At the outset, the InsurTech movement has focused on disruption of the insurance industry and its organization. However, InsurTechs may be finding that it is easier to join the insurance incumbents, not fight them. Does this mean insurers are drinking the kool-aid, or that they are reaching into their innovative insurance core?
All insurers are luddites, right?
For the last few years, Insurance-Canada has been spending an increasing amount of time understanding InsurTechs. At the outset, I was mystified by the whirl of confidence coming from a new brand of technology professionals who were bringing clever applications quickly to market.
These apps were usually stand-alone entities, and, as such, were not going to threaten established suppliers. However it was clear that new thinking combined with engaging customer interfaces, were significant advancements.
And the InsurTechs were not shy in promoting the new approaches (e.g. Hackathons, ‘Fail Fast’ prototypes, etc.). Invariably, within the first two hours, the InsurTechs would tag themselves and their products as ‘disruptors’.
Frequently, the InsurTechs would enhance the lesson with a diatribe against the insurance incumbents who wore blinders to the new technologies.
Reality check…
Truth told, many insurance technology professionals (present company included) have had similar twinges over their career, wishing the executive had a more open mind when new technology was on an agenda.
In hindsight, I have come to the conclusion that the executive was not blanking out technology. Rather, it saw the limitations of the technology (in its current form) to fully support the strategies that would take the company to a new level.
The executive is getting a different view today …
There are two drivers that changing the executive’s view:
The first is the desire for new insurance products and aligned services. With an on-going soft market and a continuing parade of new entrants, established marketing, underwriting, and claims leaders are constantly looking for new products and services.
Second is the emergence of InsurTech. Over the past year, I have been in a number of meetings between insurers and InsurTechs. There is little doubt in the executives’ minds that the technology has inherent capabilities to support new, more sophisticated insurance offerings.
Let’s talk Mutuals…
When I started my insurance career (in a publicly traded insurer), several of my mentors helped me understand that mutual insurers had a number of interesting characteristics, but innovation was not one of them.
It was only when I moved to an industry association that mutuals had a different view of innovation: As the executive and the customer were one and the same, there was little conflict over priorities.
Kurt Eaves, Vice President of Underwriting and Production at Grinnell Mutual in the USA, recently penned an article in PropertyCasualy360, titled “5 advantages of investing in InsurTech for traditional insurers”. Eaves notes that many insurers (8 in 10 according to PxC) see InsurTech as a threat.
However, this is not so with Eaves’ 100 year old P&C insurance and reinsurance company. He writes: “Grinnell has been instrumental in developing an insurance accelerator, which is a group of insurance companies and executives that help startups navigate the insurance industry.”
Eaves provides great explanations of 5 advantages. My favorite is #3: “Develop and combine existing and new insurance products by partnering with up-and-coming insurance startups.”
Meet the folks at InsurTechTO’17
At Insurance-Canada, we have had good participation at our events from Mutuals (and other insurers) for some time. There is an opportunity to see some of this in action and gauge the alignment of InsurTechs and Insurance Execs.
This continues at InsurTechTO’17, being held on 6 November 2017 at the Westin Harbour Castle. You can find details here.
