Looking Back, Looking Forward: Insurance 2023
From the meteoric rise of AI, the major impact of inflation, and ongoing need for product efficiency and automation, 2023 was a momentous and transformative year for insurance. How did the industry respond to its key developments and what can insurers and customers expect in 2024? Host Patrick Nobbs, Sapiens Regional Marketing Director, EMEA & APAC and guest Graham Gordon, Sapiens Director of Product Strategy P&C EMEA take a look back, and a look forward as they unpack 2023’s year in insurance.
Patrick Nobbs|Graham Gordon
Patrick Nobbs: Hello, welcome to the Sapiens Insurance 360 podcast. I’m your host, Patrick Nobbs, Sapiens’ Regional Marketing Director for EMEA and APAC and I’m so glad that you’re out there listening. This is where we discuss the latest news, trends, and issues from across the insurance solutions and technology spectrum. Today we have an incredibly special guest, our own Graham Gordon, Sapiens’ Director of Product Strategy, P&C EMEA. Graham has over 20 years of broad experience in a variety of roles in the business arena, including sales support and enablement strategy marketing. Prior to Sapiens, Graham was at LexisNexis Risk on the data products side of their business. He’s been at Sapiens now for two and a half years, leading our P&C strategy team. Today’s topic is “Looking Back, Looking Forward: Insurance 2023,” and Graham, we’re so glad that you’re back with us today! You were on the inaugural Sapiens Insurance 360 episode earlier this year, so this is a nice bookend to our first season.
Graham Gordon: Seems like a lifetime ago, that first one! Must be a year!
Patrick Nobbs: It is several months. Yes, it is hard to believe that we’re about to close the book on 2023 and turn the calendar to 2024. So without doubt, 2023 was an eventful year. So with so much happening in the world, the insurance industry, and of course, at Sapiens, why don’t we start with your take on the wider insurance industry. Talk to us about some of the most significant trends of this past year and their impact.
Graham Gordon: So let’s cut to the chase, I think, there’s only one thing that actually matters this year or in the past 12 to 18 months, that’s inflation, and the rest of it is just noise. If you think about what’s happened, so the energy costs, yeah, globally, this isn’t just European-specific. But energy costs, their impact across the manufacturing chain. The cost of used cars, the cost of repairs, add the inflation in, there’s an uptick in vehicle claims, an uptick in used car prices. There’s an increase in stolen vehicles. And you look at external forecasts, ABI, you know they’re looking at price increases 16% to 20% in 2022, plus a similar amount [in] ’23, cumulative, let’s say there’s a 40-odd % increase in insurance costs for consumers over the past two years. And then we’ll add in some local issues as well, the residual impact of the FCA’s ban on price walking. And they said it would save motorists 4.2 billion over the next five years, [I’d] love to see them recalculate that one, because it sure doesn’t feel like it. And it’s everywhere, commercial as well. I think Marsh did a report recently looking at the global trends in commercial insurance, 4% quarter rise. You know, that say 16% a year. And the other one, big one was PricewaterhouseCoopers, like for like same policy that you had 12 months ago is going to cost you 20%, 10%. There’s a big range difference there this year. So it’s all inflation-related.
Patrick Nobbs: So regarding those developments from 2023 so, and 2022, where we’ve got inflation increasing and affecting prices of premiums and pretty much everything, what do you think is going to happen in terms of that playing out in 2024?
Graham Gordon: Yeah, so we know, you know, a couple of things. We know what happened in 2008, the financial crisis, and in 2020, a reasonable degree with COVID. Got that word in there. That’s good. You know, being that was masked by lower claims frequency and the cost impact in the insurance industry was, you know, under insurance, larger gaps in cover, uptick in fraud, demand down, significant price competition and pressure on pricing and customer shopping rates went up. So happy Christmas, everybody! You know, interesting times.
Patrick Nobbs: Excellent. Okay. So, let’s bring the conversation around to Sapiens for 2023. Talk to us about some of our new products and enhancements that we’ve rolled out in 2023.
