Periodically, I get the question: “Is this InsurTech thing going to help at work, really?”
Rather than winging it, I looked up two InsurTech experts to get a perspective of 2018 in motion. The two had very different scales to measure progress and, as expected, each analyst took a different approach. However, at the end of the day, they each helped me understand that this damned stuff really works.
The Digital Insurer
Rick Huckstep is Chairman Global / Europe at The Digital Insurer, which is “committed to working together to accelerate the digital transformation of insurance.”
A noble calling, indeed! But is it extensible.
At the end of 2017, Huckstep published a summary of the work to date and predictions for the upcoming year; 10 Insutech Trends at the Insurance Crossroads 2018.
All ten trends are interesting, but I selected the top 3 in order to keep this blog tight.
Why these 3? In my mind, these are fundamental changes to the business of insurance. These 3 are ordered by impact (low to high).
Claims settlement will become an automated, self-service and quick to pay experience for customers. Insurers have been trying to improve claims practices and shorten closing duration. Huchstep suggests that this will go further by 1) putting the responsibility in the consumers’ hands to collect data, and 2) implementing automated reviews to finalize payments in a compressed time period.
New models will challenge the traditional insurance value chain. Huckstep sees insurance programs simplifying, and removing overhead for the client and the underwriter. “These new models will see the carriers squeezed as the reinsurers provide risk capital direct to digital brands,” Huckstep writes.
Tech enabled loss prevention will become a key feature in the insurance product. Methods of risk prevention are improving dramatically, especially with development of AI information tools. The result, Huckstep writes: “instead of being a passive risk taker (which carriers are today), insurers will become active risk managers.”
Huckstep doesn’t specify premium reductions and overall shift of revenue streams, but it seems obvious.
… Aye, That’s (Not) the Rub
In the last part of May this year, Karen Pauli, Principal at SMA – Strategy Meets Action, published a blog, titled To be InsurTech or Not to Be InsurTech – Is No Longer the Question.
Pauli noted that in the latter half of 2017, some strong realities emerged. SMA’s recently released research findings have revealed several major InsurTech trends or themes that are specific to insurance and have meaningful implications for the industry.
As with Huckstep, Pauli identified major InsurTech themes that are in play:
InsurTech has spread to all tiers and lines of business. As with Hucksteps results, after initial focus on personal lines, activity is spread across lines of business: “SMA data indicates is 39% of all the activity, a little over half is personal lines; 35% is commercial lines; 13% is workers’ comp.,”
As significant, start-ups are arriving without pre-conceived assumptions “SMA partnering data shows that there are InsurTechs with customers ranging from top ten insurers down to single state insurers,” allowing flexibility of programs.
Live implementations are increasing. Again, as with the size of the insurer, startups are realizing that the insurance company has its own strategies, and typically needs to start from its own pole position.
InsurTechs are partnering. “While there is nothing wrong with a technology provider staying in their space, a long-standing trend within the insurance industry has been partnering for greater value.”
So, is this extensible?
My grey hair allows me to say that the insurers and IT professional identified in these examples are impressive. I’m not going to bet the entire farm as this expands, but I will be following the examples from leaders such as Huckstep and Pauli carefully.
Question: Based on InsurTech examples, are you planning to utilize these new constructs?
Editor’s Note: InsurTech will be highlighted in several session at the 2018 Insurance-Canada Executive Forum, being held Tuesday, August 28, 2018, at the Sheraton Centre Toronto Hotel. Details here.