Changing the face of risk in the digital age

MUCH has been discussed of late in the media about the digitalisation of the insurance industry by innovation torchbearers.

The prospects of disrupting one of the oldest trades in the world with technology are exhilarating, especially when examined from the outset.

The concept of insurance fundamentally involves the transfer and distribution of risk as a means of protection from financial loss. Before the introduction of the Internet of Things (IoT), the valuation of risks has been subjected to the complexities of actuarial science, and is not easily understood by the man on the street. Complex pricing models arise as they are necessary to help insurers in a market of imperfect information, and to mitigate moral hazards which occur when customers neglect to manage their own risks after taking up insurance.