Graham Gordon: So let’s just keep on this context thing for a moment before we go on to particular products and stuff. So, let’s flip that kind of, sorry world, more of the same story to positive action and talking about what our customers are doing to adjust to this kind of new normal. And we held our first customer post-COVID conference this year in person in Barcelona and it was great to have everyone in the same place at the same time for the first time in two, three years, I think it’s been. But one of the striking things that came out of the workshop sessions was, you know, the switch from talking about business efficiency. We all like to talk about it and we bake it generically into the products and, but it’s all kind of like, nice talk about efficiency, too, you know, a real step change, absolute focus on efficiency. And that was pretty much universal across the 100-plus customers that attended. And it makes sense. You know, we have had years of GWP growth. Most, if not all of our customers, have been in a growth mode. They still are. And if you think about, you know, what we have brought in terms of product solution sets, the digital-first attitude that we now have, more and more customer self-service, more low-code business toolkits that, you know, our customers can use, this hyper-focus on speed of product delivery and change, you know, to insurance products that’s two hours. Commercial too, you know, we see more and more larger risk purchased online and digitally. So our customers are like, if we want to get a handle on this inflationary world we live in and get control over prices, we have to be super-efficient. And the benefits to our customers, same as competitive advantage and customer advantage. And we have to remember who we actually serve at the end of all of this, who we ultimately serve, and that’s our customers’ customers. Lower prices, better services, to be clear. I want this as a consumer, we’re all consumers, so it makes absolute sense. This has driven a lot of the thinking now to be hyper-focused on how our products or services can be high proficient for our customers.
Patrick Nobbs: So with that in mind, are there any other products that you think really stood out with that sort of cost and efficiency process in mind?
Graham Gordon: Yeah, Can’t not mention, AI. None of us saw this coming this time last year, and I include our customers in this. When I think back to the product workshops and things that we were hosting and this is going to solve or contribute to solving a lot of these, kind of, the next step change in our innovation capability. You know, look what we’ve got access to now. We’ve got, you know, open AI, ChatGPT, that text in, text out, and the kind of step change in image recognition and generation. So more emphasis on the recognition side of it. And then internally, you know, the open AI codex, which is your GitHub copilot, you know ultimately using natural language to code. And the speed and the magnitude, and the execution of what they’ve done is mind boggling. And if you think about this, have you ever seen that kind of speed of innovation in an industry, let alone from one single firm, that launched its first product 10 months ago, and how they’ve opened that out and let companies like us, you know, start to work out how we bring into our products and services. I’ve no doubt that they’ve figured out how to use all three of those things to create and write new products and services already. Open AI’s cracked how to use AI design code and ship product. It’s like AI is building AI and it’s just, you know, a start of an entirely new way of doing things.
Patrick Nobbs: Yep!
Graham Gordon: So we can’t not talk about it. I should pause there and let you unpick that statement because it’s amazingly complex, you know, AI is building AI along with AI applications and shipping them.
Patrick Nobbs: I think what that does show is a very brave new world that everybody is, is confronting. So just a change of there, now, can we pivot to some discussion about Sapiens 2024 customer strategy? So in addition to providing next-generation products, we’re really focusing on earning trust through customer care and collaboration. What are your thoughts on that statement?
Graham Gordon: Yes, if you look at the technology roadmap and what we’re working on, there’s a couple of things. You need to kind of break these down to make them easier to kind of think about. First one, artificial intelligence, and its use in insurance. So for problems too big for one organization to deal with, you partner. And, you know, I’m delighted that in 2023, we got selected by Microsoft to look at how we can apply this in the insurance world and how we can use the Microsoft tools to introduce [the] next generation of innovation efficiency. There’s that word again, you know, baked within our platform, how we can embed generative AI capabilities. And you know, combine that with the [Microsoft] Azure platform with the Power BI suite and that kind of toolkit, and then how we think about our existing processes and make this kind of step change for, efficiency and driving business growth, and the use cases are probably as broad as your imagination. Well, we know they are, or if you’re stuck, you know, just ask ChatGPT to do it for you. So that’s the kind of, you know, the cool kind of forward-looking side. But there’s also a whole bunch of compliance and biases issues we could expose our customers to. So, you know, we’ve been working in 2023 and we’ll work next year and thereafter, hand-in-hand to work with Microsoft to solve those kinds of challenges and watch this space. So that’s the first bit. Second bit, I think you asked me about was trust. And it’s a good example and this is a switch. You know, for many, many years, we’ve been really, really good at taking requirements from customers, building it, scaling it, and that’s built an awful lot of trust in our delivery and our execution capabilities across the organization. So you know, what’s next? And if you combine these two stories, now it’s getting interesting, that technology philosophy we were talking about, and a lot of the conversations we have of our customers is now built on that foundation of the delivery and the execution. And they know we’ve done this for them. So the conversations are all about, you know, what’s next? And that tends to be around, what are other customers doing, what’s your R&D looking at? Where can we share, where can we share investment? What can you advise us? You know, what’s working well in other geographies or territories that we can bring into our company or our country and what insurtechs should we use? Should we build or buy it? And that changes the conversation an awful lot. And that’s a result of this kind of collaboration and this right to to be trusted by the customer based on that execution and the delivery foundation that we have.
