Insurtech is changing the way that claims are processed and handled, as Karim Derrick of Kennedys Law explains
Insurtech is well on its way to delivering the innovation that has been promised for a number of years, as the industry itself takes control and attempts to modernise the way that business is done.
In February, Tech City UK’s fintech delivery panel created a new subgroup focused specifically on insurtech and innovation. Featuring representatives from leading insurtech startups, incumbent insurers and key market bodies, including the Association of British Insurers, Lloyd’s of London, the London Market Group and the British Insurance Brokers’ Association, it’s clear that insurers are keen to be masters of their own disruption. But they’re also responding well to the innovators around them.
Commercial law firm and insurance specialist Kennedys Law is one such innovator, despite the majority of its peers still needing to undertake a “palpable shift in thinking about the practice of law and serious investment in new technologies and delivery methods”, as James Tsolakis, head of the legal sector at NatWest, put it recently.
Kennedys Law has gone as far as to hire a head of research and development in Karim Derrick, a technology CEO-style appointment who has worked across capital raising and product development, and knows how to take a technology idea from inception to implementation.
He says that the key to Kennedys Law’s work in insurtech has been to focus on development to meet a client need.
Derrick explains: “One of the challenges for any firm, no matter their sector, is that their commitment to innovation and investment in new ideas is hampered by their constant obsession with ‘business as usual’.”
“Our approach has been to have a dedicated prototype team in place. They are completely separate from production and development, as well as application. They are simply there to try out ideas, rapidly. Our incubator, the Ideas Lab, must follow the same pattern: new ideas have to meet a client need. We won’t invest in a new idea unless it meets a client need and is backed by evidence.”
In insurtech, Kennedys Law’s plan has been simple. Derrick says: “Somewhat surprisingly, Kennedys believes that there is a lot of work that insurers can do themselves, without the input of their lawyers. The partners here recognised that there a lot of volume work carried out for clients that can benefit from automation.”
“We want to develop technology that will help our clients use lawyers less. Technology is traditionally used to improve efficiencies and increase margins, and while it can still do those things, Kennedys Law’s approach has been much different, essentially to help its clients use lawyers less.”
How have insurance clients reacted? Derrick says: “It’s clearly an area of interest for clients, because they all want to learning about how some of these innovations could be applied to them.”
Claims have been of particular interest, says Derrick. “There has been a lack of technology input in the claims area for many of our clients, which have traditionally used it toward the front end, in terms of pricing and selling policies, but not so much in the claims end.”
The Kennedys Law toolkit, as its known, is made up of multiple technologies, both licensed and built in-house. KLAiM, the virtual defence lawyer, has been developed over a number of years. Now, under Derrick’s oversight, its users are enjoying almost monthly releases.
Initially built for motor claims, the artificial intelligence behind KLAiM acts as an online claims litigation tool that enables insurers to settle the majority of their personal injury litigation where liability has been admitted. The simple ‘traffic light’ system guides users through the process, and essential documents are generated and auto-populated.
KLAiM is now utilised across motor, employers liability and public liability, as well as claims under the Occupiers Liability Act. Insurers can also employ KLAiM in infant approval hearings, Civil Procedure Rules Part 7 proceedings and MOJ3.
Derrick says: “KLAiM allows insurers to do more of the work before they hand it over to us, and consequently, for substantially less cost. We’re saving clients an awful lot of money. The number of clients we’ve done that for has grown substantially.”
Kennedys Law is eying up further expansion of KLAiM, given the success it has enjoyed in the UK.
“There’s no doubt of its value. Usage has grown quickly,” says Derrick. “The work we’re now undertaking is to allow it to be standardised for as many other jurisdictions and processes as possible. The new version of the platform, which will be available soon, is entirely configurable, so we won’t have to involve the developers every time we want to customise for something or someone new. We’re at the stage now where there are almost monthly releases, so we’re in the process of constant iteration.”
“The lawyers have already proven its utility and value; my job has been about putting the processes in place to allow it to develop with our clients needs, gaining an understanding of those needs, and understanding other jurisdictions and what they would require.”
The next technology under the spotlight at Kennedys Law is blockchain. Distributed ledger technology, which is best understood as a digitised, decentralised database of records, is taking financial services by storm, with IBM among the highest profile tech companies looking to apply it.
“It seems to me that blockchain, probably more than anything else, has the potential to really disrupt the core of legal services and insurance,” says Derrick. “There is a lot of discussion out there about how blockchain might do this and we’re been keen to find out what the technology can do for these sectors.”
In claims, one immediate application for blockchain is protection against fraud, according to Derrick.
He explains: “Fraudsters operate between the gaps in databases, because one business cannot see another’s books. The idea is that blockchain would fix that, because every business could put their claims data onto a shared blockchain. They could do so without exposing themselves to each other, and they’re be no need for an intermediary.”
“For the claims process in particular, there are a lot of different parties involved along the way, each with their own databases. A blockchain is the obvious place for that data to reside, for the people to have timely access to it, and to make the whole process easier.”
Karim Derrick (pictured) is head of research and development at Kennedys Law.