by Mike Davies, Director - Norman Broadbent Interim
Insurtech has now been around for a few years and like its big brother, Fintech, has taken time to establish itself as a credible and viable driver of evolution and transformation across all parts of the Insurance landscape.
Whether you are running large a L&P, GI, Broking or London Markets organisation, only now can we really start to look at Insurtech with a view to commercial viability. However, which areas of new technology will be most valuable – who will be the ‘Uber’ and who will be the ‘Blockbuster Video’?
- AI is transforming Insurance. The start-ups are already on board, but what about traditional insurers?
- Telematics – so much data – how do you get the best out of it?
- Social media – new Channels – can traditional keep up with Millennials and Gen Z?
- When does collaboration finish and become disruption begin
According to a recent report published by PwC, 28% of insurers recognized that collaborating with Insurtech startups helped increased the value their business. This figure has increased in 2017, with 45% of insurers actively engaging with Insurtech startups via partnerships.
The overarching question then remains: how do traditional insurers - some of which have been operating for more than a century - collaborate with Insurtech companies which are less than a year old? Various challenges, including differences in workforce, culture and technology, must be overcome if they are to succeed.
This collaborative approach means insurers and Insurtech startups must both change their approach and mindset to get the greatest value from their partnerships.
This brief article will present the challenges facing modern insurance organisations, and how Norman Broadbent Interim can support them with end-to-end transformation services, in light of the future advancement of Insurtech innovations.
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AI is Already Here</h3>
Unsurprisingly, artificial intelligence (AI) is one of the prime technologies spearheading an unprecedented new wave of innovations, which are soon to form a pivotal part of the insurance business sector.
In one of their recent reports, Accenture highlighted that three-quarters of insurance executives around the globe believe AI will have a profound effect on their industry. Over the next three years, these executives believe AI will either have a significant impact on day-to-day operations, or transform the industry completely. Indeed, just recently Lloyds of London signed a global deal that will bring on cognitive automation, to modernise its business processes in order to support the needs of market participants.
Given how quickly customers have adapted to machine-led interaction and advisory services, AI will also change the role that humans play in organisations. AI is not just about virtual assistants or cutting back-office costs in businesses, organisations are instead using it to drive product development and innovation to improve the experience of their customers.
With a younger workforce of digitally native millennials, many Insurtech companies have placed AI at the core of their strategies. Amodo for example, a provider of innovative digital insurance solutions, has invested into behavio
ur analytics, product innovation, customer engagement and acquisition, all implemented through AI.
With a growing number of new Insurtech startups operating in a similar way, AI adoption rates within large organisations are set to increase exponentially in the next few years. Furthermore, traditional insurers have already started to invest in AI on the top level, mainly through video analysis and machine learning.
Although this shows great progression, these insurers are not adequately using AI to assess and develop the human aspect of their businesses.
It’s generally accepted that adopting technology is easier than adapting long-standing organisational cultures. To keep up, traditional insurers must invest into the development of a people-centric strategy that focuses on using AI to increase performance and keep the personalised, human element of the business.
To their advantage, those that can adapt quickly will have substantial time and cost savings. This will allow for the automation of their customer interactions and internal operations, letting AI assist in the development of products and customer experiences.
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Reshaping the Insurance Value Chain</h3>
A big challenge facing long-standing insurance companies is external disruption. The main drivers of this disruption are:
- Raised customer expectations: The vast majority of industries have had widespread adoption of new technologies, which has resulted in customers having increased needs and expectations from insurance companies - particularly in terms of interaction channels.
- Unprecedented speed of innovation: Recent technological innovations have allowed insurers to meet the needs of their customers. With the increased demands of trends such as the Internet of Things (IoT), wearable technology, virtual reality and autonomous vehicles, insurance companies now have the opportunity to implement innovative operations into their organisations. New business and insurance solutions are being demanded by customers and insurers must offer a tailored product and service offering. A ‘one size fits all’ approach will not suffice.
- Insurtech startups: Technological barriers to entry have been lowered for startups due to their access to open source frameworks, on-demand development and scaled cloud computing. Innovation is quick for new players and they are able to take full advantage of the gaps left by long-standing insurance companies.
Every company in the insurance sector - from reinsurers to insurance carriers, must now ask how their value chain can be reshaped.
The opportunity is available through the adoption and analysis of revolutionary innovations such as IoT, smart homes, mobile payment methods, big data & advanced analytics, autonomous agents and virtual reality. All of which form part of a new paradigmatic proposition for the insurance business, referred to as Connected Insurance.
This approach to insurance uses sensors to acquire and send data along the insurance value chain, from the initial search right up to the after sale service. Auto Telematics is the most widely used and mature of Insurtech sectors and is playing a pivotal role in motor insurance organisations.
A growing number of customers are now willing to use a mobile device or app to receive a tailored mix of a traditional insurance policy, with technological aspects to the service, as highlighted in a survey conducted by SSI in seven countries.
Insurance companies are continually breaking down the barriers for telematics adoption in order to satisfy customers’ growing need for fairer behaviour-based pricing. Through innovative products such as Wunelli’s bluetooth connected 12V plug-in telematics device, insurers can provide accurate analysis of the driver’s behaviour using various parameters such as speed, braking, terrain type etc. Back in 2015, USAA invested $24m into the telematics platform
Atomic Labs, and are continuing research and development today.
Like telematics, there is an incalculable amount of data collated every minute through connected insurance. The challenge for insurers is to validate the data in real-time and deliver it to their customers in an engaging way. This core data can then be used by insurers to engage with their customers, and inform them of pricing and managing their claims.
Life insurance provider Sureify have developed a platform that provides a tailored premium for customers based on data retrieved and input from their wearables. The challenge for insurers is to meet new customer needs, build relationships, and enhance interaction.
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Where Does Norman Broadbent Interim Come In?</h3>
Over the years, our heritage has allowed us to gain a deep knowledge of the financial services sector and all of its services, none more so than insurance. With an exceptional level of insight and experience, our Interim Executives can implement long-standing transformational processes into an organisation. Our Executives will help businesses to adopt a new way of thinking and implement effective strategies, which will remain long after they depart.
At Norman Broadbent Interim, our Insurance Practice has over 20 years’ experience supporting and facilitating change in the Life & Pensions, General Insurance and London Markets arena. Working in conjunction with our Executive Search practice, we offer senior decision makers the ability to access both a unique network of Insurance and Technology Executives in the market, and to a wealth of expertise to deliver cost-effective solutions, producing lasting benefits.
If you would like to hear more about how we may be able to help your business, please contact Mike Davies, Director, Norman Broadbent Interim Management, for an initial confidential discussion.
Email:
mike.davies@normanbroadbentinterim.com
Switch: +44 (0) 20 7484 0000
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