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How insurance is being disrupted

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Many industries, including the insurance sector, are seeing how disruptive technology is changing the way they do business – often forcing companies to re-think their strategies, writes JAQUELINE VAN EEDEN, Insurance Head at Wipro South Africa.

Disruption, once a word used to describe bad behaviour, has now been turned into a revolutionary means of changing the way business is conducted by technology. Insurance is not exempt from this disruption. We are seeing a very clear shift away from traditional means of insurance towards the newer, more evolved methods necessary for maintaining pace in a fast changing, always-on and connected world.

There are typically four main aspects of insurance: product design, pricing and underwriting, distribution and admin, and claims management. This model has been the same for decades and, despite of the increase in product complexity, the insurance business is essentially relying on policy premium income and asset management to function.

However, the rise of disruptive technologies and changed customer mind set is changing this model, and insurance companies are forced to change from product-centric model to customer-centric approach.

Insurers are moving towards customised, usage-based, real-time coverage models and moving away from risk-based underwriting approach to risk management approach. From the beginning, insurance companies have captured lot of data and advancements in big data and analytics, helping insurers in right risk selection, enabling more accuracy than ever before. Legacy interaction methods and distribution channels using call centres and one-on-one visits are being replaced, and  anywhere anytime response to customers is taking top priority. Virtual technology is providing easier and instantaneous ways for clients and insurers to obtain and update information, even enabling seamless and accurate billing via mobile applications.

Emerging digital trends in insurance

There are several trends currently disrupting the insurance industry across the globe, many of which are either technology related or technology driven, which are enabling insurance companies to remain relevant and competitive. African insurance companies are following suit and embracing many of these global trends in the face of a challenging and complex market environment.

Some of the key trends that have been identified are an increased use of Internet of Things (IoT) by insurance companies, the use of Big Data to improve claims processing, an increasing demand on cyber insurance, the emergence of Peer-to-Peer insurance, and a growing focus on mobile applications for interaction between insurers and their customers.

Today’s customer uses the Internet to source quotes and research insurance companies to check for the best deals, yet research shows that most insurance purchases are still happening telephonically or through in-person interaction. Insurers are coming around to the fact that customers prefer online interaction, and are realising the need to adapt their systems accordingly. We will be seeing the progressive simplification of legacy systems to remove the barriers that hinder them from offering a consistent and seamless customer experience.

As the trend for connected and smart devices continues to grow, IoT is fast becoming a transformational driver in insurance industry. Several auto insurers have implemented new models based on vehicle telematics.  The possible applications of connected devices across the industry are extensive and have the potential to revolutionize claims processing, product pricing and fraud detection. Auto insurance industry still worried about the future of insurance connected cars and driverless cars as the manufacturing advancements are going to reduce the risk and there by premiums for insurers. Industry predicts that Auto insurance premiums will go down significantly in the next 10 years due to customer behaviour changes and manufacturing advancements in the industry.

Virtual adoption across the insurance industry has also been vast, and many insurers are actively using or implementing virtual computing for operational flexibility, function standardisation, cost savings, scalability and business agility. Small to mid-market insurers have been seen as early adopters of virtual computing services, which is enabling the ability to deliver faster claims, policy and billing services.

Insurers are facing an all-time low retention rate, backed by growing customer demand and rising concerns about cyber-crime. By not capturing and extracting data accurately, insurers are not able to assess their business positioning and the associated business risks fully, including security breaches. Insurers are being forced to make operational changes which will enable them to make better use of their data, for the purpose of retaining business and staying ahead.

Traditionally insurance is sold than bought. With advancement in technology customers have multiple options and they are demanding changes in the behaviour of insurers to have multiple touch points now compared to the past. Insurers are migrating and upgrading their legacy systems, by automating and digitising core systems. Insurers are seeing the benefits of improved efficiency and customer interaction at multiple touch points. Legacy system transformation has been slow in Africa due to perceived high costs and lengthy implementation timelines. However, many are quickly realising that the longer they wait, the more customers they risk losing, adding to their lag behind competitors.

Insurance companies are embracing these trends and looking at more innovative ways they can attract and maintain customer retention. They are remaining up to date and very interactive with what is happening, even exploring radical game changing technology such as the blockchain.

Disruptive technology is creating new insurance services

With the advent of technologies like IoT, we are seeing an emergence of new services. Connected home technologies are enabling people to stay in touch with things like their home security systems, which is reducing risk for insurers who offer home insurance. Wearable technology is enabling health insurers to keep real-time tabs on the health and wellbeing of their customers, again mitigating risk.

We are seeing the biggest impact in the use of Big Data, though. Insurers are discovering the multiple benefits that the wealth of information available from sources such as social media is delivering. Using this information, they are able to tailor their products based on customer preferences and even offer customised rewards programs, increasing sales and customer retention significantly. It is also enabling easier and more streamlined claims processing, as information is recorded, and centrally stored and accessed.

