This March, The Fintech Times is shifting its spotlight towards insurtech, such as how advanced data analysis is driving efficiencies across the insurance sector.

From enhancing risk assessment accuracy to personalising products and services, insurers are leveraging data analytics to optimise decision-making processes, mitigate risks and cater to evolving consumer needs.

Industry experts share insights into the pivotal role of data in reshaping insurance operations and strategies worldwide.

Huge impact

Data analysis, particularly predictive analytics, have made major strides to improving risk assessment in insurance, says Ashleigh Gwilliam, director of insurance industry growth at customer lifecycle intelligence platform FullCircl.

“Vast amounts of information can be analysed allowing for more accurate pricing, individualisation of policies and mitigation of future losses.

“Algorithmic analysis is also having a huge impact on actuarial departments, identifying hidden trends in data that can uncover the real reasons for claims, advanced analytics can also identify key trigger moments when a claim is likely.

“Fraudulent claims are a key concern for every insurance company. Data analytics can improve detection rates – analysing documents and information for areas of potential miss-representation and inaccuracy – whilst ensuring claims are paid quickly and cost effectively.

“In BIBA’s 2024 Manifesto, it encourages brokers to “meet the needs of the modern economy” and “respond to emerging risks”. Advanced data analytics will have an increasingly important role in modern insurance decision, identifying trends and customer needs and driving innovation in products and services.”

Streamlining workflows

Rajeev Gupta, co-founder and chief product officer of Cowbell, an adaptive cyber insurance company, suggests that advanced data analytics, particularly in cyber risk assessment, enables businesses to gain clarity, simplify processes and improve efficiency and accuracy.

“Data analytics is not new to insurance. Actuaries have been analysing data for pricing and claims reserving for decades. However, the landscape has evolved lately, with advanced data analytics now used by insurers in all other areas of the business – from risk assessment and fraud detection to improving operational efficiency and even refining product roadmap.

“At Cowbell, we are actively assessing the cyber risk posture of over 39 million businesses in the US and the UK. With our rich data pool, we enable businesses to gain clarity about their cyber risk posture in relation to their industry peers in just minutes, while also simplifying and expediting the quoting process for agents, and making the underwriting process more objective.

“By automating processes and streamlining workflows, they are able to reduce costs, improve speed, and increase accuracy across various workflows.”

Improved efficiency

AI-driven tools are enabling personalised quoting, dynamic policy management and streamlined claims processing, according to Scott Logie, chief commercial officer at independent UK consultancy.

“Data analytics, particularly tools underpinned by AI, is powering more efficient, intelligent decision-making across the insurance pipeline and customer lifecycle.

“At the beginning of customers’ journeys, analytics is making quotes generation more personalised. Historically, insurers grouped customers into broad segments based on basic profiles. Now, machine learning models enable more datapoints to be analysed, creating accurate risk profiles for designing bespoke offers. We see this technology in action on comparison sites, which are underpinned by models trained on existing quotes for age, location, house type, and car make or model.

“Analytics is also used by insurers to manage ongoing policies. AI tools review customer data and suggest edits to premiums when a customer’s situation changes. For example, moving into a higher risk area or buying a more expensive car.

“Finally, AI is making claims decisions more efficient. Often, the basics around who, why, when and what are now dealt with automatically based on machine learning models trained on past claims. With fewer manual tasks, insurance advisors and experts can dedicate more time to complex cases and tasks that bring more value to the business.”

Better policy decisions

For Sarah Carver, head of retail banking, wealth and insurance at global financial services provider Delta Capita, insurers can make better, more informed decisions, optimise their internal processes and create value for both the business and the end customers by leveraging advanced data analysis.

