Technology will be the megatrend dominating the insurance sector, a conference was told.
Matt Cullen, assistant director and head of strategy at the Association of British Insurers (ABI), said technology had an impact on UK insurance through: new insurance environments, price comparison sites and big data analysis.
At a conference on the future of UK insurance (organised by the Westminster Business Forum), Cullen said: "I think this is a systemic megatrend with more scope than any other to revolutionise how insurance businesses operate, and that is [through] rapid and relentless technological change; the rise of the digital economy."
He said the rise of companies such as room-sharing website Airbnb and taxi app Uber would create "new insurance environments" with "new risks to insure."
Cullen said technology challenged the industry and listed three types of challenges: technical challenges such as developing capabilities to analyse "huge volumes of varied and structured data"; commercial challenges including modeling and pricing challenges; and public policy challenges, which involved the use of data "acceptable to consumers and regulators".
The conference heard concerns that price comparison sites would result in customers only focusing on the headline price of an insurance product and ignoring policy wordings.
Cullen stressed the importance of traditional methods of selling an insurance product, such as the use of insurance brokers, and said price was "not everything".
He said: "I don't want to encourage everybody to be using price comparison websites because actually there might be people for whom more in-depth discussions about the products or services that they want to buy are more appropriate, there might be people who need to use broker channels or talk to insurers directly when they buy products as well.
"So from our perspective, just because I say the technological age is coming, it's growing and it's going to dominate, that doesn't mean that other ways of accessing this market are dead or irrelevant, I think they are just as relevant as they have ever been."
Caroline Barr, member of Financial Services Consumer Panel, urged insurers to "have a very honest conversation with consumers" about the use of big data when making an assessment. She said: "As long as you're not getting the data in an underhand secretive way, they have to make the trade-off in their own minds about whether they are willing to share in order to get the price that they want to pay."