Of course, the mobile trend, particularly in Africa, is making possible the use of apps, not only to smooth insurer and customer interaction, but also to track things like customer fitness, health and even wealth status. Applications are opening up a world of possibility for insurers everywhere.

Insurance in Africa vs the World

In South Africa, lot of importance is placed on things like life insurance, private medical aid car insurance. The rest of Africa, however, sees insurance as less necessary. This means that insurers who operate in Africa need to be more agile, identifying ways in which they can appeal to the African market and delivering them with speed.

Quick, Easy, Instant, Flexible Insurance is very attractive to the African market. An example of such an initiative is currently being investigated by a South African Insurer who is moving into the Nigerian market. They identified a need for taxi drivers to have medical and insurance cover specifically for while they are in transit. Taxi drivers will be able to purchase insurance making use of USSID or a smart phone application enabling cover only for the time that they are travelling from collection point to destination – an attractive and cost effective proposition for the transport business

This is just one of the many ways in which insurance is changing and being impacted by technology. Insurers, typically entrenched in tradition thanks to its association with stability and reliability, do need to realise that the market has changed. It’s time to embrace technology and disrupt the way insurance works for longevity.

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Which IoT horse should you back?

The emerging IoT is evolving at a rapid pace with more companies entering the market. The development of new product and communication systems is likely to continue to grow over the next few years, after which we could begin to see a few dominant players emerge, says DARREN OXLEE, CTOf of Utility Systems.

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But in the interim, many companies face a dilemma because, in such a new industry, there are so many unknowns about its trajectory. With the variety of options available (particularly regarding the medium of communication), there’s the a question of which horse to back.

Many players also haven’t fully come to grips with the commercial models in IoT (specifically, how much it costs to run these systems).

Which communication protocol should you consider for your IoT application? Depends on what you’re looking for. Here’s a summary of the main low-power, wide area network (LPWAN) communications options that are currently available, along with their applicability:

SIGFOX 

SigFox has what is arguably the most traction in the LPWAN space, thanks to its successful marketing campaigns in Europe. It also has strong support from vendors including Texas Instruments, Silicon Labs, and Axom.

It’s a relatively simple technology, ultra-narrowband (100 Hz), and sends very small data (12 bytes) very slowly (300 bps). So it’s perfect for applications where systems need to send small, infrequent bursts of data. Its lack of downlink capabilities, however, could make it unsuitable for applications that require two-way communication.

LORA 

LoRaWAN is a standard governed by the LoRa Alliance. It’s not open because the underlying chipset is only available through Semtech – though this should change in future.

Its functionality is like SigFox: it’s primarily intended for uplink-only applications with multiple nodes, although downlink messages are possible. But unlike SigFox, LoRa uses multiple frequency channels and data rates with coded messages. These are less likely to interfere with one another, increasing the concentrator capacity.

RPMA 

Ingenu Technology Solutions has developed a proprietary technology called Random Phase Multiple Access (RPMA) in the 2.4 GHz band. Due to its architecture, it’s said to have a superior uplink and downlink capacity compared to other models.

It also claims to have better doppler, scheduling, and interference characteristics, as well as a better link budget of 177 dB compared to LoRa’s 157 dB and SigFox’s 149 dB. Plus, it operates in the 2.4 GHz spectrum, which is globally available for Wi-Fi and Bluetooth, so there are no regional architecture changes needed – unlike SigFox and LoRa.

LTE-M 

LTE-M (LTE Cat-M1) is a cellular technology that has gained traction in the United States and is specifically designed for IoT or machine‑to‑machine (M2M) communications.

It’s a low‑power wide‑area (LPWA) interface that connects IoT and M2M devices with medium data rate requirements (375 kb/s upload and download speeds in half duplex mode). It also enables longer battery lifecycles and greater in‑building range compared to standard cellular technologies like 2G, 3G, or LTE Cat 1.

Key features include:

·       Voice functionality via VoLTE

·       Full mobility and in‑vehicle hand‑over

·       Low power consumption

·       Extended in‑building range

NB-IOT 

Narrowband IoT (NB‑IoT or LTE Cat NB1) is part of the same 3GPP Release 13 standard3 that defined LTE Cat M1 – both are licensed as LPWAN technologies that work virtually anywhere. NB-IoT connects devices simply and efficiently on already established mobile networks and handles small amounts of infrequent two‑way data securely and reliably.

NB‑IoT is well suited for applications like gas and water meters through regular and small data transmissions, as network coverage is a key issue in smart metering rollouts. Meters also tend to be in difficult locations like cellars, deep underground, or in remote areas. NB‑IoT has excellent coverage and penetration to address this.

