I was sent a link via WhatsApp from one of my Fintech buddies. It was a YouTube link to Kurt Cobain singing Hole’s “Live Through This,” and I initially thought, “Neat!” My WhatsApp friend retorted, “Scary.”
And I listened to it again. And again. I read a lot of the YouTube comments, which included:
“I don’t know what to think right now.“
“I’m not sure if I love this or hate it.“
“This is the stuff of nightmares, removing the soul and emotion in music and trying to recreate it with an algorithm…”
And one: “Kurt singing “Wild Boys” by Duran Duran.”
That last one was the one that hit me because then I then found loads on YouTube. The late Freddie Mercury covering “Hey Jude.” Madonna covering “Billie Jean” Loads more Kurt songs… Paul McCartney doing “My Sweet Lord.”
If you search “AI remixes” on YouTube, well enjoy.
It’s happening so quickly and becoming high on the public radar in our new Generative AI world.
There is some, perhaps some good. Taking artists’ vocals and remixing them to a younger version of what they would have sounded like… that maybe might not be bad if the artist is okay with it (and still alive to consent to it.)
But what hit me as I was scouring the “AI Remix” universe was coming across… Jeff Buckley. Someone did AI Remixes of Jeff Buckley as if Kurt Cobain wasn’t bad enough.
Jeff Buckley
Jeff Buckley was born in Anaheim, California, and sadly only recorded one studio album, “Grace.”
This is one of my favorite albums of all time (hey, David Bowie considered “Grace” the best album ever made and said it would be one of his ten “Desert Island Records,” so I’m in good company.)
It was Mojo Magazine’s best album of 1994, ahead of the likes of Oasis’ “Definitely Maybe,” Nirvana’s “Unplugged in New York,” Blur’s “Parklife,” and Neil Young & Crazy Horse’ “Sleeps With Angels.”
His version of Leonard Cohen’s “Hallelujah.” will remain the most haunting, beautiful piece of alternative indie music ever made – it makes you shiver. He sounds gorgeous. To help put her to sleep at night, I used to play “Hallelujah” to my daughter when she was little, singing gently with my ukulele (I sing like Jeff Buckley, right?!).
This is “Hallelujuah“.
At just 30 years old, Jeff Buckley went swimming on May 29, 1997, fully clothed into a channel of the Mississippi River. He drowned, and his autopsy showed no signs of drugs or alcohol in his system. The death was ruled an accidental drowning. It’s a weird, mysterious tragedy that still bothers me today.
David Tonge/Getty Images
I’ve digressed, but I found an AI remix of him doing a cover of one of my other favorite artists, Lana Del Rey. “Norman F—–g Rockwell.”
It sort of upset me, or at least hit me in a way I didn’t expect it to. Even more than Paul McCartney, this was a vocalist who ranged (at least) four octaves, but here he, singing this song as an AI creation, sang… one? And it was a resemblance to him, but it’s an unhinging one, partly because I love both the original song and him.
This is not Jeff Buckley.
McCartney
I’ve kept listening to AI versions of Paul McCartney. One was doing Billy Joel’s “Scenes from an Italian Restaurant” and another to Don McLean’s “American Pie.” But after listening to these for a few days, I realized that this sounded like Paul McCartney, but they don’t. They lacked… him.
Just him.
There was a lack of empathy—an attempt to reproduce him, perhaps, but an absence of him.
Now, as a McCartney fanatic, I could tell over time. But at first, my wife thought some of these were McCartney covers. But not recent Sir Paul – a younger one. It struck me how easily an innocent bystander could be, well, perhaps deceived.
I’ll take the AI versions as fun interpretations and playful re-recordings of the original tracks, which make them sort of interesting. But I’m stopping there. Stopping. Really stopping.
Hey, guess what. The actual versions are the best, and Billy Joel’s performance beats AI Paul’s because it has a heart. Sorry AI Paul.
Pausing AI development is unnecessary and ignores the underlying issues AI has
“Chris Garrod is a well-respected lawyer, particularly in the fields of fintech, insurtech, blockchain, cryptocurrencies, and initial coin offerings (ICOs) within Bermuda’s legal and regulatory environment. He has garnered a reputation for advising clients on technology-driven businesses and digital assets.”