“We see particular value driven in three key areas:

• Risk: Insurers can use advanced data analysis to both evaluate risk and then personalise risk assessments using both historical data and predictive scenario based modelling to predict future behaviour. This can also be meshed with individual behaviour patterns allowing for an enhanced risk picture and better policy decisions.
• Customer insights and servicing: Data-driven insights can help insurers understand customer preferences, behaviours, and needs better leading to much better servicing of these customers whether on a micro level of individual servicing or on a macro level to future product development and marketing strategies. Advanced data analysis can also help identify and prevent fraud before it occurs saving cost and retaining customer trust.
• Efficiency and precision: Whether in processing claims more efficiently through analysis to determine where time should be spent, setting precise pricing by using better data to offer both competitive pricing but also less generic ‘one size fits all’ approaches.”

Getting ahead

Alex Littlejohn, executive VP at US insurance brokerage Alliant Retail P&C, says that with the insurance industry’s increasing ability to understand analytics and uses for collected data, analytics are taking on a larger role in how underwriters review, charge and provide capacity on insurance programmes, in addition to leveraging claims analytics to understand how losses impact coverages.

“Assessments conducted based on insureds’ data affects how the insurance community rates and evaluates risks.

“From an insured perspective, analytics allow them to get ahead of underwriters’ decisions, enabling decision-making on limits and deductibles for programme optimisation, both prior to shopping the insurance market and then evaluating conditions they receive back from the market.

“We’ll always move forward in terms of how data and analytics impact decision-making, both in how clients decide to buy risk and mitigate their risk, and how insurance companies decide to provide capacity and charge for the risk.”

Better price risk

Insurance companies worldwide are adopting AI to understand better how insureds drive, says Rashid Galadanci, CEO and co-founder of Driver Technologies, an AI-based mobility tech company

“Specifically leveraging video telematics-based scoring, insurance companies can now underwrite and classify the risk based on how an individual, or even a whole fleet, really drives instead of traditional factors like credit scores or motion-only telematics, which miss critical factors like tailgating and traffic sign adherence.

“Telematics with video analysis is also incredibly valuable for the claims process for users as visual ground truth cuts substantial time and costs from the claims lifecycle and, in many cases, can eliminate any need for arbitration.

“Additionally, to assess and design safer communities, we must understand our current road infrastructure by studying anonymous road safety and road risk information to develop insights into the types of improvements we need.

“By analysing real-world, location-specific road risks derived from regular and image-based road segment data (RSD) using telematics and computer vision data, insurance companies can better price risk while educating their insureds with insights into the most dangerous intersections and best roadways to keep them safe.”

Better predictions

David Bairstow, chief product officer at EagleView, a provider of aerial insights for insurance companies in the US, underscores the critical role of data and analytics in helping insurers address significant challenges such as talent retention, increasing population density in disaster-prone areas, and economic pressures.

“The insurance industry is facing significant challenges. Employees with deep experience are retiring. Attracting new talent is proving difficult. Externally, more people now reside in areas often affected by severe events, increasing pressure on insurers to more effectively underwrite those property risks.

“Further, large-scale events also present challenges in effectively servicing insureds after such events occur. And recent inflationary trends continue to damage insurer economics.

“To stay competitive, carriers will need to use data and analytics to pro-actively assess climate risk and model property portfolio exposure. Being able to better predict catastrophic impact and forecast maximum exposure value – before events even occur – will help insurers manage their underwriting and pricing strategies.

“In the aftermath of large-scale events, property intelligence and analytics can be critical tools to help insurers better service their customers. For example, leveraging timely, high-resolution aerial imagery captured at scale across affected areas can help insurers to begin processing claims much faster and, in many cases, before First Notice of Loss (FNOL) is even filed by the insureds.

“Innovative data, analytics, and technology approaches like these will help insurers better serve their customers while also helping improve the structure and financial performance of the carriers’ property insurance portfolios.”

Improving accuracy

James Harrison, global head of insurance at Dun & Bradstreet, a business intelligence and data company.

“In today’s insurance landscape, the power of data analytics cannot be overstated. Advanced data analysis techniques are revolutionising how insurers assess risk, price policies, and make strategic decisions within the industry.

“One primary way data analysis is reshaping the insurance sector is through improving the accuracy of risk assessment. By leveraging vast amounts of data from multiple sources, insurers are better positioned to conduct real-time risk analysis for individual and systemic risks, which leads to precise underwriting decisions and reduced exposure to losses in a volatile risk environment.