MY FORECAST

The LPWAN technology stack is fluid, so I foresee it evolving more over the coming years. During this time, I suspect that we’ll see:

1.     Different markets adopting different technologies based on factors like dominant technology players and local regulations

2.     The technologies diverging for a period and then converging with a few key players, which I think will be SigFox, LoRa, and the two LTE-based technologies

3.     A significant technological shift in 3-5 years, which will disrupt this space again

So, which horse should you back?

I don’t believe it’s prudent to pick a single technology now; lock-in could cause serious restrictions in the long-term. A modular, agile approach to implementing the correct communications mechanism for your requirements carries less risk.

The commercial model is also hugely important. The cellular and telecommunications companies will understandably want to maximise their returns and you’ll want to position yourself to share an equitable part of the revenue.

So: do your homework. And good luck!

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Ms Office hack attacks up 4X

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Exploits, software that takes advantage of a bug or vulnerability, for Microsoft Office in-the-wild hit the list of cyber headaches in Q1 2018. Overall, the number of users attacked with malicious Office documents rose more than four times compared with Q1 2017. In just three months, its share of exploits used in attacks grew to almost 50% – this is double the average share of exploits for Microsoft Office across 2017. These are the main findings from Kaspersky Lab’s Q1 IT threat evolution report.

Attacks based on exploits are considered to be very powerful, as they do not require any additional interactions with the user and can deliver their dangerous code discreetly. They are therefore widely used; both by cybercriminals looking for profit and by more sophisticated nation-backed state actors for their malicious purposes.

The first quarter of 2018 experienced a massive inflow of these exploits, targeting popular Microsoft Office software. According to Kaspersky Lab experts, this is likely to be the peak of a longer trend, as at least ten in-the-wild exploits for Microsoft Office software were identified in 2017-2018 – compared to two zero-day exploits for Adobe Flash player used in-the-wild during the same time period.

The share of the latter in the distribution of exploits used in attacks is decreasing as expected (accounting for slightly less than 3% in the first quarter) – Adobe and Microsoft have put a lot of effort into making it difficult to exploit Flash Player.

After cybercriminals find out about a vulnerability, they prepare a ready-to-go exploit. They then frequently use spear-phishing as the infection vector, compromising users and companies through emails with malicious attachments. Worse still, such spear-phishing attack vectors are usually discreet and very actively used in sophisticated targeted attacks – there were many examples of this in the last six months alone.

For instance, in late 2017, Kaspersky Lab’s advanced exploit prevention systems identified a new Adobe Flash zero-day exploit used in-the-wild against our customers. The exploit was delivered through a Microsoft Office document and the final payload was the latest version of FinSpy malware. Analysis of the payload enabled researchers to confidently link this attack to a sophisticated actor known as ‘BlackOasis’. The same month, Kaspersky Lab’s experts published a detailed analysis of СVE-2017-11826, a critical zero-day vulnerability used to launch targeted attacks in all versions of Microsoft Office. The exploit for this vulnerability is an RTF document containing a DOCX document that exploits СVE-2017-11826 in the Office Open XML parser. Finally, just a couple of days ago, information on Internet Explorer zero day CVE-2018-8174 was published. This vulnerability was also used in targeted attacks.

“The threat landscape in the first quarter again shows us that a lack of attention to patch management is one of the most significant cyber-dangers. While vendors usually issue patches for the vulnerabilities, users often can’t update their products in time, which results in waves of discreet and highly effective attacks once the vulnerabilities have been exposed to the broad cybercriminal community,” notes Alexander Liskin, security expert at Kaspersky Lab.

Other online threat statistics from the Q1, 2018 report include:

  • Kaspersky Lab solutions detected and repelled 796,806,112 malicious attacks from online resources located in 194 countries around the world.
  • 282,807,433 unique URLs were recognised as malicious by web antivirus components.
  • Attempted infections by malware that aims to steal money via online access to bank accounts were registered on 204,448 user computers.
  • Kaspersky Lab’s file antivirus detected a total of 187,597,494 unique malicious and potentially unwanted objects.
  • Kaspersky Lab mobile security products also detected:
    • 1,322,578 malicious installation packages.
    • 18,912 mobile banking Trojans (installation packages).

To reduce the risk of infection, users are advised to:

  • Keep the software installed on your PC up to date, and enable the auto-update feature if it is available.
  • Wherever possible, choose a software vendor that demonstrates a responsible approach to a vulnerability problem. Check if the software vendor has its own bug bounty program.

·         Use robust security solutions , which have special features to protect against exploits, such as Automatic Exploit Prevention.

·         Regularly run a system scan to check for possible infections and make sure you keep all software up to date.

  • Businesses should use a security solution that provides vulnerability, patch management and exploit prevention components, such as Kaspersky Endpoint Security for Business. The patch management feature automatically eliminates vulnerabilities and proactively patches them. The exploit prevention component monitors suspicious actions of applications and blocks malicious files executions.
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