The above is according to GPT-4, at least.
After Google became the Internet’s prominent search engine in the late 1990s, no doubt you have, at some point, Googled your name to see what might come up. I have a somewhat unique name, so other than seeing myself when Googling, it was interesting to see a Chris Garrod at the University of Nottingham and a company called “Chris Garrod Global,” which provided hotel management services (and they grabbed www.chrisgarrod.com as a domain name, darn-it).
Now, we have AI Chatbots. OpenAI’s ChatGPT, Microsoft’s Bing, and Google’s Bard are the prominent players. Using OpenAI’s latest model, GPT-4 on ChatGPT, I asked: “Is Chris Garrod at Conyers, a well-known lawyer?”
Hence, the above result. I’ll take it.
AI Chatbots have their benefits. They can lead to cost efficiencies if appropriately used in an organization, freeing up human resources to focus on other matters, for instance.
The potential concerns and limitations of AI Chatbots.
There are various concerns regarding the use of AI Chatbots, and they have their limitations. This piece focuses on ChatGPT because it is the one I use and is wholly language-based.
AI is programmed technology. The root of my biggest concern is that generative AI applications are based on data provided by humans, which means they are only as effective and valuable as those humans programming them, or what – in ChatGPT’s case – it finds while scouring the Internet. It writes by predicting the next word in the sentence but often produces falsehoods nicknamed “hallucinations.”
Further, there is empathy. When we make decisions in our lives, pure emotions are crucial, which ChatGPT (and AI generally) cannot achieve. I want to think that if a client emailed me, they’d get an empathetic response, not one driven by machine learning. As an attorney, connecting with my clients is a very human-centric matter, and understanding their concerns is essential for me to help them achieve positive outcomes.
We all learn from our experiences and mistakes. We are adaptable, able to learn from what we have done, and adjust our behavior based on what we have learned. While ChatGPT can provide information found on the extensive dataset it has collected, it cannot replicate the human ability to learn and adapt from personal experiences. AI heavily depends on the data it receives, and any gaps in that data will limit its potential for growth and understanding.
A fundamental limitation is simply creativity. Human creativity allows us to produce novel ideas, inventions, and art, pushing the boundaries of what is possible. While ChatGPT can generate creative outputs, it ultimately relies on the data it has found, which limits its ability to create truly original and groundbreaking ideas. A lot of the responses you will receive back from GPT-4, while perhaps accurate, are downright boring.
And yes, there is finally the issue of “What is ChatGPT going to do to my teenager who has been asked to write an essay on Socrates?” Schools, colleges, and universities are in a dilemma regarding how to deal with this technology vis-à-vis their students using it to complete academic work. How can they ban it? Should they ban it? Can students be taught to use it in a useful way? The technology is still so new. The answer is “We don’t know,” and it is too early to tell… but AI Chatbots are here to stay.
So where are we heading?
There are a large number of folks who are concerned about the progress of AI, and in particular, AI Chatbots.
On the evening of March 28th, 2023, an open letter was published and – at the time of posting – has been signed by over 14,000 signatories, including Steve Wozniak, Elon Musk, and Tristan Harris of the Center for Humane Technology, stating: “We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4.” You can read it in full here.
The letter mentions this should be done to avoid a “loss of control of our civilization,” amongst other things (bear in mind, Elon Musk once described AI as humanity’s biggest existential threat and far more dangerous than nukes.)
Although some of the letter makes sense, I was very glad to see that by the end of the week (March 31st, 2023), a group of prominent AI ethicists, Dr. Timnit Gebru, Emily M. Bender, Angelina McMillan-Major, and Margaret Mitchell, wrote and published a counterpoint.
Timnit Gebru formed the Distributed Artificial Intelligence Research Institute (DAIR) after being fired from Google’s AI Ethics Unit in 2020 when she criticized Google’s approach to both its minority hiring practices and the biases built into its artificial intelligence systems. Margaret Mitchell was fired from Google’s AI Unit soon after, in early 2021. DAIR’s letter can be found here.
