Risk Teching


Thanks to new tech-friendly measures announced by the government, the insurance sector in Abu Dhabi is spearheading the adoption of artificial intelligence and automation of services.

The insurance market in Abu Dhabi is set to witness a growing presence of digital solutions and automation. Most companies, including market leaders, have increased automation and will continue to do so through digital engines and artificial intelligence (AI).

The drive toward embracing technology-based solutions comes directly from the top. In an exclusive interview with TBY, Ebrahim Obaid Al Zaabi, Director General of the Insurance Authority, revealed that the nation’s insurance authority is exploring the intersections of technology, fintech, and blockchain. As investment income has not contributed significantly to shareholder returns, insurers are faced with an opportunity to exploit technology to increase technical profitability and cost reduction given relatively low pricing and increased reserves. For this reason, technology spending in the global insurance industry is expected to reach USD205 billion by 2019.

Through digitization, companies will significantly improve their services, certainly raising industry standards, probably forcing market consolidation, and hopefully easing the pressure on margins as the market becomes less price driven. Currently, technological upgrades have focused on digitizing paperwork, in turn streamlining claims handling. The new claims technology introduced by the Insurance Authority pushes claims directly to the insurance company, and it has three days to come back to the client before it is escalated to the regulatory body. A practical example is the loaner car policy, whereby the company has to provide customers with the same type of car or compensate them AED300 (USD82) per day until the claim is settled.

The policy is in line with the UAE Vision 2021, which aims to reduce traffic casualties from about six to three per 100,000 people, and seeks to follow into the footsteps of similar measures taken by its neighboring Emirate. Indeed, Dubai-based I-Insured, the retail unit of the largest insurance group in the MENA region, recently launched an AI-based SafeDriver pay-how-you-drive app that reduce traffic accidents significantly. The innovative solution offers incentives by basing premiums on how safe drivers are on the road. The app has been designed with advanced AI to automatically detect who is driving and secure a statistically valid “safe driving score.”

After reducing the amount of time it takes to receive a claim, the next step in this evolution will concern companies’ interaction with clients, as the need for branches and manual operations will fall further. As such, companies’ paths along the digital transition are likely to be all but smooth due to the insurance version of fintechs. Insurtechs are technology-led companies that enter the insurance sector. This is particularly true for the retail segment, 75% of which is already served by insurtech business, since online and mobile channels and digital technologies offer many quick wins in retail as they are catered to a younger demographic. According to a report by PricewaterhouseCoopers, a consulting firm, “Millennials are less company-loyal and tend to treat financial products and services, including insurance policies, as interchangeable as long as they fulfill personal needs.”
Thus, just like fintechs have attempted to disrupt the banking sector functioning with much lower cost burden than traditional banks, insurtechs seek to exploit the rigid structure of a traditional industry and low penetration rates in emerging markets, including the Gulf. While the UAE still ranks first in these terms, and insurance has grown at an impressive double-digit rate in the last five years, regional penetration remains lower than in most of the world’s emerging markets.

Insurtech is still at a stage of infancy, but Abu Dhabi market needs to react fast so as not to witness a total disruption and perhaps open up channels for partnerships, similar to how banks and fintechs are beginning to collaborate. Abu Dhabi Global Market and Daman are collaborating closely on a range of technology-related initiatives—a concrete signal for traditional market players that embracing digitization can no longer wait.