When it comes to the development of AI, AGI, ML and RPA, advancements seem to follow Moore's Law, multiplying exponentially every six months or so. This progress isn't just about innovation for the sake of innnovation; to have an impact it's about evolving operating models in parallel so that the practical benefits of innovation can be felt. So to my mind, the true challenge lies in synchronising the evolution of operating models with the control environments of organisations. As we push the boundaries of risk in pursuit of benefit and change, our controls must keep pace to mitigate potential pitfalls.
Data, often referred to as the oil of our sector, remains central to success. It’s the battleground where victories are won and lost. Initiatives like Lloyd’s Blueprint 2 underscore the pivotal role of data in market-wide transformation efforts. Whether structured or unstructured, mastering data manipulation is crucial for leveraging technologies like AI and forms of automation to benefit every facet of re/insurance.
The fusion of vast data potential with AI capabilities brings immense promise, but it also harbors risks, particularly concerning the potential for discrimination within models. Without adequate checks and balances, these biases could permeate decision-making processes. Thus, understanding the context of AI-generated insights is paramount. We must prioritise explainability and embed ethical considerations into model designs to ensure that the pursuit of advantage is aligned with ethical principles.
Looking ahead to the second half of the year, as technology hurtles forward, the question arises: Can we keep up? Are we instilling the right value structures into organisations and model designs to safeguard against unintended consequences? It’s essential to ensure that the evolving business of insurance remains true to the core values we aim to uphold. This alignment is the key to staying ahead in the rapidly evolving tech landscape.
With this in mind, I feel strongly that the next two to three years will be pivotal for our industry, marked by fresh momentum in the transformative potential of technology across the insurance value chain. With projections indicating robust growth, particularly in the US property and casualty (P&C) sector and the European managing general agent (MGA) sector, the stage is set for insurers worldwide to capitalise on opportunities while navigating through global challenges. At Pro Global, we stand at the forefront of this dynamic environment, witnessing firsthand the intersection of technological innovation and insurer operations.
The outlook for 2024 continues to be promising, with significant premium growth and easing inflation pressures forecast over the course of the year. Swiss Re predicts industry return on equity (ROE) at 9.5% in 2024 and 10.0% in 2025, supported by premium growth of 7.0% and 4.5% respectively in these years.
However, amidst this optimism, it’s crucial to acknowledge the diverse regional landscapes shaping the industry. 2024 sees ongoing multiple economic and geopolitical crises converging; and political shifts, with more than 80 countries – over half the world’s population – voting this year in elections that could be pivotal for global democracy. And, while the US P&C sector shows signs of strength, challenges such as hyperinflation in countries like Argentina and shifting regulatory pressures particularly with a focus on the applications of AI and automation in insurance, and ongoing scrutiny over governance, underscore the need for agility and adaptability across jurisdictions.
Challenges and Opportunities of Running Multinational Businesses
Running multinational insurance businesses entails navigating complex regulatory landscapes, addressing varying market demands, and optimising operational efficiencies across jurisdictions. In today’s interconnected world, insurers must deploy strategic solutions to capitalise on growth opportunities while mitigating risks associated with geopolitical uncertainties and regulatory changes. Against this backdrop, technology emerges as a critical enabler, offering solutions to streamline operations and enhance competitiveness, while maximising the value of their human expertise.
At Pro Global, we recognise the transformative power of technology in reshaping insurer operations. Our international team of insurance experts, spanning across the UK, Europe, Latin America, and the US, collaborates seamlessly to deliver value-added services to our clients worldwide. From this perspective, we can see that from claims management to underwriting – automation solutions are revolutionising every aspect of the insurance value chain.
Last year’s acquisition of Propel Automation underscores our commitment to delivering value through cutting-edge technology, empowering insurers to drive operational efficiencies and capitalise on growth opportunities, and throughout 2024 we have been embedding digital services across our business verticals to augment and enhance our support for leading re/insurers.
Ethics and Automation: a headline topic for 2024
As I alluded to at the start, a key part of this conversation is the ethical considerations of weaving automation into the corporate fabric of re/insurance. While technology offers unprecedented opportunities for efficiency and innovation, it is imperative that insurers maintain a human-centric approach and prioritise ethical practices.
