AI could help provide data to predict and price risks appropriately. (Credit: VideoFlow/Adobe Stock)

Creative product design and better technology could help bring stability to a challenging insurance market, according to a panel of professionals at Send’s INFUSE webinar, Navigating the Hard Insurance Market.

Inflation, a global pandemic, evolving cybersecurity threats, climate change and other issues have left the insurance industry on unstable footing in recent years. “I think the word ‘volatile’ is very appropriate,” said Tandis Nili, managing principal, global risk management, with Epic Insurance Brokers.

Weather disasters in particular have made it more difficult for underwriters to assess risk and price products appropriately.

“We all see the impact of the changing weather,” Nili said. “Our underwriting hasn’t caught up. The crystal ball we’ve been using is murky, with 100-year events now occurring on a 10-year timeline.”

To move forward with more certainty, tech might be the key. Automation can boost efficiencies, and AI can help analyze data and provide insights, said Martina Conlon, executive principal at Datos Insights. AI-generated predictive models can be used to potentially foresee risks, helping insurers price products more accurately.

“It’s thinking about the opportunity to become more efficient and more accurate by using more than a spreadsheet, using more than a policy system,” Conlon said. “It’s about being able to find tools and automation that really drive efficiencies.”

Product innovation is an area of opportunity as well, said Jennifer Kyung, CEO and founder of NextGen Underwriting. That includes adding new lines for new risks as well as rethinking existing product designs. For example, some home insurance products could be restructured so there’s shared responsibility with the insured.

“I think this is a real moment of opportunity for underwriters to creatively structure products going forward,” she said. “Maybe that property product needs to look very different in the future in certain geographies.”

Beyond innovation, the last few years are proof that simple preparedness is essential.

“What the past several years have told us is that we could not have predicted a lot of the things that happened,” Kyung said. “We can’t possibly predict what the next thing is, but we can have all of our levers, our capabilities, our toolkits ready, so when that thing happens, we’re poised and ready to go.”

See also:

• Climate change, geopolitical instability seen as top risks
• Extreme weather spurs AI adoption in insurance industry
• The insurance industry is at an AI adoption crossroads