The Promise of Insurtech
Disruptive technology is poised to shake up our industry. Following tectonic plate shifts in publishing, finance, investing, telecommunications, recorded music, information technology, retail, and even ride hailing services, insurance has been added to the queue.
Disruption can be unsettling. While a brave few welcome new challenges and ways of doing things, the great many prefer the certainty that comes when tomorrow looks like a facsimile of yesterday. Change has the capability to be difficult and frightening. Yet, it remains inevitable.
The frightening news about insurtech is the insurance industry may look very different in the next few years. The reassuring news is this disruptive technology presents a real opportunity for us to deliver greater value to those we serve.
Insurtech represents a striking opportunity for insurers to evolve the business model beyond its present legacy structure to better serve insureds. While it will shake us out of our comfortable seats, the benefits of innovation outweigh the potential pain.
The transformation will not necessarily lead to a destructive disruption of our current business model. Instead, it can lead to creative disruption as we make use of technology and ever-growing streams of data to develop innovative solutions, reduce operating costs and deliver greater value to everyone in the chain.
Although any one of us can choose to passively follow along as insurtech transforms our business model, the greatest opportunity is to be found in actively participating. To fully exploit insurtech’s technological advances to move us out of our comfort zone into a new space characterized by exciting opportunity, our industry requires leaders rather than followers.
To put leadership into practice, we must first fully accept, without reservation, change is coming. We must also embrace the positive aspects of this change.
Next, we must work to understand the foundation of this change is data. While it is easy to take the explosion of data for granted, we should stop for a moment to recognize its extraordinary magnitude. We should not join the chorus of Luddites (a person opposed to technology or innovation) who see the use and processing of this data as being a threat to privacy. Building in safeguards and training people who act with prudence when putting it to productive use are two steps to help secure this developing future.
When we get a complete understanding of the vast quantity of data being collected, we must identify the rising stars among the start-ups and accelerators working to collect, read and act upon this data. In many instances organizations collecting data will be different than those imagining creative ways of acting upon it. Through this exercise we will be able to determine which pioneers to partner with as we reimagine our business to better serve all stakeholders.
As in all things, we must be guided by the needs and shifting behavioral patterns of our customers. Insureds participating in a sharing economy exhibit different risk transference needs than those participating in an ownership economy. Consumers for whom immediate gratification is the norm possess different demand criteria than those comfortable with waiting for an application to be delivered by mail. We should look to insurtech as being a vehicle to meet this need.
One of the greatest promises of insurtech is the potential to anticipate and remove risk rather than to make individuals and businesses whole in the wake of unintended consequences. We must be particularly aware and interested in applications and devices seeking to make greater health and wellbeing at the individual, corporate and societal levels a reality.
All risk management and insurance companies – both large and small – should consider assigning a person as an insurtech champion within their ranks. While the hours these champions devote to exploring this innovation will not be fully client facing, it is an effective way to ensure this critical cluster of technologies receives full consideration, good and bad. Senior leaders and principals should regularly meet with their insurtech champions so their acquired knowledge can help to drive the corporate planning process.
The future, as always, begins tomorrow. The past, as always, ended yesterday. There is little question insurtech will help our industry better meet the needs of tomorrow’s insureds. How much better we meet those needs will depend on our willingness to leave familiar patterns behind, and dive deeper into the promise of the future.