“InsurTech” is a term used quite often these days – a spin-off of the even more popular word “FinTech.” It refers to technologies and platforms. These platforms can help optimize any of the principles for success or requirements of insurance.
InsurTech encompasses companies that provide insurance, but engage technology in a user-centric way.
It includes the following:
- Customer service and account tracking software
- Risk analysis software
- Personalized insurance products
- Software allowing a customer to view all their insurance products in one place
- Devices and appliances that collects data
Traditionally the pace of technology innovation in the insurance industry has been slow. There was no real sense of urgency for change, which was most likely due to the high profits. Plus the belief that there was no real external competition for agents and brokers.
Fast forward to recent years and information technology has evolved dramatically. Insurance players have lost track of what competitors are offering and who their competitors actually are.
But a recent study conducted by PWC revealed that about 75% of insurers expect this technology to disrupt their industry. Less than half of them are actually prepared to make it a key strategic priority though.
This clearly shows that these bigger insurance players are slower to move. This gives smaller broker businesses like yours, an advantage – so do embrace it!
AXA Insurance created an interesting Infographic on InsurTech in China. Since this region is at the heart of innovation in digital insurance. It gives others an opportunity for take-way ideas to put in place. Here are relevant sections:
(Full infographic here – SlideShare)
Here are 7 ways of making InsurTech the heart of your business:
1. Identify which part of your business would benefit most
The insurance industry is currently in a phase of digital revolution. Whereby it’s replacing its legacy systems and infrastructure. The industry is doing this to meet the demands of today’s digital consumers.
Being active in InsurTech can help you to discover coverage needs and risks that need new insurance products and services. You will be able to get a clear outlook and even redefine your product portfolio and service strategy accordingly.
PolicyGenius is a good example of a company that has done well in identifying a need by providing a tailored insurance check-up platform. Users can discover their coverage gaps and review solutions for their exact needs. It provides a unique online forum to shop for life, long-term disability, renters and even pet insurance. Through its quoting engines that offer side-by-side comparisons of tailored policies.
Take a look at the technologies available to define a promising product strategy. Then determine required capabilities and create a plan to seize opportunities. However, make sure this strategy is in line with your overall businesses strategic outlook. There has to be a benefit to you and your customers. Don’t just innovate for the sake of innovating!
2. Partnering – do your homework
As innovative as some InsurTech solutions may be, there is no way that it can beat decades of experience. Many technological innovators may have solutions to customer needs. Often though, they lack the insight into how they can apply and scale them and in do so in your agency.
Your exploration should lead to the development of potential use cases. And should address specific business challenges. Here are a few aspects of where InsurTech is changing the industry. It’s for you to decide which aspect is worth developing with the right partner:
– Updating your claims process (Example: Embroker)
– Updating your client user interface (Example: SurelyGroup)
– Appealing to new markets (Example: SurelyGroup)
– Policy flexibility (Example: Sureify Labs)
– Policies linked to longer life expectancy (Example: Human Condition Safety)
3. Customers come first
Make sure that the technology you want to introduce is in line with your customer base and target market.
For example, if 90% of your customers are older than 65 years of age, an online customer service platform is not going to appeal to them. But, if you are hoping to appeal to a new younger market, it may work for that strategy.
If this is the case in your business. Make sure that your older clients still have the option of interacting through the usual mediums of communication. You may just be surprised about how many of them will be interested in an online platform! That would be a bonus. There are ways of identifying what your customer’s priorities are.
You can get to know this by:
- Cleaning up your existing data, gathering proper statistics of your customer base
- Conduct surveys with your customer base to see what type of innovation would most appeal to them
- Conduct market research to get to know any new markets you want to appeal to.
Wave goodbye to the days of just buying a life insurance product and then never ever hearing from your life insurance company. Until there is an actual claim.
Today insurers connect with their customers throughout the life of the policy. Insurance is becoming a lifestyle product and it’s all thanks to digital engagement.
It’s all about putting customers first and treating them fairly.
New technology and new business models which engage with customers – this is where insurance is going. Customers are being made to feel that they are getting value. Make sure that this is a minimum standard for whatever type of InsurTech you wish to introduce to your business.
