For the longest time after I started working in the insurance industry, I accepted the common wisdom that insurance technology was a laggard in comparison to other sectors.
Whether that was ever true, InsurTech is definitely at play now, driving innovation.
So, can we stop apologizing for being so far behind? Let’s explore a few examples.
The Internet of Things (IoT) is a prime example
Tarun Bansal, Research Manager at Let’s Talk Payments, writes that the Internet of Things (IoT) will “present a ray of hope” for insurers. Bansal adds that this is important, as he calls insurance a ‘sinking ship.’
The reality is that IoT has been active within the insurance industry for some time now. In 2008, Progressive Insurance launched its telematics driven usage-based insurance (UBI) program is used to assess risk and develop premiums.
By 2014, Progressive had accumulated 10 billion miles of data from the clients using the telematics device, Snapshot. The product is available for use in 45 US states. And some Canadian insurers have followed suit.
I would not call this a sinking ship.
Telematics is not the only innovation. Other insurance organizations are exploring uses for IoT, such as connected homes. Bansal identifies five areas that insurers can use to add value based on IoT:
- Increasing the number of touch points
- Product innovation
- Fraud prevention and claims management
- Risk management
- Enhanced customer base
Based on activities at incubators, accelerators, and within larger organizations’ innovation teams, I would suggest that insurers are addressing these outputs at the pace that consumers can absorb them.
Are Brokers Dead?
Let’s turn to distribution.
Common wisdom suggests that brokers are becoming redundant, due to self-service consumer tools and streamlined product support.
The reality is that brokers are changing their business model to serve the up-coming digital consumer.
Recently Totten Insurance Group – a Canadian Managing General Agent – was facing a two year plan to roll out its own policy system. After some analysis, Totten elected to buy a Windsor based insurance brokerage – EasyInsure – to take advantage of its digital functionality.
InsurTech functionality was a critical component. Susan Murphy, CEO of Totten was quoted in Canadian Underwriter, saying ” “Everyone has to be investing in it. If we are not we are going to be left behind.”
Out west, Sherif Gemayel created Sharp Insurance in Calgary in 2009. His vision was to offer a different version of service, driven by technology.
Simultaneously, Gemayel set up a second organization – Sharp Mobile – which supplies technologies to other brokers as well as to his own brokerage.
Still no evidence of a sinking ship.
But can we all live together?
Up until recently, insurers distributed their products in one of three ways:
- through brokers
- through ‘captive’ agents
- directly from the insurance carrier.
That has changed substantially over the last decade. An increasing number of insures are moving to multiple distribution channels.
Initially, brokers took a confrontational strategy, i.e., shifting business arrangements to support insurers who maintained a broker channel only. However, digital experience is driving new relationships between brokers and carriers.
For example Aviva Canada has been working on digital solutions for its own requirements and has worked with brokers as well.
Tom Ried, Executive Director of Aviva’s Digital Broker Strategy explained:
Aviva Canada is a leader in insurance innovation and remains strongly dedicated to the broker channel. Consumer expectations have changed – real time, online interaction is now the norm for an increasingly tech-savvy generation.
Modern insurance has been innovating since the 17th century, when Edward Lloyd mounted chalkboards in his coffee house. Sometimes these come with financial constructs, other times with intelligent machines.
Regardless, we can take pride in the work that we do and the contributions that we make. I’d suggest that we hold our heads high.
Editor’s Note: The 2018 Insurance-Canada Technology Conference is being held on 27-28 February 2018 at the Beanfield Centre in Toronto. We will be exploring New Risks, Customer Engagement, and Digital Technologies. Information and registration is available here.