Moreover, as insurers increasingly rely on data-driven algorithms for pricing and risk assessment, ethical oversight is paramount. It is essential to ensure that these algorithms are transparent, fair, and free from bias, particularly when sensitive data such as health or personal information is involved. Our sector has a regulatory and ethical duty to uphold trust, integrity, and fairness in the way re/insurance operates, ultimately benefiting both customers and society at large.
A key focus for 2024 and 2025 is striking the balance between automation and human expertise. Rather than replacing humans, automation should complement and enhance the capabilities of insurance professionals, enabling them to focus on high-value tasks that require empathy, creativity, and critical thinking.
At the same time, the significant introduction of technology that both streamlines and augments the tasks that are completed by human beings introduces a critical new point of potential operational failure. It is therefore essential that insurers recognise this potential failure point, and proactively work to address eventualities, to assure business continuity and resilience in all contexts. This control-focused and anticipatory thinking applies not only during digital transformation programmes, but also with post transformation operations, which need as much focus on measurement and continuous improvement as the technology opportunity that is being harnessed. It is vital that insurers avoid inadvertently automating flaws into their core operations and processes that could, if left unchecked, snowball into significant operational challenges.
While embracing innovation with this critical thinking in mind, insurers must also contend with legacy systems that pose challenges to modernisation efforts. Legacy technology, particularly in run-off and legacy portfolios, can impede operational efficiency and inhibit the adoption of new technologies.
However, it’s essential to recognise that legacy systems play a vital role in supporting core business functions and must be integrated effectively with newer technologies. We advocate for a balanced approach to legacy tech, leveraging modernisation strategies to enhance operational efficiencies while ensuring seamless integration with existing systems. By adopting a phased approach to technology transformation, insurers can unlock the full potential of the data within their legacy systems while embracing the benefits of new technologies.
The Rise of MGAs and Tech-Centric Startups
At the same time that traditional insurers are evolving, the MGA sector continues to serve as a hotbed of innovation, bridging the gap between traditional insurers and emerging technologies. Pro Global’s subsidiary, Pro MGA Global Solutions, stands as a testament to this trend, with tech at the heart of every startup’s proposition.
The agility and flexibility inherent in the MGA model allow capacity providers to access startups to experiment with new technologies and underwriting approaches, driving innovation and differentiation in the marketplace. Pro MGA Global Solution’s multi-territorial platform supports the incubation of new MGA startups, enabling them to scale rapidly and capture market opportunities efficiently. In 2024, we anticipate continued growth and expansion in the MGA sector as insurers seek innovative solutions to meet evolving customer needs.
With the increasing emphasis on efficiency and multi-territory access, brokers are also increasingly seeking collaboration opportunities with entities like Pro MGA Global Solutions to develop more efficient models for distributing and placing business into global markets. Parametric insurance and tracker-type syndicates represent just a few examples of how the insurance industry is aligning with wider financial services in terms of data-driven progress.
Expertise and Tech Combined as Core Enablers of Growth
I am firmly of the view that technology working in harmony with sector-specific expertise will remain the cornerstone of insurer success. From harnessing AI for risk insight to streamlining processes through automation, re/insurers, brokers and MGAs have unprecedented opportunities to drive growth and profitability, through the focused lens of human expertise.
Pro’s competencies lie in its unique blend of proprietary technology and market practitioner insights, which form the backbone of its service offering. Unlike traditional tech companies, our technology is not developed in isolation but is intricately crafted through the lens of Pro’s own market practitioners. This ensures that our solutions directly address real challenges encountered in the field, honed through repeated encounters over time.
Pro stands out as both an enabler and a partner. Our approach bridges the gap between the old and the new, leveraging the expertise of practitioners alongside cutting-edge technology, both proprietary and partnered. Moreover, our partnerships extend to solutions developed by market practitioners for market practitioners, enhancing the relevance and applicability of our offerings.
The differentiation we offer is not merely in transformation but also in our thoughtful consideration of the post-transformed operating state. We focus on the thematic of automation and the evolution of capabilities and controls beyond the initial transformation phase. This holistic approach ensures that our solutions not only bring about change but also pave the way for sustained innovation and efficiency.
We recognise the interconnected nature of global challenges, and the need to reject old silos in favor of collaborative, innovative approaches. As the CEO of Pro Global, I am confident that together, we can navigate through the complexities of the insurance landscape and emerge stronger, more agile, and better prepared to thrive in the evolving global marketplace.
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Name: Steve Lewis
Job title: CEO
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