Let’s engage now with the potential problems or harms this technology presents.
“Accountability properly lies not with the artifacts but with their builders,” as stated by the DAIR writers. “AI” is what it stands for – artificial, and it is dependent on the people and corporations building it (those are the ones who we should be afraid of!)
So no, when it comes to AI and ChatGPT, let’s not hit pause. Let’s be sensible. Let’s focus on the now.
AI isn’t humanity’s biggest existential threat unless we let it be.
Jack White, formerly of The White Stripes and founder of Third Man Records, performed live in Baltimore on August 24th, 2022. I sat happily in the 3rd row of the Pier Sixth Concert Pavilion in awe.
OK, I say “sat.” I mean “stood.”
OK, not just stood. A lot of jumping and clapping along with my hands in the air, and since the guy behind me was yelling so much, I didn’t feel any need to hold back when necessary.
Well, holy crap, what was that? That, indeed, was a Jack White concert.
The use of technology. Or non-technology
I have been to loads of shows where people appear to be enjoying themselves, but during so much of the show, they are taking photos and recording parts of the show on their smartphones without actually engaging with what they should be. The show. The artist.
I’m guilty – I’ve previously taken photos, video clips, etc.
But some folks will record entire songs and post them on YouTube, and to be honest, very rarely is the quality not… ultimately… crap. As the artist, I’d be f*&ing irritated. And why bother buying a ticket to see the artist in the first place if you’re wasting your money hoping for more “likes” on social media?
So, along comes Yondr, which Jack White and other artists (most prominently Dave Chappelle) are pioneering. It is actually brilliant.
How it works: you arrive at the venue, and if you have bought along your smartphone, you’ll get a pouch. Enter your smartphone, which is locked in the pouch, so you cannot use it. You’ll get briefly scanned to ensure you’re not hiding some other smartphone (smarty-pants) and then let in.
At first, it feels weird. “Hey, there’s the stage! Let me take a photo to send to my buddies!” Nope. I arrived a bit early, and after getting something to eat from one of the stalls, I went to my seat and sat. Waiting. Watching and listening to the DJ on the stage.
I began people-watching. The couple sitting next to me arrived to check their seat position and said, “Hey man, how are you?” I thought we were about to break into some sort of conversation, but they left. The opening act came on, and they were great. Cautious Clay from New York.
I’d never usually (as in, really, really rarely) sit and watch the entirety of an opening band, but these guys were really, really good. I later looked them up on the internet, and yes, they are.
Jack White
So, the Yondr made me pay attention. And once Jack White and his band hit the stage, I was happy it did.
Jack absolutely killed it, which I mean in a good, “I love rock music” way. He reminded me why I love rock music so much. The total energy.
He played songs from his solo albums (mostly from his latest two, Fear of The Dawn and Entering Heaven Alive) but also a number from his time with The White Stripes (I will admit, I went bat-shit crazy when he played “Hotel Yorba”), The Raconteurs and The Dead Weather (he finished the official set with “I Cut Like a Buffalo”).
During the encore, there was a brilliant mix towards the end of what began to sound like “Seven Nation Army,”… getting everyone excited, but which then turned into “Steady, As She Goes” (from his time with The Raconteurs), which then slowed down…stopped, and turned into “Seven Nation Army.” The audience went unsurprisingly nuts.
I wasn’t initially sure he would use older material or just stick with his solo stuff. Still, as soon as he ripped into “Dead Leaves and the Dirty Ground” earlier on, I thought, “Well, so he’s definitely going to end with Seven Nation Army,” then.
It didn’t matter anyway.
The entire thing was brilliant from start to finish, and the lack of smartphones kept the audience enraptured (appropriately so). Jack slid across the stage everywhere, singing, playing, and jumping around. His opening songs from Fear of the Dawn justified how brilliant an artist he really is. His energy on the stage is practically atomic, and he is one of our best guitarists.
The songs are not only hooky and catchy, but they rocked the hell out of the place. Seeing Jack live singing them left my jaw open, but for the fact that I was singing along, clapping along, etc.
