Johnston-based insurance solutions company FM Global teamed up with MassChallenge to host a virtual demo event in September. With 10 startups showing their work, insurtech was a focus.
Michael Lebovitz, FM Global’s senior vice president of innovation for the past three and a half years, spoke with Providence Business News about technological trends in the industry and his company’s approach. There are risks, he says, and when it comes to insurance, not all tech advances have proven their worth thus far.
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PBN: One of the areas of technology that we hear is changing the insurance industry is blockchain. How does blockchain make underwriters’ lives easier?
LEBOVITZ: Although the FM Global innovation team is seeing some interesting applications of this technology in areas where immutable records are important – deeds, birth records, etc., applications in the insurance industry are not too far advanced at this point. Blockchain technology is one of those areas that has generated a lot of buzz but hasn’t yet lived up to the promise that people think it could bring to the industry.
An example is a consortium in Europe that is using blockchain for some limited reinsurance transactions. Because of the complications of implementing blockchain, one of the challenges is finding use cases that [have] benefits for all parties involved in a transaction and that also need distributed ledger technology.
PBN: We hear that insurance companies are also leveraging big data, artificial intelligence, consumer wearables and smartphone apps. Is that true for FM Global?
LEBOVITZ: Yes, to an extent. As a large commercial property insurer that specializes in helping our clients be more resilient, utilizing advanced technologies is a part of our business model now and will be in the future. At FM Global, we use in-person loss-prevention engineering visits and remote technology, such as mobile applications or aerial imagery, to help clients understand property risks they face at their facilities and in their business operations.
Using machine learning and algorithms, FM Global has developed predictive analytics to understand the relative likelihood of property loss and the most critical factors contributing to those potential losses. This allows for a more informed approach to both understanding and mitigating risks.
PBN: Last year, CIR Magazine gave FM Global its Cyber Security Product of the Year Award for its Cyber Risk Assessment, the industry’s first cyber-readiness assessment product. Andrew Bryson, operations senior vice president and manager for the company’s London operations, said that many companies think of cyber risk as a theft of information but that it has a “very real physical property component that businesses need to consider.” Can you elaborate?
LEBOVITZ: FM Global’s cyber assessment is a three-part approach that includes an information security assessment at the enterprise level, a physical security assessment at
the location level and an industrial control systems assessment that also includes building automation systems.
This holistic approach helps clients recognize, target and mitigate threats that pose the biggest risks to operating resilience. The physical property component of cyber risk – beyond the theft of information that most people think about – is resultant damage. Resultant damage is damage to property and associated business interruption that results from a cyber event caused by a covered cause of loss. An example of this might be a cyber event causing a dangerous condition, like over-speeding in a piece of machinery that leads to a fire burning down the facility.
PBN: Are there risks when insurance companies adopt new technology?
LEBOVITZ: It is important for all businesses to innovate and bring in new ways of doing things if they want to be viable in the long term, but there are always risks inherent in change.
One challenge is in customer adoption and acceptance of new ways of doing things, which is why it is so important to focus on ethnographic research in developing new products and services.
Another challenge is analyzing what problems need to be solved, rather than just adopting the newest technologies that are out there. Bringing in new technology without tying it to a business problem can bring significant expense without any real tangible return. Blockchain is a good example of that. Several years ago, it was the shiny new toy, it was quite expensive to develop and deliver. Many companies spent a lot of money implementing blockchains that didn’t live up to the promise or deliver the ROI [return on investment].
PBN: How will technology make for a better customer experience moving forward?
LEBOVITZ: With technology adoption, most advances start in the business-to-consumer space. There’s a growing trend to personalize experiences and product offerings, from bespoke shopping experiences to first-name soda bottle labels.
As Bridget van Kralingen, a senior vice president at IBM said, “The last best experience that anyone has anywhere becomes the minimum expectation for the experience they want everywhere.” Similarly, I believe future business-to-business customer experiences will be much more tailored to meet individual client needs. With advances in technology, omnichannel delivery of important information centered around client needs … will be enhanced by artificial intelligence and machine learning to proactively deliver what customers need, when they need it and how they want to receive it.
Susan Shalhoub is a PBN contributing writer.
