Insurance-Canada.ca - Where Insurance & Technology Meet

This InsurTech Thing Isn’t Going to Work, Is It?

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 assumptionsSMA 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.

Neil Huzinga

It’s an interesting article and you can’t move for insurtech discussions in the insurance trade press, so it’s been a hot topic for a couple of years.

However, when you distill down what insurtech actually might be, it might be a lot of different things to different people.

You have the (largely) “invisible” insurtech that will help improve workflows, systemised processes and data augmentation etc within large brokers and insurers for example, and there is no doubt that that is already happening.

However, for me the jury is still out on the “active risk management” element of insurtech. Yes I think it will start to take a hold in the commercial space where the reward is high, but at a personal, private e.g. within the home level…? I don’t think so.

I think home insurers will struggle to crack the “active risk management” piece. That hasn’t (and won’t) stop them from trying, but there isn’t a solution out there at the moment that, at scale, ticks the active risk management box.

I think consumer-facing insurtech has to do the work on behalf of the consumer, not ask the consumer to do anything different or more, for it to be a truly scalable (r)evolution that works for insurer and policyholder alike.

Reply
Patrick Vice, Insurance-Canada.ca

Well said, Neil. Constructs such as ‘InsurTech’ are vague… intentionally. But it does help to have some points of reference.

I think that the business of insurance needs to be examined and changes to meet consumer requirements with fewer buzzwords and voices from The Castle. (A favourite of mine). I think that IsureTech is releasing tech that will support that, if nothing else.

Reply

Leave a Reply

Your email address will not be published. Required fields are marked *