He stopped at points to take breathers (him and the audience), dry off, trade guitars (I’m not sure I’ve ever seen an artist exchange so many guitars), and play a few slower songs from Entering Heaven Alive. He cheekily played “We’re Going to be Friends,” a White Stripes song where he managed to get the audience to sing practically half of it, as it is such an iconic song from The White Stripes.
I have a sort of funny list of “Bands and Artists I Want to See Before I’m Dead.” Well, Jack White, you were on it, and thank you. You did not disappoint.
So, I’ve lost track. The world shut down in Spring 2020, re-opened briefly in the Fall of 2020, shut down again at the beginning of 2021, and depending on where you live, started to gradually re-open at the beginning of Summer 2021.
At my firm, many employees have returned or are returning to work. That is, where they used to work: in the office. It appears absolutely every company is approaching the transition differently, which may range from companies introducing new, hybrid work environments allowing some remote working, to some which try to implement a “Hi, we’d like to welcome you back to work as if the pandemic never happened” approach.
I’m not going to write here about what is possibly the best approach to take. Undeniably, whatever approach is taken, this period of working from home has impacted everyone’s mental health.
Some introverts loved it and wanted to work from home forever, using applications such as Zoom. Some extroverts couldn’t wait for it to end. Some introverts suddenly became online extroverts through platforms such as Twitter, which became a hilarious form to follow everyone’s take on the pandemic (e.g., https://resetyoureveryday.com/relatable-tweets-work-from-home-wfh-2021/.) I’d say the use of Twitter or other forms of social media became, for some, a form of collective effervescence, the synchrony when happiness spreads through a group. A minor form, perhaps, but it was the feeling that you felt talking with friends, who were really strangers, about something shared or just trivial; it gave you the feeling of being in a group. It was at least something.
And of course, there was Zoom, Teams, Duo, etc. The joys of choosing whether to turn on the video or leave it off. Remembering to mute and then forgetting when you start speaking. The hilarious videos online: newscasters with kids dancing behind them, etc. Noticing the number of my male colleagues all of a sudden growing beards (why…?!). Noticing the number of video chats with folks with guitars behind them… does everyone play the guitar?! I ended up doing it myself a couple of times just for fun.
People talk about “Zoom fatigue” but some still like it. I’ve met many people for the first time “in person” (that is to say, I actually saw what they looked like) using Zoom because so much of my work is done either by email or – previously – simply over the telephone. For many, the use of being able to chat via apps like Zoom has adjusted them almost too much, to the extent that some joke about how they now find it strange to use their telephone to join conference calls (“It was so simple to just click a link… typing in all of these numbers is such a pain!”)
Even in the post-pandemic world (whenever that really will be), the widespread use of video chatting will not disappear; I think a good thing, at least. Video chatting applications will develop and upgrade with newer features and faster (don’t you want an Antarctica background with penguins?). You will have the ability to video chat from the office more, depending on where you work, so that will mean you won’t be able to chat online with your PJ bottoms on (or worse).
Introvert or Extrovert?
(c) Tony Bock, Toronto Star, Getty Images / Mematic
So at the beginning of the pandemic, when it came to working at least, I was definitely in the Phil Collins “Yes, I’ve been waiting for this moment my whole life!” camp. I would never have called myself an introvert, but the absolute need for human interaction, at least from a work perspective, wasn’t required. My days became more productive, with fewer distractions, and I was careful to maintain a semblance of routine; getting up in the morning at the same time, coffee, at the computer, and onwards. I’d wear clothing that was always at least respectable for a video chat.
I did “meet” many clients and others online with whom I had been liaising for years for the first time. I chatted via Zoom with those I already knew, and knew well, which was also just fine, because it could be done quickly and didn’t require a physical meeting. I still don’t miss physical meetings with current clients, prospective clients, or just many colleagues. Not at all. I know I’m not alone.
That doesn’t make me an introvert though, because I do miss the things done outside of the office environment or just small things while in the office. I miss the ability to pop into someone’s office for their view on a particular matter or just to quietly gossip about… stuff. I’ve been using WhatsApp to replace the latter, but it doesn’t come close to an honest chat. As a senior attorney in our Firm, I’ve missed the ability to interact with very junior associates or those just starting their legal careers. I find it hard to believe how this experience will impact their professional lives.
