Robot Autonomy and the Future of Reinsurance Carriers
Guide Overview: As the world grows closer to significant automation, reinvention becomes increasingly imperative for reinsurance carriers. Traditionally, reinsurers have been a steady and predictable industry. However, the advent of robot autonomy is setting the stage for changes that could disrupt the current market index, largely driven by improvements in accuracy and efficiency. These advancements in robotics are predicted to generate $13 trillion in economic activity globally by 2030, according to McKinsey Global Institute, and are anticipated to transform the reinsurance sector in unprecedented ways.
Robot Autonomy and its implications for Reinsurance Carriers: Robot autonomy is gathering pace, with 38% of businesses worldwide already using some form of automation, stating significant efficiency gains and improvement in work quality (Deloitte Insights). This advancement means that the risk associated with human error is being mitigated, allowing for more accurate predictions and fewer instances of costly indemnification for reinsurance carriers. Reductions in claims related to human error could lower premiums by up to 60%(KPMG). If the trend continues, the implications for reinsurance carriers could be transformative, rendering certain insurance products obsolete and creating demand for innovative new offerings.
Future dynamics of Reinsurance Carriers in the Robot Autonomy era: In a McKinsey survey of insurance executives, 89% foresee that automation will reduce operational costs. Currently, much of the underwriting process, policy servicing, and claims handling can be automated leading to an estimated 20-25% decrease in expenses. However, the rise of robot autonomy ushers in a new set of risks, such as algorithmic glitches, software malfunctions, and cyber-attacks. These risks are not adequately captured in the current reinsurance model and signify the need for reinventing coverage and pricing mechanisms tailored to these new parameters. In the future, it is expected reinsurance carriers will move towards a model based on product liability rather than focusing on the traditional driver-based model.
Opportunities for Reinsurance Carriers: Despite presenting challenges, robot autonomy holds potential for reinsurance carriers to develop new and innovative products. 68% of surveyed Fortune 500 CEOs anticipate that AI and robotic technologies will create sizable opportunities for their businesses. From covering risks related to data breaches to algorithmic malfunctions and software liabilities, the rise of autonomous robots opens up a vast untapped market for reinsurance carriers. Furthermore, the real-time data generated by robots can enhance risk modeling, thus optimizing pricing and policy customization.
Key Takeaways:
- The rise of robot autonomy could disrupt the current reinsurance industry, demanding innovative risk mitigation products and pricing structures.
- Current predictive models may become obsolete as human error decreases, and new risks emerge.
- There are significant opportunities for growth and innovation within the reinsurance sector, driven by the need to cover new types of risks in the autonomous robots era.
- Real-time data from robots can significantly enhance modeling and pricing strategies for reinsurance carriers.
3Laws Robotics is developing advanced software to enhance safety and reliability for robotic systems, further supporting the foreseen future and use cases detailed above. Addressing the certification challenge, a pain point for robotics companies, 3Laws' software, 3Laws Supervisor, offers robust safety features that provide evidence of system robustness and can potentially simplify the certification process. Built on Control Barrier Functions (CBFs), a groundbreaking technology developed at Caltech, 3Laws provides mathematically proven safety.
The software is applicable across a range of industries, with proven efficiency gains in warehouse automation, human-robot interaction, and dynamic environments. The software also minimizes downtime and offers real-time guardrails for autonomy stacks to ensure optimal robot operations. The software is adaptable to various platforms and is compatible with ROS and ROS2. With 3Laws, we move beyond traditional E-stop safety methods towards a dynamic, predictive safety solution that is safety-certified for ISO 3691-4 and ISO 26262, unlocking the full potential of robotics.