When thinking about insurance, technology is not always a top board item. But in today's context, technology that senior executives of an insurance company use on a daily basis is "creating a different dynamic in the boardroom".
Elaborating more in his keynote speech, Federato CEO and Co-Founder Will Ross said this includes “talking about cyber security, social inflation and climate catastrophe, alongside many topics that have become core to the insurance industry”.
But at the same time, the reality of the insurance industry is that “we work primarily off of an old core of on-premise systems”, Mr Ross added.
“And in APAC in particular, that could not be sort of more crippling to the future we all want to go to,” he said.
“While we will be talking a lot about the potential of AI over this conference, one of the most important things we need to do is address the pieces underlying the surface.”
Resilient does not mean efficient
“The state of our industry is not as healthy as we think it is, even if it has survived many trends,” said Mr Ross.
“The fact that it is resilient does not mean that it is efficient.”
For instance, Mr Ross highlighted the usual trend of convergence in performance in the insurance industry as an example.
“Combined ratios that sit in the high 90s means a company is creating value without investment income. With investment income, organisations can become an overall profitable business,” he said.
“But more recently, instead of converging, we are starting to see a divergence.”
Such a trend he pointed out was the presence of a bimodal distribution, which is what happens anytime a group of companies or people have an advantage over another group.
“What do you think is making the difference? The answer inevitably comes back to who is making the best use of data,” Mr Ross said.
“And there is no doubt in my mind that in today’s modern era, it increasingly means the use of AI and generative AI.”
Leveraging AI to address inefficiencies in insurance
With the use of AI in mind, the focus shifts to how insurers can make use of technologies in order to make a difference, such as how organisations can automate in order to move faster, according to Mr Ross.
“But this assumes that advantages will accrue from this core idea of automation; that is the danger,” he said.
“And insurance has among the highest exposures to automation in AI.”
One such exposure is in labour costs, which only makes up less than 10% of expenses related to changes insurers are attempting to make, Mr Ross highlighted. In comparison, labour costs in the software industry make up to 80% of expenses.
“The insurance industry needs to think bigger. We cannot just think about replacing humans within processes,” he said.
“We have to look more holistically at where the efficiency really comes from, because in insurance, the inefficiency is not human and process: it has to do with the allocation between capital and risk.”
According to Mr Ross, inefficiencies in insurance includes profits leading out through core distribution tables and capacity stacks in reinsurance that include layers of brokerage “that sit in between, taking slices out and reallocating capital”.
“I would argue that if we are looking for a place for these technologies to help, it would be in what agents can do that humans cannot,” he said.
“And it is also very important that the industry understands that in trying to do sophisticated things like moving through very complex risks without a human in the loop, these systems have underlying dependencies.”
Mr Ross also said, “But the reality is for those underlying systems, if organisations do not address the problems from a process perspective internally, but from a technology perspective, inefficiencies within will compound.”
ITC Asia is being held at the Sands Expo and Convention Centre in Singapore, from 30 June to 2 July 2026. Asia Insurance Review is the official media partner.