Patrick Nobbs: So we talked about trust in that conversation. When it boils down to, what it means to be a customer, a Sapiens customer in 2024, how will Sapiens provide further value in terms of products and partnership to our clients’ transformation journeys?
Graham Gordon: Yeah, I think about this a lot, what it means to be a Sapiens customer and it’s, it’s a combination of things. It’s the user groups and the workshops that we run. It’s like-minded people working on problems and opportunities, and we have a common shared platform, technology platform, technology stack. But combined with that, combined with the new tools that we’ve got, is this kind of, the experience of a shared team that’s executed a lot of the things before. So it’s not just technology, but it’s also how that technology is applied. The change management, you know, we’re a deep partner of our customers and yeah, it really is a product, I don’t want to say a by-product, but it’s like a function of our team of business professionals, not people. So as much as I like talking about the technology, it’s not always about the technology, it’s about the people, and I do believe now that this kind of collaboration approach that we have, our customers now trust us to inspire them.
Patrick Nobbs: So Graham, what does 2024 look like from the point of view of tangible development?
Graham Gordon: Yep, I look at this a couple of ways. So, you know, business as usual and a couple of, of bigger bets or bigger developments. Let me explain what ‘business as usual’ is. We’ve got a deep roadmap for our core product set across, you know, core digital data and analytics and these are all about incremental feature and function enhancements across the whole value chain of the software. We’re embedding more and more analytics into the workflow to increase automation. These are specific features that make the software easier to use. Three releases per year, really, really, good, good stuff inside them. And most of those are planned out. That’s business as usual. And then we have the kind of bigger bets. This is all around some of the items we touched upon earlier on, the use of open AI and AI across the value chain. And that is also getting really under the skin of the compliance factors and the implications of that. We have to make it rock-solid for our customers. And this feels like, you know, transformational like we spoke of earlier. The second point is a lot more work going on around data enrichment, a point of need. So what does insurance thrive on? Well, as much compliant data, as much data as permissible at the lowest possible cost. I think there’s a massive opportunity here for our customers to harness the broader ecosystem and the insurtech world that’s out there. You’ll need a lot of this to take advantage of the full capabilities of the AI we want to deploy. So that kind of you know, the data models and bringing more and more data enrichment into the into the platform is going to be critical for this. So we want to evolve those two things in 2024. We’ve got a lot of customers collaborating through the workshops that we run and the user groups and sharing that insight. And I think if we, if we nail those things, that’s going to give us the big efficiency gains that we need and going forward into 2024.
Patrick Nobbs: That is a great answer, and I think hopefully that provides some clarity on being a Sapiens customer, but also our thoughts on 2024 or rather Graham’s thoughts on 2024. So thank you very much, Graham, for all of that. Like we’ve said, 2023 has been quite the ride, but 2024 is certain to be packed full of growth opportunities for Sapiens as well as our valued clients and partners. So, I want to wish you all out there a safe and happy festive season, as well as a peaceful and prosperous new year. As always, thank you so much for spending your time with us here today. We love hearing from you, so if you have comments or would like to follow us on social media, please reach out to us through any of our channels. And don’t forget to subscribe to the podcast, and thank you once again for listening. We’ve got more coming, so be sure to tune in next time to Sapiens Insurance 360.
