How carriers can adopt InsurTech innovation right now
Today's customers expect technology to integrate seamlessly into their lives and welcome such developments from insurers.
I’ve been watching as interest (and investment) in InsurTech companies has picked up over the past few years. It’s been exciting to see how innovative technologies are helping carriers compete in new ways.
In fact, as the graphic above illustrates, investment in this sector surged beyond $4.1 billion in 2018, up from $348 million in 2012.
But what is it exactly that has made the growth so rapid? And how can carriers effectively integrate new innovative technologies into their business?
Customer expectations drive innovation
Customers now expect technology to integrate seamlessly into their lives, and they’re welcoming these developments from their insurance companies. The level of personalization and efficiency that technology has brought to other experiences, from banking to travel, has made traditional insurance practices seem ancient by comparison.
We are experiencing a seismic shift in customer expectations. Of the 6,700 consumers surveyed for Salesforce’s State of the Connected Customer report, 59% believe that cutting-edge digital experiences are a must have, and more than half say that advances like the Internet of Things, voice-activated personal assistants, and AI have already changed what they expect from businesses.
Consumers today want to find, compare, and get a quote for insurance with ease, and companies that can offer a seamless experience — especially on mobile — stand to win the most. These shifting attitudes present an enormous opportunity for carriers who embrace innovation: in fact, 82% of insurance executives surveyed in the latest Accenture Technology Vision for Insurance report say their organizations will have to innovate quickly just to stay competitive.
The pace of technology means there’s no turning back
The pace of technological change has transformed the insurance landscape. According to Accenture, 96% of carriers say that digital ecosystems have impacted their industry and 87% agree that technology is advancing exponentially. In fact, 77% say that AI is advancing faster than they can keep up, and 80% of insurance executives believe that AI will soon be working alongside human colleagues at their organizations.
Despite the turbulence that rapid change can bring, the gains are too significant to ignore. InsurTech promises greater cost-efficiencies, powerful data-driven insights, seamless customer experiences, and growing engagement.
It’s why, according to Accenture, “Leading insurers are embracing emerging technologies such as blockchain, virtual reality, and intelligent automation, weaving themselves seamlessly into the fabric of people’s everyday lives.”
Carriers are starting to understand that despite the breakneck pace of change, innovative technologies can ultimately help them make better risk decisions, provide new types of policies, develop new revenue streams, and adapt to changing consumer expectations.
Collaboration is creating new opportunities
The early days of InsurTech presented a big existential question for incumbents: Could they compete against agile startups and their disruptive technologies?
Interestingly, both established carriers and InsurTech startups seem to have concluded that they are better collaborators than competitors. According to McKinsey Panorama InsurTech data, rather than competing with traditional carriers, 61% of InsurTechs appear to be collaborating with them to optimize the existing value chain.
“The vast majority of InsurTechs have settled in as collaborators with incumbents, looking to improve carrier capabilities across the organization, from distribution to underwriting to claims,” PC360 columnist Sam Friedman, who’s also a researcher at the Deloitte Center for Financial Services, told Tearsheet.
The big question now is how quickly insurers can build these teams to test and deploy these new technologies, and collaborate with the right partners to make it happen quickly.
Kevin Reilley (kevinr@hover.to) is executive vice president of business development and corporate strategy at HOVER. These opinions are his own.
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