- Where Insurance & Technology Meet

Who Can Do InsurTech? Who Should?

The term “InsurTech”  is a bit ambiguous, describing a wide scope of activities.  Depending on the source, InsurTech  may cause disruption of current insurance practices, the rise of new insurance products, the evisceration  of entire insurance C-Suites, the ascension of new entrepreneurs to Unicorn status.  This is not particularly helpful.

I prefer to use a basic construct from Investopedia: “InsurTech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model.”

In simple terms, it is a version of process improvement.  The difference is that InsurTech takes away manual or semi-automated activities and redefine the process map with technology.

Who is doing InsurTech?

If I were just reading the current trade press, I would believe that InsurTech was the exclusive domain of  1,000+ start-ups which opened their doors post 2014, and are plotting a route to Unicorn land.

There is some truth here, but not all…

One of the first applications of InsurTech came well before the definition of the term.  In the mid-1990s, Progressive Insurance began developing a device to send vehicle data to the insurer, which could record the use of vehicles for purposes of underwriting and rating.

Over the next two decades, Progressive fine-tuned the technology and the approach.  It is now the ‘Snapshot’ product.  A number of other insurers world-wide have adopted the general approach and exploited the technology to change the automobile business model.

What the new entrants are doing…

New entrants to insurance are moving quickly and are poised to make a substantial difference in how we do insurance and Insurance Technology.

For example, MetroMile – a recognized InsurTech leader – established itself in 2009 to use the same devices as Progressive, but to focus exclusively on the electronic data and analytic tools.

Other InsurTech leaders – including Slice, Trov, Lemonade – have leveraged technology to optimize underwriting and rating targets and eliminate redundancies and manual handling.

This is the disruptive side.  But established insurers are not ignoring the lessons the start-up are teaching.

How can insurers ‘buy in’?

There are several well-publicized examples in Canada.  Here are two.

  • Aviva Canada has had a digital program going for several years.  Ben Isotta-Riches, Aviva’s Canadian CIO, told attendees at the 2016 Insurance-Canada Executive Forum that the objective is to effect a cultural shift to compete with ‘born-digital’ competitors.  Aviva just recently opened a ‘Digital Garage’ in downtown Toronto, modeled after similar facilities in London and Singapore.
  • Economical Insurance introduced Sonnet, a new underwriting subsidiary company, which is focused on direct to consumer distribution of personal lines based on a web-based interaction platform.  From the beginning, Economical set up the Sonnet office in downtown Toronto. (Do we see a pattern forming?)

And others are stepping forward.  We are also seeing insurers and re-insurers – including MunichRe and SwissRe – taking financial positions in various start-ups in the InsurTech World.

How will this work … And where to find more information?

Some ‘purists’ argue that success in digital requires a start-from-scratch approach.  These folks argue that established insurers are doing little more than bringing bad habits and will fail.

I disagree.

While there is always a temptation to follow a well worn path, the insurance industry has a track record of almost 350 years, which suggests that we have both history and creativity.

And more information is available ….

The theme for 2017 Insurance-Canada Technology Conference & Broker Forum is Disruption ⇒ New Realities, New Opportunities.  On 28 February and 1 March 2017, there will be sessions on InsurTech, including: