Perception is not always reality, as currently I see many players in the industry embracing innovative technologies still in its infancy and finding ways to improve the experience of customers. Much of these advancements are aimed at improving access, increasing affordability, improving understanding, and better aligning risk premium with assumed exposure.
Rather than risk averse, I believe that our industry is simply very risk aware. This is particularly helpful now, as we are heavily investing in revolutionary technologies such as artificial intelligence (AI) and machine learning (ML) that rely on sensitive data and automation with algorithms. How do we assure that the machine doesn’t discriminate? What is our response to the fear of data misuse? What do we adhere to if there are no international standards?
At Swiss Re, we firmly believe that to truly harness the potential of new data-based technology, we must earn the trust of clients and consumers.
The rub: clear definition of what constitutes digital trust is still taking shape. What we do know is that the digital transformation of the insurance industry must be underpinned by: trust that emanates from our employees, our regulators, our shareholders and, most importantly, from our customers.
Design of customer touchpoints crucial
It is critical to strike a balance between expanding digital footprint and ensuring data is handled in a transparent and responsible manner. Ethical considerations must be taken into account not just after implementation, but in the planning and development phase of complex investments. Digital trust cannot be delegated to a single office. It runs through everything.
In a new publication Swiss Re Institute (SRI) has illustrated the ubiquity of digital trust. “Decoding digital trust” describes how we look at digital trust through the lens of a consistent methodology. The SRI study also builds out a business case for digital trust that will be essential, given the insurance industry’s increasing dependency on data.https://flo.uri.sh/visualisation/9906858/embed?auto=1
The digital trust pyramid begins with the reliability zone, the ability of insurers to connect with consumers. With investment in new digital distribution channels and processes, the digital design of insurance accessibility has huge implications for the industry.
Design of virtual touchpoints with the customer is just one step in the customer journey, but it has a big impact on trust and willingness to share data. While face-to-face interactions between customers and companies usually have an inherent trust quotient, a virtual interaction scenario could be radically different.
If there’s merely a black box in front of consumers, people will be reluctant to share financial and personal information. Choice sets on websites and mobile apps can be designed in a way that is beneficial to consumers – avoiding so-called “dark patterns” and “sludges” that can harm consumers, which in turn stymies adoption.
Digital trust happens along the value chain
The challenge for insurers is that fostering trust must be done on many levels throughout the whole value chain. AI is the next digital frontier. Machines are being programmed to both learn and to take decisions. It will affect everything from welcoming clients to underwriting decisions.
The potential benefits for insurers of AI are manifold. Success requires first winning the trust from our customers, regulators and other stakeholders. Accomplishing this will require even greater transparency from industry participants. We need to be able to shine a light on digital black boxes, to explain and even challenge our algorithms.
The SRI study reiterates that increasing regulation on data, AI, etc. won’t solve the trust challenge on its own. The authors suggest: “Where companies may see data legislation as being insufficient to create trust, they can sign up to standards codified by a third party.” And they can be broad in their remit, extending beyond data protection to encompass areas including the ethical use of data.
Such certifications are already emerging worldwide, with one example the Swiss Digital Trust Label, which we at Swiss Re consider a unique endeavour. Swiss Re has already received this certification for our Magnum Go automated underwriting solution. The label gives clients and consumers a transparent means of comparing trustworthiness of digital services they may be considering.
Beware the limits
I see immense opportunities for ‘risk-aware’ insurers to foster digital trust. But we also must contend with the reality that we may come up against some natural limit.
Insurers support some of the largest decisions and most significant events of our lives. While customers might be willing to buy car coverage or travel insurance from a bot, when it comes to life insurance – to help support loved ones in the event of a tragedy – they may prefer to speak to an experienced agent. The human touch is unique.
Finding the sweet spot between automation and the human factor will hinge on trust. Automation and people must complement each other. While machines can make decisions, they remain machines. They cannot take responsibility; they are not accountable. Accountability must remain with real people, so that digital trust can flourish.
Source: Swiss Re
