Future Model of Insurance
By Fei Zhang and Petra Wildemann
29 October 2018
In this debate Fei Zhang and Petra Wildemann discuss the essence of insurance with respect to risk analysis, prevention, preparedness and reimbursement. They compare the origin of the insurance industry with that of its sister industry, stock trading. They agree that both industries started with similar paper certificates and yet the two industries today have very different levels of digitalization in the full cycle of contract management.
The essence of insurance is the understanding and controlling of risks as well as protecting businesses and individuals from the devastating effects of possible dangers, losses or injuries. So although the fundamental goal of insurance is to mitigate risk and remediate losses, the industry spends a huge amount of time and resources in processing “legal papers”. The insurance industry has a proven record in leading and driving safety and security behaviours in the auto industry, the health industry and nearly all other lines of business. However, the minimization of data and the lack of transparency of insured data from the insured to the insurer make it more difficult to develop new products and services.
The stock market is enormously far ahead of the insurance industry in replacing paper work with digitalized processes. The capital markets have digital market places and shared market infrastructures.
In the article, Fei and Petra discuss what a future insurance digital business model could look like and what the technology pillars of the business model are likely to be. A futuristic risk management ecosystem model, covering front, middle and back offices, could enable customers to have a significant digital footprint in a variety of social media. The article takes a close look at how this could be realized in the different office layers.
We believe that with appropriate layers of capability modules, fulfilled by human and machine working in close coordination, a much more efficient digital business model of risk management ecosystem can be built. In our next article, we will analyse the digital platform strategy of PingAn through the lens of such a future digital business model of risk management.
About the Authors
Petra Wildemann is the Chair and Founder of the Swiss Cyber Think Tank (https://www.risk-cyber-insurance.com), a business network of like-minded people for Cyber Risk & Insurability, providing an industry-wide networking platform for insurers, technology and security firms. As a qualified actuary for Life Insurance and Property & Casualty Insurance in Switzerland (SAV), Germany (DAV) and UK (IFoA Affiliate), her specialisation includes risk management on a variety of local and global risks. Of late, she has expanded her focus to also include the challenges of modelling the risks on Pro-active pricing and incentive models. Petra is a member of the Australian Insurance Cyber Think Tank (https://www.linkedin.com/groups/13606933/) and the ASA Groupe des Dames de SAV (https://www.linkedin.com/groups/13606933/).
Fei Zhang is the Head of Blockchain at Allianz Group and was co-founder and COO of the B3i consortium (www.b3i.tech), a global (re)insurance transaction platform based on Blockchain technology. Fei has 15+ years of international experience in designing, implementing and driving digital technology innovations in the consulting, telecom and insurance industries. Fei has a mixed background in electronic engineering, computer science and MBA from INSEAD. Recently Fei has refocused his career driving Insurtech ventures and investments in the insurance space.
Cyber Insurance Incentive Model
By Denny Wan and Petra Wildemann
27 August 2018
This whitepaper extends the concept of Pro-active Cyber Insurance Pricing Model (by the same authors) leveraging cyber risk control metrics in order to encourage insureds to improve their cyber security posture. This whitepaper explores the underpinning incentive model for cyber insurance policy and its potential to elevate and amplify the incentive effort.
In the white paper “Cyber Insurance Incentive Model”, Denny Wan and Petra Wildemann tentatively compare Cyber incentive models to more complicated insurance business lines.
Pro-Active Cyber Insurance Pricing Model
By Denny Wan and Petra Wildemann
29 July 2018
When we review the terms of Cyber Insurance policies, it becomes clear that there is a mismatch between the insured‘s knowledge of the underlying type of cyber risks and the cyber risk insurance products offered on the market. It is not a gross overstatement to say that the insured simply has no idea what type of cyber risks and events they want to insure for.
In the white paper “Pro-active cyber insurance pricing model”, Denny Wan and Petra Wildemann discuss cyber insurance pricing models which can potentially provide the necessary incentive to the insured to improve cyber security postures as a sustainable response for cyber threats to bridge the gap. They examine a transformational approach called “pro-active cyber insurance”, where there is explicit understanding of the risk metrics by the insurer and insured.
Switzerland Cybersecurity Landscape Slide – Switzerland CyberSlide©
The Cyber Startup Observatory© team is currently working on the Switzerland CyberSlide©.
Assessing Global Risks – Pandemic and Cyber Risks
Published in The European Actuary (March 2018)
English and French Version:
Act before the damage happens - International experience with cyber risk
Published in Schweizer Personalvorsorge (September 2016)