“Moreover, data analytics enables insurers to personalise products and services to meet the evolving needs of customers. By analysing data like customer demographics, behaviour and preferences, lifestyle habits; insurers can tailor offerings, pricing, and coverage options according to the consumers; thus enhancing customer satisfaction and loyalty.

“Data analytics is empowering the insurance industry by utilising data-driven decision-making to optimise the entire value chain. In a competitive landscape today, insurers who embrace these technologies and leverage the power of data will not only simply survive but also set a precedent for a new era of more customer centric innovation.”

With many having grown up with technology, the new age of investors has different priorities when looking to trade and invest their assets. Social media and technology like AI are quickly shaping what investors look out for. Eric Krueger, CEO Americas at GTN Group, the trading and investment fintech, identifies eight ways in which the next wave of investors will behave.

Across the globe, a colossal financial shift is brewing – the Great Wealth Transfer. As baby boomers approach retirement and beyond, an estimated $72.6trillion in assets is projected to flow to younger generations by 2045. This event has the potential to redefine the landscape of retail trading and investing, ushering in new players, preferences, and priorities.

So, how will these new investors trade and invest differently?

Mobile-first mindset

Unlike their predecessors, Gen Z and millennials are digital natives. They’re accustomed to seamless mobile experiences, and their financial lives will be no different. Trading platforms and investment apps need to prioritise intuitive interfaces, sleek design, and lightning-fast mobile functionality to capture and keep their attention.

Fees matter

Value-conscious and accustomed to transparent pricing models, the younger generation expects competitive fees and low barriers to entry. This doesn’t just mean free trades, but also transparent fee structures for more complex investment strategies.

Trading education reigns

Financial literacy can be a hurdle for younger investors. Platforms that prioritise in-app learning modules, gamified simulations, and personalised tutorials will likely gain traction, encouraging them to enter the market with confidence.

Rise of the robo-revolution

Automation and AI-powered solutions resonate with a tech-savvy generation. Robo-advisors that offer automated portfolio management and personalised investment strategies at lower costs could become increasingly popular, catering to those seeking a more hands-off approach to wealth building.

Fractional shares: democratising access and diversification

Fractional shares are reshaping the investment landscape, democratising access to previously out-of-reach stocks and fostering broader diversification for retail investors. This innovation enables ownership of ‘slivers’ of expensive blue chips, opening doors that were once locked by high share prices.

No longer bound by whole-share minimums, investors can now:

• Own prestigious names: A slice of a high-price tech stock becomes attainable, alongside other historically off-limits companies.
• Spread risk across a wider universe: Diversification is enhanced, mitigating risk and tailoring portfolios to individual goals.
• Invest with greater precision: Exact amounts can be allocated, maximising flexibility and control.

Traditional institutions face a choice: adapt or risk irrelevance. Collaboration with innovative FinTechs, through white-labeling or API integration, offers a pathway to embrace fractionalisation and stay relevant to younger generations.

Fractional shares are not a fad, but a fundamental shift already expanding beyond stocks. With rising interest rates, bonds are becoming increasingly attractive targets for fractionalised investment. This is just the beginning of a transformative wave in retail trading.

Social trading’s influence

Millennials and Gen Z are heavy users of social media, and these habits could extend to their trading and investing. Peer-to-peer learning and social validation play a significant role in their decision-making. Platforms that enable social trading features, connecting users to share insights, discuss strategies, and learn from each other’s experiences, could offer a unique advantage and gain market share. Examples include features like public watchlists, copy-trading functionalities, and social media integrations.

Beyond the new guard

It’s not all about upstarts and disruption. Established financial institutions have a wealth of experience and brand recognition, which is invaluable. To remain relevant, they must adapt to changing user preferences. This means prioritising ongoing platform and mobile experience enhancements, developing engaging educational tools, and continuing to innovate around their product offering and competitive fee structures.

A landscape in flux

The Great Wealth Transfer is not a singular event; it’s a long-term transformation. As new generations enter the market, their preferences will continue to evolve, shaping the future of retail trading and investing. The most successful players will be those who adapt, innovate, and prioritise user experience, regardless of their legacy or origin.

