral role. Advanced technologies and interconnected information can tell us a lot about risk, how exposures can be lessened, and how accidents can actually be prevented from occurring in the first place. All this, ultimately, raises our clients’ ability to avoid losses and claims.
To put that in perspective, not too many years ago car insurance premiums were based at least partially on the color of the vehicle—red deemed riskier than black, for instance. Contrast that to what we know today through sensorization. We’re able to track a car down to its component parts, project when they might break down, monitor functionality along the way, and alert the mechanic and driver when timely intervention should be scheduled.
AIG worked with a European car rental client to allow drivers to opt in to using telematics to monitor safe driving, assign a real-time safety score and reward the best behavior. The result was a 23 percent reduction in claim incidents over a 17-week pilot period.
Turning to industrial operations, connected technologies enable predictive monitoring and preventive maintenance in modern factory settings. We can also track global supply chains at ever-more precise levels. Whether it’s French wine going to China or Colombian coffee headed to Canada, we can know the temperature of the vessel, and the temperature and humidity of the container and the box itself. Door-to-door we have the power to understand more than was ever possible about business interruption, property damage and spoilage. And the needle is moving ahead continually.
Knowledge of risk is gaining accuracy every day, and that’s where insurtechs with good ideas and products enter the picture for us. Building intelligence about risk is the core of our business and it’s our first priority in whatever form it comes.
That explains why I am interested in insurtechs that bring new risk insights—things that we couldn’t track or understand even a few years ago and that will better inform future insurance pricing and risk selection.
Speaking from my own San Francisco base, with innovation listening posts in that city, London and others around the U.S., my hope is that New York brings its own creative edge to the mix. We’re looking for that. In fact, the insurance industry is hungry for it.