From the past few years, the insurance industry has been witnessing huge disruptions caused by insurance startups and emerging technologies. Nowadays, insurers are bombarded with an increased pressure to constantly evolve and reinvent themselves before such disruption hits the bottom line. To grow and be competitive, insurers are pushing up their conventional strategies by leveraging and integrating InsurTech solutions.
Despite the fact that existing competitors are supposedly at the utmost risk of disruption in insurance, people are increasingly identifying the new disruptor, InsurTech, as more of an opportunity than a threat. As new tech-savvy companies enter the insurance sector, they bring a full force of their innovative, disruptive, opportunity-laden power along with them.
It is one of the most common concerns from the millennials about the way the traditional insurers, some of which are more than thirty decades old, would collaborate with InsurTechs that may be as new as thirty-month-old. There are significant differences in culture, agility, workforce and technology; and a huge challenge to overcome these differences. Insurance incumbents need to keep an eye out for new competitors that use technology to create a strategic advantage. Otherwise, the size of their share in the next generation of the insurance industry will be at stake. It is important for traditional insurers and InsurTech startups to change their mindset and approach, if they need to extract maximum value from working together.
How large is the InsurTech wave?
According to a report from CB Insights, global InsurTech investment continues to splurge. The number of investment deals were a five year high at 202 in 2017, valued at $2.2 billion – a 31% spike from the previous year. Initially the insurance industry has been slow to promote digital innovation. But today, the everchanging consumer expectations and an increased importance of digitization are forcing insurers to utterly consider digital investments in order to offer customer-centric products and services.
Majority of the big players in insurance are currently struggling to meet the demands of their digital oriented customers. These demands include ease of use, transparency and accessibility because they already enjoy these facilities in other sectors like banking, shopping and so on. People want insurance coverage personalized to their needs, choosing value over price while demanding easy access to information from the Insurer via the channel they prefer.
Insurtech is burgeoning right now – it validates why the Insurance industry is an exciting place to be! InsurTechs have proliferated in many segments, including home insurance (e.g. leakage detection, intrusion, video expertise of insurance claims), car insurance (e.g. pay-as-you-drive), health insurer services (e.g. doctor appointment booking, tele-consultation, health coaching programs) and retirement planning services (e.g. simulation tools such as robo-advisors, video chats). There is also an increased number of insurance deals involving Analytics and Big data, Artificial Intelligence and intelligent Automation, along with Internet of Things.
More than a Life Insurance Policy Service
InsurTech disrupters have especially targeted the non-life insurance. The wisest insurance incumbents thrive on seizing the collaborative opportunities burgeoning from this new environment.
It is obvious that technology startups in any industry would require support, in order to be successfully integrated into the processes of a business operation or a market. Evidently, tangible encouragement and cooperation of insurance businesses are must for Insurtech startups to accelerate.
Insurance and innovation is not some sort of experimentation to be kept at arm’s length. Innovation is a vital aspect for everyone in the insurance chain, and it should be institutionalized in the insurance sector. Progressive organizations should sport dedicated divisions for exploring new technological concepts. They should consider appointing a technocrat in the organization to take charge of innovation. He/she would also bridge the gap between insurers and entrepreneurs, while finding out ways to facilitate the businesses in a collaborative manner. This includes offering the start-ups with rationalized access to market intelligence, support with business development, marketing and brand building, and advice on regulation and governance.
Opportunities for InsurTech Ventures
New technologies are changing the innovation architype by helping life insurers to pull alongside the other sectors and become more entrenched in clients’ lives. Not to mention the huge opportunity for insurance available, to assist in improving their operations in everything from sales to underwriting, by leveraging big data and online-scoring platforms.
Traditional insurers are still dragging the legacy administration costs and the old sales structures and practices. Today’s modern customer base expects the smooth experience offered by industry giants like Google, Amazon, Apple and Netflix. There are tremendous opportunities for InsurTechs to address consumers’ pain points, as insurers now have access to more and better data insights. AI and Machine Learning will allow insurers to interpret such data and fundamentally transform the industry.
Promising segments for market growth – or disruption – include mobile point-of-sale, automated claims management and group healthcare. Traditional insurers that are quick to leverage the relevant start-up services while defining a digital vision for themselves might be able to thrive.