Tech industry: Solution to interruption insurance dilemma?
Business interruption insurance has been dominating insurance-related news since government-imposed restrictions caused many businesses to close throughout the UK. Although some insurance policies cover financial loss due to ‘notifiable disease’ and ‘denial of access’ type events, insurers are staunchly refusing to pay out on loss flowing from the government lockdown. Compounded by long waiting times for insurer decisions to pay a claim, this has put immense strain on already struggling businesses and prompted an industry-wide search for solutions to prevent similar incidents in the future.
Proposed solutions include government-backed insurance products, independent third-party entities administering payments to policyholders and greater integration of technology. Except for technological developments, existing proposals do little to remedy the situation.
Clearly, the most promising remedy for the business interruption dilemma is technological innovations, which fall into two categories: those which exist alongside and accelerate existing processes and those which replace or alter existing processes.
Of the first category, stand-out developments include artificial intelligence and machine learning, which have driven a reduction in investigation and claim handling times, reducing the time taken to reach a final response and the time taken for payments to be made to policyholders. Swifter payments save thousands of pounds for businesses suffering business interruption, by reducing the need for bridging finance and other expensive temporary measures. Further development of technologies such as artificial intelligence and machine learning will further reduce these delays and could be an avenue to resolving the issues with business interruption insurance.
A more novel and perhaps more promising development is one which alters existing processes, namely the development of parametric insurance. Parametric insurance works by removing the traditional indemnity insurance trigger (insurers paying money that compensates the insured for the amount of loss suffered following an insured event) which most insurance policies use, and replacing it with a parametric trigger, whereby an agreed upon disruption to a specific service will trigger an automatic payment of a pre-set amount to the policyholder.
This parametric trigger means that all the delays caused by the traditional process of notification, investigation, consultation with specialists to assess financial loss (where necessary) and correspondence with policyholders are entirely removed from the process. The impact of this cannot be overstated. Policyholders will save substantial sums in lost revenue and the arrangement of replacement services which are necessary under the current system, as policyholders often wait months to hear back from insurers, even when claims are accepted.
Although not yet prevalent, some key market participants (including Lloyds of London) have started offering insurance policies which use parametric technology. While there are issues to overcome for those developing parametric insurance (for example, the economic losses of the insured could differ by any margin from the amount of coverage), a more widespread uptake of parametric technology could offer an affordable, simple, and fast business interruption insurance solution, which the market is desperate for.
SLK Software: Optimising performance in the digital economy
Established in 2000 in Bengaluru, India, SLK Software recognises that fast-paced digital transformation is creating an unprecedentedly fertile period of opportunity for global businesses.
As such, with a firm belief in the power of simplification and automation to yield new and exciting experiences, the company has been challenging the status quo for over 20 years through an approach that is:
- Relationship oriented
- Strategically focused on a desired outcome
- Reliant on automation tech
Believing in purposeful automation
SLK’s specialisation in automation tech is full spectrum: artificial intelligence (AI) and machine learning (ML), Computer Vision, Natural Language Processing (NLP), Robotic Process Automation (RPA), and more, are all part of its core competencies.
Citing 90% productivity improvements, 30% business growth through better customer experiences, and up to 20x faster go-to-market capabilities, the reasons for its focus are clear.
The company currently serves the banking, financial services, insurance, retirement services, M&A, manufacturing, and supply chain sectors. Solutions offered include:
- Intelligent Business Transformation
- Agile IT Automation
Accelerating workflow processes
The latter is a tool specifically calibrated to enable business users an easy method for capturing document processes. This can occur across any application, with these individual tasks then seamlessly combined for both improved compliance and governance.
Carol Castelloni, VP of Transformation at CNA Insurance, highlighted this as providing critical support in helping the company meet its business objectives:
“SLK’s Avo Discover tool accelerates how we can document workflow processes, measure impacts on enhancements, and identifies future automation opportunities.” Liberated from having to focus on these process-driven aspects of business, CNA Insurance has been able to refocus its attention on creative problem-solving instead.
Ultimately, this is the most important benefit that SLK brings: it optimises the back end so that clients can channel their energy towards what matters the most, customers.
Read more about SLK Software and CNA Insurance in the June 2021 edition of FinTech Magazine.
Pictured: SLK Software team (source)