Celebrating INSTANDA's Inclusion in Gallagher Re's Global Q2 InsurTech Report

INSTANDA is thrilled to announce that we have been hand-selected by Gallagher Re as one of the five featured InsurTechs in their Q2 Global InsurTech Report titled "The Role of AI in the (re)insurance Industry." This recognition underlines our position as a driving force behind a new era in insurance innovation.

Key Highlights from Gallagher Re's Q2 Report

A Positive Outlook for InsurTech Funding

The Q2 report reveals a promising trend for InsurTechs, with global InsurTech funding rising to USD 1.27 billion—the highest level since Q1 2023. This surge is largely attributed to an increase in deal sizes, signaling a robust investment landscape.

AI's Transformative Potential in Insurance

James Poynter, Gallagher Re’s Global Head of Data Science, highlights the significant impact of advancements in deep learning and generative AI on risk assessment and pricing. His key takeaway? To scale operations effectively with AI, it’s crucial to "operationalise" these exciting new technologies.

Building on Gallagher Re's Q1 report, which introduced a framework for AI tools across four quadrants (Distribution, Risk, Claims/Settlement, and Central Business Operations), the Q2 report focuses specifically on AI's impact on Risk—encompassing pricing, underwriting, and portfolio management. These components are vital for an insurer’s ability to assess exposures and determine premiums, ultimately ensuring financial stability and success.

AI in Risk Functions

The Report recognises that the application of AI to risk functions—specifically pricing and underwriting—represents the biggest potential win for the industry. AI tools offer "prospects better-tailored products and more appropriate cover", leading to greater profitability and a strong ROI. However, the report also notes that where underwriting has been entirely delegated to AI, success has been limited. Frequently, the report shares, results are less favorable than when “humans run the entire show.”

As we alluded to within our own AI Report published in January 2024, AI is, as the Gallagher Re report also finds, incredibly good at performing very predictable tasks at speed, which helps humans to be more efficient. We couldn’t agree more with one very powerful statement within the Gallagher Re report that, “To perfect the hybrid process, one needs to identify the most efficient combination of human and machine.”

As Gallagher Re surmises, “Using AI, underwriters can produce more precise actuarial tools, utlilising larger structured and unstructured data tools, at speed,” something that INSTANDA’s are already doing. Here, AI enhances underwriting by providing a richer source of information. However, we echo the report’s overarching message that “AI should never entirely replace the human – particularly one with deep-risk expertise.”

Regulatory Considerations

The report addresses significant regulatory considerations regarding AI, notably the European Union’s AI Act, which received final approval in May and will come into force within two years. It also discusses unique challenges such as deep fakes and the potential for AI to inadvertently push insurers towards “better” (more profitable) risks, potentially undermining the industry’s function as a shared risk pool.

That said, if these concerns can be adequately addressed, there's enormous potential for AI to improve pricing, underwriting and portfolio management.

As the report finds, AI can serve a very deliberate purpose, helping to optimise pricing while enabling underwriters to have an accurate “macro view of the whole portfolio of risks.”

If you have time, the section to the report on data availability and advances in connected technologies offers some great insights, exploring the correlations between large data sets, including those which might seem unrelated at first. It’s a fascinating read, as is the report’s evaluation of AI-enabled underwriting in commercial insurance.

INSTANDA's Role in Insurance Innovation

Within the report, INSTANDA is celebrated for its role in driving insurance innovation. The report spotlights how INSTANDA takes complex insurance processes and allows insurers to reimagine them through a simple no-code user interface (UI) to streamline policy administration processes and enhance operational efficiency, with “rapid speed-to-market” noted as a marker of success.

Our platform's capabilities are highlighted, particularly in the context of risk:

• Automated Underwriting Workflows: Providing underwriters access to comprehensive information, including emerging data sources, without switching between multiple applications.

• Accurate Pricing Models: Enabling a comprehensive view of risk factors, leading to more precise pricing models.

• Operational Efficiency: Allowing underwriters to focus on complex, high-value tasks through automation of time-consuming activities.

• Real-Time Analysis and Reporting: Offering detailed insights into performance, risk exposures, and operational inefficiencies.

By pairing INSTANDA with the predictive power of AI, insurers can develop their AI solutions, enhancing their underwriting processes and operational efficiency.

Looking Ahead

Being featured in Gallagher Re’s Global Q2 Report is a testament to INSTANDA’s commitment to transforming the insurance industry through innovative technology. We are honored to be recognised and excited to continue driving forward this new era of insurance.

For more insights and to explore how INSTANDA can help your organisation harness the power of AI, contact us.