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InsuranceNEXT’UA 2017 to force digitization in Ukrainian insurance industry

Ukrainian Federation on Insurance and the digital economy and fintech focused Future magazine with the support of the German (GDV) and Austrian (VVO) Associations of Insurers and the League of Insurance Organizations of Ukraine held the first insurance Conference InsuranceNEXT’UA 2017 in Ukraine. It was dedicated to the preconditions for digital changes in the insurance market of Ukraine and the world.

The Conference became a place for the unification of all stakeholders interested in the evolution of the insurance market of Ukraine in the conditions of the development of the digital economy.

“The ideology of the Conference lies in the attempt to look into the future and find new opportunities for the insurance business. Clients of the near future are the current youth; and we must learn how to interact with them in the language of technology, be where they are. The second task of the Conference is to start the process of the insurance market’s image changing, to understand how to establish technological transformations. We have the good opportunity to build a modern communication strategy to interact with our customers. I believe in the prospects of the implementation of these ideas in Ukraine, although we are only at the beginning of this journey. We have a lot of wonderful start-ups; amazing IT-specialists, and it promises to get a massive success,” – noted Andrew Peretyazhko, President of the Ukrainian Federation on Insurance.

Kate Shcheglova, Editor-In-Chief of the digital economy and fintech focused Future magazine, Founder of the Future Communications Lab, who was one of the ideologists of the Conference, noted that she sees a great prospect for the Ukrainian insurance market in becoming the leading East European insurtech hub that generates networking, innovative knowledge and has a strong technological base. “The first insurtech conference was a breath of fresh air for the industry; it gave hope that the domestic insurance market has the prospect of stopping “pulling up the rear” and break into the number of leading players. We have the potential for this in the form of insurance companies with international capital and access to world markets. We have friendly relations with international associations that are ready to support us, and we do have a very strong IT community. So we have a unique chance to build a sustainable and strong insurance market…”

The Conference united global leaders of the insurance industry, who came to share their experiences and advanced ideas. Thus, Matteo Carbone, the Founder and Director of Connected Insurance Observatory, the Insurtech Thought Leader, dedicated his speech to the telematics and insurance in the conditions of “connected world”. In particular, he expressed the opinion that “connected insurance represents a new paradigm for the insurance business. This new insurance approach is based on the use of sensors for collecting and transmitting data on the status of an insured risk and the deployment of big data capabilities that transform raw information into actionable knowledge along the insurance value chain.”

Frank Tyrolf, International Affairs Senior Manager of the German Insurance Association (GDV), shared the experience of digitizing the German automotive system. In his opinion, insurance associations are the main providers of digital transformations. “Associations of insurers can and should be active players in the sphere of digital transformations. Industry associations’ main task is the creation of digital, technical and legal insurance standards that reflect the needs of consumers and companies. One of the elements of the digital strategy of our Association is the implementation of the “Emergency notification service for German auto insurers (UMD).” UMD installation is voluntary for insurers and customers. However, it is in high demand. This is how it works: a sensor is being installed on the car; it reacts to the impact in the case of an accident; and, in the case of the accident, it notifies the emergency services, transmitting information about the location of the car and the features of the traffic before the collision. It is important that no one collect information about the client and its manner of driving the car; the information is being constantly replaced by the newest.”

Michael Brandstetter, who represented the Austrian Insurance Association (VVO), underlined the importance of data protection and legal bases for its processing: “Customer data is the core element for insurers. However, it is very important to realise the risks interlinked with the data management, including cyber risks that threaten insurers. We need a legal framework for processing customer data and agreeing on disparate legislation in different countries on these issues. Consumers should have control over their data, and the insurer can use them only if there is a legal basis, the client’s consent.”

Senior Marketing Manager of GenRe Michael Theilmeier is confident that we cannot predict the consequences of digital changes to the full: “The world is not linear. There are many options for what the consequences of digitalization will be. Auto insurance is not in the epicenter of the vehicle system’s digitalization, which consider an autonomous driving, “auto without a driver”, emergency warning systems as its core elements. We still don’t realise what is the role and place of insurance in these transformations. Telematics, which is actively developing in the countries of Central and Eastern Europe, does not allow a thorough assessment of the quality of driving so far, and the nature of pricing is too complex.”

Dr. Michael Pickel, Member of the Executive Board of Hannover Re, is convinced that insurance and reinsurance of the future will largely be automated. “Already today we create new values and opportunities for our customers and partners. Insurance and reinsurance are no longer isolated services from the rest of the world. This is part of the great ecosystem that we are creating and should take a proactive position in this process,” – he stressed.

Igor Novikov, Head of SingularityU Kyiv Chapter, is confident that the drastic transformations for the insurance industry will be visible within 3-5 years. After all, the term of penetration of any innovation into any sphere of life is being reduced every year. So, if for mass coverage of the first 50 million users of technology, for radio it took 38 years, television – 13 years, the Internet – 4 years, Facebook – 3.5 years, Instagram – half a year, then for the Angry Birds game – only 35 days.

According to Igor Novikov, citing the example of the Lemonade start-up, today, the insurtech companies offer radically new value to customers compared to traditional players. So, you can manage all processes independently through a mobile application without the participation of a broker, the back office of an insurance company or an assistance agency – from signing the contract to a claim process.

Oleksiy Putyatin, head of business “payments and transfers” of PrivatBank, said: “The number of online transactions is growing at a huge rate. Today, the bank is an API. The insurance company is also an API. Our task is to create products and support all the processing procedures. The bank is very similar to the insurance company. The bank estimates a loan amount, and the insurer estimates risks. The bank determines the percentage of the loan to be given and what the collateral should be, while the insurance company assesses the driving style and determines the insurance rate corresponding to it. Therefore, today, our goal is to create a competitive product and appropriate processing. And finally: you do not need to create a product for years. If there is an idea, launch it tomorrow, get feedback from customers and do immediate improvements…”

Dmytro Zarahovych, General Director of Softinvest Holding and Co-founder of UAPAY, believes that “the digital trends will lead to changes not only in the product offerings of insurers but also in the whole financial sphere. New models of monetization, new distribution channels for insurance products will appear following the changes in the culture of consumption. Insurance sales will be concentrated in consumer hubs…”

Olexandr Drobot, Managing Director at Audatex Ukraine LLC, analysed the most dynamic segments of the Internet of Things – Smart homes & connected cars. “Autonomous cars carry both positive moments and threats, – he noted. – Relatively positive moments, according to Google statistics, for 6 years, for the fault of them there were only 11 accidents, and those were related to the human factor. However, there are threats related to cyber terrorism, quality of service and significant investments. But in any case, future is behind these technologies.”

“The use of drones in the agricultural sector and auto insurance could greatly accelerate the process of damage assessment and save significant funds for insurers,” – said Fevzi Ametov, Co-founder of DroneUA.

Galina Tretyakova, Director General of the Ukrainian Federation on Insurance, is convinced that every insurer today faces a choice of strategy, how to move forward and build cooperation with the client. “Each insurer chooses a development strategy and priority channels of communication with the client. Insurance is not a product of prime necessity. Moreover, the industry does not yet meet high technological standards. Therefore, today every insurer faces a choice of how to bring high-tech realities closer and make them the basis for interaction with the client. From this choice will depend, for example, whether the clients will get responses to their questions from the insurance agent or the bot. However, despite the channel of communications, insurance is based on trust, and in any case, it is important to establish a trusting relationship with customers.”

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