Sure about the digital hunt
Twenty-five years ago, having Internet on your mobile phone was still a theoretical concept. Today, however, even your toaster fights hard to escape the Internet of Things.
Technological developments move faster than the speed of light, it seems. Most of these bring about widespread social changes – and thus affect our insurance needs too.
This explains why there are so many companies entering the InsurTech domain – and worth following because of the innovative and engaging way they try to distinguish themselves.
Support vector machines, neural networks, classification and regression trees: the actuary among you, looking for a new mathematical challenge, is exposed to a significant risk of choice stress within the rebranded data science world.
Within our business I would say that the ‘science’, although fascinating, remains a hype for the time being. One of the reasons is that such models are usually not well understood. And that makes model and change management – which every normal organization obviously needs – virtually impossible.
In addition, such models cost significant amounts of processing power but usually hardly perform better than ‘simple’ regression models estimated on the same information. And it is exactly that, i.e. the ‘data’ piece, that is anything but a hype.
Your phone already knows where you are at any point in time and your fridge may already know when you normally eat – and even what’s on the menu. Collaborative filtering techniques pinpoint your interests and needs with impressive precision.
No need to be part of a social network for that: you are in the contact lists of your acquaintances who are.
But interestingly you’ll hear the skepticism when you talk about such topics in a business context: “That won’t happen at short notice” or: “I haven’t encountered any company that actually gains significant market share.” Make no mistake: even in a conservative country such as Switzerland, which I’ve called home for several years, I already receive an indirect discount on my healthcare premium when I walk the target number of steps each day.
The move from opt-in (which labels you as a healthy client) to opt-out (which labels you as an unhealthy one) is small – and its impact on pricing big.
Fortunately, health insurance in Europe is regulated heavily, and I think it should stay this way. But in other retail and SME segments of the insurance industry, the hunting season has almost started… and I am looking forward to it!