By: Munich Re Africa
Beware the hype
Rapid changes in technologies and their real-world application make it difficult for firms to stay at the forefront of the tech innovation game. “Firms must be wary of market hype and think carefully about which emerging technologies to adopt,” says Edward Kiarie, Life Reinsurance Developer at Munich Re of Africa (MRoA). Kiarie was presenting at the Munich Re 2019 Africa Life Conference held in Johannesburg from 9-11 July.
The risk of being a technology leader is clearly illustrated by the hype cycle, a graphic representation developed by US-based research company Gartner to illustrate the maturity, adoption and social application of specific technologies in five stages. “The principle introduced by the hype cycle is that we tend to overestimate the effect of a new technology in the short run and underestimate the effect in the long run,” explained Kiarie. The hype cycle begins with a technology breakthrough (which Gartner calls the ‘technology trigger’ stage) which is talked up by media despite little being known about its potential commercial application.
A new technology can percolate in the trigger stage for many years. Take blockchain as an example. The concept of a distributed ledger was born as early as 1995, but only rose to prominence after its 2008 implementation in the world’s most popular (to date) cryptocurrency, Bitcoin. Over the next few years blockchain emerged from the trigger stage to what Gartner calls the ‘peak of inflated expectations’ stage. Using bitcoin as a proxy for blockchain we can equate this period to the investor frenzy that played out in late 2017 and early 2018. Yet Gartner reports that by May 2018 ‘only 1% of Chief Information Officers indicated any kind of blockchain adoption within their organisations’ while a mere 8% were considering active experimentation with the technology.
Munich Re introduced its Tech Radar in 2015 with the aim to identity and prioritise technologies for development within group. “The challenge is to choose technologies that are both relevant and able to add value to our clients without being distracted by market noise,” says Kiarie. “Our initial focus was on digital technologies that had the potential to improve efficiencies and enable organic growth”. The reinsurer set about identifying opportunities under three categories including technology, product and services and processes and methods. It then followed an in-group development lifecycle to take each of these potential innovations through a hold, assess, trial and adopt phase.
Cyber security was among the first concepts to appear on the reinsurer’s radar. Munich Re now has a department that prices cyber security worldwide. Another area of interest was the field of predictive analytics. “We started developing models that ran side by side with the decisions that our underwriters were making to see whether this would give us a competitive edge in automating the underwriting process,” says Kiarie.
The pace of change continues unabated and the current day focus is on artificial intelligence, the connected world and other disruptive technologies. “Technologies that dominate our latest discussions include open API, quantum computing and the concept of digital twinning,” says Kiarie, who backs the introduction of 5G networks as an enabler for each of these concepts as part of the broader Fourth Industrial Revolution. “Munich Re has developed its own methods for identifying technology and adapting it to our business case,” he concludes. “We stand ready to adopt the right technology to enable positive change through the digital age and beyond”.
About Munich Re of Africa
Munich Reinsurance Company of Africa Limited commenced operations in Johannesburg in 1968 and celebrated 50 years on the continent in 2018. A new business strategy for Africa was put in place from 2015 to focus skills and expertise in one central hub, based in Johannesburg. Munich Re was active on the continent pre-1968 under the Munich Re brand, operated out of Munich, Germany.