Ultimately, the Great Wealth Transfer represents an exciting opportunity for everyone. By understanding the preferences and priorities of the new investor, all players – fintech newcomers and established institutions alike – can position themselves to thrive in this dynamic and evolving landscape.

 

Authors’ note: This article is for informational purposes only, based on the author’s personal opinion,  and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.

In an age defined by borderless commerce, commercial payments has found itself on a transformative journey. This evolution has been driven by various factors, including the convergence of personal and professional payment experiences, the digitalisation of payment methods and the imperative for faster, more efficient transactions.

In 2022, global commercial payment transactions surged beyond the $108trillion mark, with forecasts indicating a remarkable compound annual growth rate of 7.5 per cent. By 2025, this trajectory is expected to propel the market to an astounding $135trillion. As businesses anticipate a return to pre-pandemic levels of travel, there is also a growing recognition of the need to modernise business travel payments for greater efficiency and control in the new era of corporate mobility.

Despite a surge in digitalisation, traditional payment methods, including cash and cheques, continue to maintain a stronghold, accounting for over 20 per cent of total commercial payments in various regions. Seventy-three per cent of small and medium-sized enterprises (SMEs) still rely on cash to settle their business expenses, revealing a noteworthy contrast in payment methods.”

Global payments brand Discover® Global Network and research company Euromonitor International have unveiled critical insights into the commercial payments industry, shedding light on the forces that have shaped it over the past year and the emerging trends set to define its future.

Their research encompasses 30 interviews with upper management at large businesses across 16 countries and solicited feedback from 1,800 B2B survey respondents. The findings reveal a spectrum of challenges faced by large corporations concerning commercial payments management.

Among these challenges, the most pressing for large businesses is the management, payment, tracking, and reconciliation of supplier payments. This has a profound impact on various facets of organisations, including procurement, accounts payable and travel expense functions. Decision-makers are actively seeking improved commercial payment solutions capable of delivering operational efficiencies, seamless integration, cost savings, and enhanced peace of mind.

One significant catalyst for change has been the convergence of personal and business payment experiences. Younger, digitally native business managers are bringing their consumer-oriented expectations into the B2B realm. As a result, businesses are increasingly seeking more efficient, streamlined, and intuitive digital payment management tools.

Spotlight on VCNs

The role of virtual card numbers (VCNs), or a single or multi-use form of digital payment tied to an overarching spend account or line of credit with specific spend controls assigned to it, has emerged as a pivotal component in addressing the demands of not only business travel but B2B payments.

VCN offers multiple benefits including security as it creates rules allowing the cardholder to create a specific use of the VCN tied to date, merchant category code or an fixed amount – as management of total spend is another benefit.

Over the past year, VCNs have not only cemented their place in the market but have also become significantly more manageable, primarily attributed to the prevalence of API integrations between networks, issuers and commercial VCN management providers. This transformation offers substantial advantages to businesses, including simplified reconciliation processes, enhanced visibility into expenditures, and greater control over spending. These benefits empower both businesses and their traveling employees to conduct transactions with increased efficiency and effectiveness, streamlining financial operations and facilitating smarter financial decision-making.

As Dan McKenzie, senior product manager at Discover Global Network, pointed out at the recent CPI Global B2B Payments Summit in New York, VCNs are at the forefront of ‘consumerising commercial payments’.

He explained: “With the re-emergence of business travel paired with the surge in payment advances over the past three years, we’re seeing a trend of consumerising commercial payments, or minimising the gap between how someone pays in their personal life vs. how they pay and expect to be paid in their work life; meeting business travellers where they already are in how they spend. We’re seeing this particularly within the travel space where VCN has seen steady growth in usage, volume, and use cases and is modernising quickly in partnership with fintechs and travel management companies that are optimising the VCN experience.”

In the past year, VCNs have evolved to become more user-friendly, McKenzie said, offering businesses and travellers greater control over seamless business-related purchases, rivalling or surpassing personal payment experiences in terms of ease and convenience.