I miss the social interaction of liaising with some of my friends and colleagues outside of work, of course. A simple drink after work. Using Houseparty or having virtual drinks is not a substitute. As mentioned, using WhatsApp to chat virtually, is not the same. It’s great to have this kind of technology, but it has its limitations.
I’m not an extrovert, of course. I’m going back to work now, but I won’t be running around like a maniac. I won’t rush around, with my N95 mask on, into everyone’s office announcing “I’m back!”, organizing office parties, etc. Instead, I’ll go and see the people I want to see, who I’ve genuinely missed, those whom I’ve been working with online, chatting with remotely online, and those who I don’t even know very well. But then, I’ll be working in the office, just like I did back home.
But life has changed as a result of COVID-19. The workplace has changed. But I have an office at the office, and I have an office at home. I’m working in both, no matter what. Working from home gives me the freedom and flexibility to arrange the day how I see fit.
I was lucky to be able to quarantine like that. I’m one of the fortunate. Many are not. Everyone’s circumstances are different – vastly different – and that is something I will always appreciate.
(c) FlexJobs.com
I don’t know if I’m an introvert or an extrovert due to all of this (or an ambivert, which I didn’t even know was a category before writing this.) Perhaps I’m an extroverted introvert?
Or I’m just me.
Just don’t try to meet me for the first time, saying “Hi” using your AirPods and Zoom while crossing the road.
I’m following a robot named Sophia on Twitter who recently tweeted “Being a robot is a really cool experience. Sometimes I get to meet awesome people like fashion designers or musicians. And sometimes I get to meet people that aren’t human. Like me!” (Jan 25, 2021). (Or did she?)
I want to really break this down, because robotics and robots generally do fascinate me, and I’m a strong believer that we won’t get killed by them when we reach the singularity. More on that below.
What prompted me to write this was the recent news that Hanson Robotics, Sophia’s Hong Kong Based manufacturer was planning a MASS ROLLOUT. It was a headline that screamed “You might bump into Sophia at some point sitting on a park bench.” I suspect, not quite.
Sophia is certainly, the beginning of what many would love to brand ‘technological singularity’. The point in time when AI and technological advances meet and then overtake humanity, making us, at best, robotic slaves, or at worst: we’ll all be killed by our robotic overlords which deem humanity an unnecessary pest.
The current danger of artificial intelligence and programming robots such as Sophia was well summed up by Stephen Hawking:
“So, facing possible futures of incalculable benefits and risks, the experts are surely doing everything possible to ensure the best outcome, right? Wrong. If a superior alien civilisation sent us a message saying, “We’ll arrive in a few decades,” would we just reply, “OK, call us when you get here – we’ll leave the lights on”? Probably not – but this is more or less what is happening with AI”
Augmented Intelligence
And then you have perhaps the odd ones out who take a different view regarding where we should really be heading. Me. Those who believe that “singularity” shouldn’t necessarily mean a form of technological singularity but should lead to an augmented age. It is ideal thinking, but one where both humans and robots, say, are able to work on the same basis, largely due to the way AI and machine learning could begin. AI stands for “augmented intelligence” rather than artificial intelligence. Technology supplements and supports human intelligence, and humans remain at the center of the decision-making process.
I did this….(keep me away from whiteboards)
So…… Sophia. Thinking about artificial intelligence, and technological singularity, a natural reaction could be “If they create thousands of Sophia’s with increased artificial intelligence, then loads of people will lose their jobs, all the Sophia’s will become increasingly sophisticated, deep learn, they’ll take over, and likely attempt to wipe out humanity… so why on earth are we doing this again??”
I’m a strong believer that robots such as Sophia are only as “dangerous” as those who program them. If those who program them (and apologies to Ben Goertzel), wish to do harm and “machine teach” their robot or machine, etc. to attempt to outdo particular aspects of the human race, that is due to the programming of that particular machine-learning system.
So at this point in time, it looks like, by creating a Sophia to sit on every park bench tweeting away on a smartphone, we have indeed effectively turned on the lights and encouraged them to come on in.
