Opportunities for modernization exist in credit protection insurance

A new report focused on the credit protection insurance (CPI) industry has found that 70 per cent of a global sampling of CPI insurers say legacy systems are the biggest hurdle to modernizing digital experiences and artificial intelligence (AI) driven underwriting.

Entitled Exploring Emerging Technology & Gen AI Trends in CPI, the report is a culmination of research by Deloitte, commissioned by the Canadian Association of Financial Institutions in Insurance (CAFII).

Stifling innovation 

Regulatory complexity is also cited in the report as being a hurdle to technology adoption among CPI insurers. “Many feel regulatory bodies haven’t kept pace with emerging technology, stifling innovation,” they write. “Distributors are still operating on mainframe banking systems that are expensive to change and difficult to modernize.” More, they say there is competition for resources as the insurance is generally not the core product in question. “CPI remains a secondary product with a high dependency on the use of digital, technology and AI in lending.” 

That said, more than 60 per cent of those surveyed said AI will have a high impact on underwriting and claims processing in the next three to five years; 33 per cent say the customer experience is a top priority for technology investment while 70 per cent say cloud-based platforms will be key enablers of future-ready CPI services.

External forces driving change 

The comprehensive report identifies and discusses eight emerging technologies and looks at each in some detail. It examines external forces driving change, including the increased availability of data, customer demand and the emergence of new, non-traditional players. Overarching trends, use cases, strategic priorities, current tech priorities and future opportunities are also all examined, along with key challenges and key risks, also in some detail.

Risk mitigation strategies suggested include strengthening data governance, creating alignment among industry stakeholders about the development of ethical AI guardrails and considering strategic partnerships. The report also suggests the design of modular and flexible offerings and recommends stakeholders leverage joint innovation.

“Consider how innovation efforts can be combined with other departments and functions within the organization to improve return on investment and offer more integration across the organization for customers,” they write.