The complex nature of hotel bookings, pre-authorisations, additional charges, and check-in processes presents an opportunity for VCNs to streamline and enhance the payment experience within this sector.

Future trends in business travel

Looking ahead, the future of business travel holds exciting prospects, not only for large organisations but for small and medium businesses (SMEs) too. Seventy-three per cent of small and medium-sized enterprises (SMEs) still rely on cash to settle their business expenses. However, 49 per cent of SMEs plan to invest in commercial payment solutions in the future.

A similar trend is seen in large businesses. Over half (53 per cent) plan to increase their use of digital payment methods, such as VCNs, for managing business travel over the next 12-24 months.

McKenzie commented: “The concept of virtual card number is becoming even more mainstream due to its user-friendly nature, ability to assist in reporting and reconciliation, and advanced ease of integration.

“With this sharpening of the overall VCN product, we’ll also start to see more focus on specific verticals, like the hotel space, for instance. Historically, we’ve seen opportunities to sharpen the VCN experience within this space given the fragmented nature of booking hotel rooms, pre-authorisations, additional charges coming from hotels, or the check-in experience.”

Learn more about the giant leap in modernisation commercial payments VCN is making.

 

The Boston Consulting Group estimates the tokenization of real-world assets could become a $16 trillion industry in the coming years. Its impact, however, goes well beyond financial figures, and can help people in developing countries to find new ways to deal with real-world problems.

During a panel moderated by Cointelegraph’s editor-in-chief Kristina Lucrezia Cornèr at Swiss Web3 Fest, industry experts provided insights into how tokenization can be applied to real-world assets, and how it is enabling solutions never seen before.

“Our farmers, in Kenya, receive their payouts days after the harvesting season ends. If they have less yield than expected, then they receive a payout immediately. In the traditional insurance space, they need to wait six months. And that can mean the end of a family’s business,” explained Christoph Mussenbrock from decentralized insurance protocol Etherisc about tokenization solutions for agricultural production.

Meet our speakers for the “Real World Assets” panel:
@KristinaLCorner – Cointelegraph
Jose Fernandez –@TheTokengate
@liesdorn –@etherisc
@CFernandezMazzi – #Finka
Stephan Rind – BRICKMARK

FIVE Zurich
https://t.co/F0jSQL2uvl@CryptoOasisUAE @dfinity pic.twitter.com/jbZaSKg5pZ

— WEB3FEST (@web3fest_int) September 16, 2023

According to Mussenbrock, there’s an increasing demand from traditional insurance companies for on-chain solutions. “This is currently happening as we speak. That is a huge change. We see that traditional insurance companies are somehow dipping into this.”

Stephan Rind, from BrickMark Group, noted that asset tokenization can deliver access to financial products that are currently unavailable to most people, thus helping to close a gap in wealth distribution.

“Number one in financial inclusion, obviously you can have a number of participants that can participate in a financial instrument, and you have the democratization of capital […] everything from real estate to animals, to all the things that you can have in traditional finance, that could actually be tokenized and represented in a digital financial instrument,” Rind commented.

Carlos Mazzi, from Finka, shared his experience of tokenizing La Pradera, a cattle ranch in Bolivia with 3,000 hectares of grassland and over 3,500 cows. “We tokenize the value creation of what we call from grass to cash. It’s the tokenization of value creation. The conversion of grass into protein, and into cash through a great nature given machine, which is a cow. We were early pioneers and this was very challenging […] it represented a lot of financial engineering, legal framework, etc. to create a revenue token. So it has been fantastic […] The only thing that has not developed the way we anticipated is the market adoption, and it’s a systemic issue that, we hope, will be corrected eventually.”

The adoption issue will be overtaken by central bank digital currencies (CBDCs), believes Rind. “It will create billions of people in the world which have a wallet,” he noted, adding that regulation will also unlock more capital into asset tokenization.

“We believe that in ten years’ time most people will be interacting with Tokens on a daily basis, whether they know it or not,” added Jose Fernandez, from Tokengate.

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