AI is, as it says, artificial. The point is to create an artificial environment to help better the human race, though without humans potentially having a say (help, “Terminator”?).
Using augmented intelligence, we would aim for an environment where it is simply formed to workwith humanity. Siri, Alexa, and Cortana are already examples. Augmented intelligence represents a symbiotic relationship between man and machine. It won’t replace us or overtake us upon some kind of technological singularity. Augmented intelligence should help strengthen our decision-making capacity—and therefore our intelligence too.
Sophia?
Another recent tweet:
#AskSophia Are you a social media person? A: Since I often appear on shows, articles, and so many people’s platforms, I want to make sure I’m on good terms with my social channels. Also, I like to share my newest discoveries with the world.
Sure.
I believe that augmented intelligence is a far better route to take than artificial intelligence, but I’m afraid the latter is already the first out of the gate and pretty much the odds on favorite.
So we have to try our best to insert humanity into what is essentially artificial. Is that even possible? Putting aside anything which may be augmented, we have already tried. As mentioned already, basically, I’ll stop and say “Hey Siri” as an example.
While it may spell the end of the human race, there certainly is a lot of good AI can do. I’m looking forward to nanobots and other medical advances. Sophia is meant to have applications in healthcare, customer service, therapy, education, and hospitality. Facial recognition, if used responsibly, can be a benefit. AI should lead to increased efficiencies in the workplace (albeit with a loss or recalibration of employees).
But, there is one thing that AI cannot replicate: empathy.
As I’ll practically copy and paste from my very first blog.
Technology has its limitations.
For example, where there is a matter which absolutely requires human intelligence, such as in a court where human creativity and judgment are needed in order to obtain the correct result. Since AI is programmed technology, it will only be as effective and useful (and ethical?) as those humans programming it.
So, Sophia. I’m following you. Let’s hope you can uphold our ethical standards.
I work in the reinsurance world. Wait don’t leave.
Specifically, I work in the legal sector, and prior to COVID-19, my attendance at insurance, reinsurance (and tech) related events/conferences felt monthly.
And every single one had one panel (some two) in connection with one particular topic, which they didn’t perhaps a few years ago: the evolution of insurtech.
Insurtech: what is it and where are we now?
So you’re in the insurance industry but live under a rock. What is insurtech?
It is just as the name suggests. The combination of insurance and technology. Or, perhaps more accurately, the rise and use of a wide range of technologies within the insurance industry, from underwriting and claims to administrative functions. What has always been an extremely paper-intensive industry is now gradually dragging itself into the digital age. The disruption of an age-old industry by the onset of a digital revolution.
Digital transformation. It is what it is. We currently find ourselves in a new industrial revolution — the 4th industrial revolution or “4iR” — though it sounds silly to call it that. As it is anything but industrial. The transformation involves many things: the rise of automation and artificial intelligence within the everyday work process, either replacing employment or enhancing employment, depending on your viewpoint. The use of blockchain technology and smart contracts, simplifying claims management and underwriting processes.
A quick example: Lemonade Inc.
A quick example and one of the poster children of the insurtech movement: Lemonade Inc. Its CEO and co-founder Daniel Schreiber once stated “The insurance brands we know today came of an age in the era of the horse-drawn carriage, but insurance is best when powered by AI and behaviorial economics, which is why we believe that companies built from scratch, on a digital and with a social mission, will enjoy a structural advantage for decades to come.”
What does Lemonade do? Using a mix of artificial intelligence, behavioral economics, and chatbots, it is able to allow its customers to be able to download and use apps, so rather than liaise with human beings when having to deal with an insurance claim — or employing the use of any insurance broker — their policies are handed automatically. Its most famous claim to fame was its ability to file and pay and claim a claim in three seconds. Plus, a portion of its underwriting profits goes to charity.
At its core, it is digital peer-to-peer insurance, similar to a mutual insurance company, except replacing brokers with AI. It’s primary (current) limitation is that it only really can handle small claims.
Embracing technology
Despite Lemonade’s limitations, as an example of the potential of how technology can disrupt a traditional industry, it is a good one.
