LONDON: Insurers are counting on real-time technology to help them cut back payouts, from a system warning ships of nearby pirates to an app offering to buy sleepy drivers a coffee on the motorway. The lure of products promising to save on claims in a highly competitive market has led to a leap in investment in “insurtech” in Europe to more than $400 million (294 million pounds) in the first half of 2017, from just $50 million a year ago. The aim is to move insurance from a “grudge” purchase, when the only interaction with customers is after something has gone wrong, to a “nudge” product, encouraging safer behaviour. While the idea is not entirely new, the technology is making it more prevalent, prompting warnings from regulators about the risk of discrimination. Insurers say they can navigate those hazards as they explore blockchain – tamper-proof databases shared and updated across a network – “big data”, analysing reams of information for trends, as well as the artificial intelligence technology behind driverless cars, drones and voice-recognition software. “The new technologies have the potential to change the game (from compensation to risk mitigation),” said Simon Tottman, head of insurance research, UK & Ireland, for consultants Accenture. The biggest surge of insurtech investment was in Britain, where, despite the vote to leave the European Union, it hit $279 million in the six months to end-June from $9 million a year earlier, analysis by Accenture of data from CB Insights showed. In the rest of Europe, investment jumped to $134 million from $37 million and some insurers are also forming partnerships with insurtech firms. A focus in Britain on analysis of social media to assess the probability of claims has fuelled concerns about data security. British motor insurer Admiral had to abandon plans last year to take data from Facebook to set insurance premiums following objections by the social media firm. The Federation of German Consumer Organisations (VZBV) sees risks from big data in personal insurance outweighing benefits, fearing it will shift insurance from spreading risk collectively to being an arbiter of social norms. New European Union data protection legislation coming into force in 2018 should strengthen consumer rights, according to a discussion paper published by European supervisory authorities in Dec 2016, which warned financial institutions to consider the legal dimensions of processing social media data. European regulators also worry about social exclusion, and are checking whether data is being used in a way that makes insurance too expensive for those regarded as a higher risk. Andrew Brem, chief digital officer at UK insurer Aviva , which is aiming to invest 100 million pounds over the next few years in insurtech start-ups, says the aim is only to promote less risky behaviour. “In our sector, technology can be very powerful in helping people make smarter choices,” said Brem, whose company has an insurtech-focused office in a converted garage in London’s so-called Silicon Roundabout area in the east of the city. Published in Daily Times, September 19th 2017.