Put in it into perspective. Look at the use of YouTube channels, which is useful to explain what customers should do when a particular event takes place. It’s an effective way of explaining more complex consumer electronic products, but it’s hardly ever used in insurance.
Instead, think of the application of social data (permission-based public data available through social platform). It will simplify the underwriting and on-boarding process of your new customers. Or the ability to log-in to certain information to simplify the customer experience.
5. Stay Abreast
In 2015, several corporate insurers such as Allianz Digital Corporate Ventures and AXA Strategic Ventures, poured huge investments into InsurTech and have funded insurance start-ups. In an $8 million funding round for QuanTemplate, an insurance reporting and analytics software. Allianz Digital Corporate Ventures and Transamerica Ventures came together.
AXA Strategic Ventures, Transamerica Ventures as well as MassMutual Ventures also helped PolicyGenius. PolicyGenius is an online insurance policy comparison platform, raise over $15 million in funds.
According to Geert Matthys from Deutsche Bank, the three fundamental trends about FinTech is:
Connectivity, simplification and personalization:
- Connectivity: anyone or anything being able to interact, trade or exchange information anywhere and anytime.
- Technologies: such as APIs and the Internet of Things are enablers.
- Simplification: It’s all about reducing complexity.
There are also a number of InsurTech trends which was predicted for 2016, such as these by Rick Huckstep:
- “Insurers will create lifestyle apps that provide additional consumer value on an ongoing basis. Continuous consumer engagement will start to replace price as the key buying criteria. This will be sticky insurance with strong brand loyalty.”
- “All in one policy” cover (aka, all risks insurance) will emerge for consumer protection. Policyholders will be able to insure their lifestyle (their home, motor, dog, holidays, iPhone, treasures, and travel) in a single policy based on highly personalized risk assessment through a digital platform.”
- “New entrants will come into the market with highly sophisticated data modeling and predictive analytics solutions. They will exploit mass-scale technologies, high performance computing and techniques developed in high frequency trading.” Stay abreast of these trends and predictions and consider these before buying into any new technology for your agency.”
Stay abreast of these trends and predictions and consider these before buying into any new technology for your agency. Tools like the advanced search on Twitter and LinkedIn as well as BuzzSumo can be a great source of information. Flipboard is also an invaluable way of combining whatever topics you want to know about.
6. Appeal to newer markets?
If your client base is an ageing one, InsurTech can be your ally in attracting Millennials. Make sure that you apply the following principles when catering for their needs:
- The needs of today’s millennial client will demand a digital-first offering. Think social on mobile screens to self-service, premium payments, document storage and downloads, and connection to licensed brokers. Fitsense is a great example of this kind of thinking. They are building a data analytics platform. It’s focused on enabling insurance companies to reduce premiums for anyone with a smartphone or wearable device.
- The life insurance journey must be a social, multi-channel experience for them. People ask people whom they like and trust when it comes to making important life event-based decisions. Ladder is reportedly starting with a mobile value proposition built around easier and faster access to term life insurance. Using available, permissible data sources to improve the underwriting process. They are doing this in the hopes of developing more dynamic, effective relationships with clients .
- An ongoing relationship should be beyond the annual policy renewal, or a claim, is the exception. You need to consider the potential of prevention services, as a way of boosting lifetime value and client loyalty.
7. Make sure everything is above board
Some firms have already learned the hard way. A three-year-old business called Zenefits in the U.S faced major legal challenges to its business tactics. They provided businesses with free human resources software as a lure to become their insurance broker. Due to many of their internal processes, controls, and actions around compliance being inadequate they have been hit with major penalties. These included a temporary prohibition from operating in the state of Utah.
Make sure you have your ducks in a row, especially when you decide to partner with an InsurTech provider.
Compliance can be extremely challenging in this industry and you have to keep up with the constant changes which can happen weekly! There’s privacy, market conduct and anti-money laundering regulation. All which will continue to prove problematic.
Penalties for not complying range from fines and regulatory sanctions to adverse claims decisions which could land up in court.