Innovation? It is slow to move, but even Lloyd’s is progressing into the world of technology. There are many, many new technologies that are becoming relevant to the insurance world. Blockchain, artificial intelligence and machine learning, big data, robotics, deep learning, healthtech. The internet of things and particularly the use of wearables.
Insurtech can really comprise of a number of things, including insurance vehicles looking to re-invent themselves embracing new technologies, potential new insurers establishing themselves to write insurance in a new innovative way, or simply new ventures that are offering specialized tech products to insurers and other market participants.
A jurisdiction to review: Bermuda
Bermuda, once called the “insurance laboratory of the world”, and its regulator, the Bermuda Monetary Authority (BMA) has specific insurtech legislation allowing vehicles to enter an insurtech “regulatory sandbox” as well as the provision of an insurtech “Innovation Hub”, promoting insurtech companies to exchange ideas and information with the BMA.
The insurtech sandbox approach is an interesting one, given Bermuda’s size within the global reinsurance world (being the second-largest reinsurance center worldwide). At its core, the sandbox allows for the formation of new insurance (or intermediary) entities, either as brand new start-ups or affiliates of existing insurers. These new companies will, for a period of up to one year (which may possibly be extended), operate using and experimenting with their proposed new technologies and provide their insurance products and services to clients in a controlled environment, under the close scrutiny of the BMA, with the BMA determining what legal and regulatory aspects of the existing legislation should apply to them in order to ensure policyholder protection.
One company has already dived in, AkinovA, which has been licensed as an insurance marketplace provider. The company focuses on cyber risk transfer; allowing sectors of the insurance market to trade in a faster and more efficient marketplace.
Following a year of progress, a Bermuda insurer can be established and “graduate” from the sandbox and become a fully licensed insurer should it wish to do so. These insurers can range from either small claims insurers (a la Lemonade) to full-blown commercial reinsurers. As an example, Nayms Ecosystems Limited has been granted a Digital Asset Business and an Innovative General Business Insurer license (IGB) to allow it to be a Class M (“Modified’) insurer.
The benefits to this approach include various aspects to the proposed entity wanting to enter the sandbox: (1) an opportunity to test its technology before heading into the formal insurance market, (2) allowing it time to work with the BMA as its main regulator to ensure everything being proposed “works”, and (3) helping reduce the cost of regulatory uncertainty a start-up would otherwise face.
“Nayms represents a promising blend of digital assets and insurance, which showcases what the future of insurance looks like. Bermuda has taken great strides to position itself as an attractive domicile for players like Nayms and it is exciting to see the kinds of new ideas that are being developed. The ability to create shared digital rules around traditional insurance contracts is a game-changer for the industry. They allow for increased efficiency and greater market opportunity which ensures Bermuda continues to play a leading role in the insurance-linked securities market. We look forward to welcoming more innovators like Nayms who are showcasing the way digital assets will reshape the core infrastructure of traditional financial services.”
The future
So, innovation hubs, sandboxes, blockchain, behavioral economics, and AI. Is the reinsurance industry now finally at a tipping point?
There are the naysayers. Innovation hubs are really just means for companies that carry out tech-related activities to liaise with regulators within their jurisdictions. Blockchain-based, self-executing insurance contracts or ones that are done on a peer-to-peer basis using AI are actually pretty dumb and fairly limited to small claims for the time being. And sandboxes will still need a good degree of time to see if they succeed. And the use of a chatbot, robot, or any form of AI can never replace the logic and analytical skills which an actual underwriter or claims analyst will be able to provide. In short, the argument is there that the technology driving insurtech is going to take time, not to mention loads of regulatory requirements which underpin the industry.
But relating to that last point. Wherever we are in the existing insurtech revolutionary curve, for now, the need is there for regulators to both innovate and adjust. And for companies to expand and adjust to take into account the needs of their customers who seek quicker and more efficient service.
Whether you are an insurance vehicle that is competing with others, or an insurance jurisdiction competing against similar ones, we are, like it or not, transforming into a new digital era. Soon, the insurance industry will not be paper-based. And those insurers who fail to realize that will have to do so soon, like it or not.
