Changes Happening in Insurance — Which One Are You Doing Already?

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Last week, I was invited to speak about “Partnering vs Disrupting” together with Greg Boutin — CEO of Relay, in the EXECinsurtech which is an insurance technology and innovation event. I was impressed by the quality of the agenda and other speakers, I took the opportunity to participate in the whole event. Here are some insights from only a couple of sessions, that I believe you should be aware of. When you finish the article, I hope you feel as excited as I am to see all the transformation and “upgrades” that our industry is adapting and the value we will continue to create for our end customers.

1- InsurTech Trends — The age of ecosystems and tech enabled neo-insurers

By Theresa Blissing, Director of Accelerating Insurance

Theresa has a very interesting background and exciting initiatives going on. She discussed these 3 trends;

1. Full-stack Neo Insurer: in short, this is a trend of launching an insurtech combining strong tech and underwriting capabilities. Lemonade who just IPO’ed recently is a good example with a claims process where you submit your claim and get paid in 3 seconds (literally!) thanks to their sophisticated AI in the back-end. Another great example is Igloo who started developing an e-commerce logistics insurance solutions, and quickly added a fully digital platform for insurers to build, test, and sell insurance solutions to millennials, then in 2019 secured an insurance and reinsurance license.
2. From insurer to tech player: this is an interesting one where a company mainly offering insurance solutions, now makes the right investments and creates a tech solution, then switches the gear to commercializing that tech solution to the entire market. An example of this is OneConnect, which is China’s biggest insurance company Ping An’s software “arm”. Find some details here. Today OneConnect services 460 banks and 1800 financial institutions in China, Thailand, Southeast Asia
3. Ecosystems: Grab (from China) is a good example for this trend and to understand why they are so important for the insurance industry. Grab is a “super app” where 180+ million customers find transportation, logistics and financial services products. Grab just added an “insurance” pillar in their platform, where it offers many insurance products such as travel insurance, microinsurance, critical illness coverage for passengers; and it created a joint-venture with an insurance company on health coverages.

Theresa also talked about insurtech having been a C-level trend so far, but it is finally expanding beyond that and we will see more impact due to this “expansion”.

2- New business models based on IoT and Best practices with insurance companies

By Yüksel Sirmasac, Founder & CEO Rockethome

If you haven’t come across with IoT yet: it means “Internet of Things” and it is a system of interrelated computing devices, mechanical and digital machines provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. Learn more on Wikipedia.

Yuksel talked about many business opportunities for the insurance industry. Concepts like smart device, smart home, smart city provide a ton of data to build new data-driven products, and expand the value chain. For instance: “predictive maintenance” can offer a framework aiming at a “smart home” or in a “smart manufacturing location” to mitigate the risks from an insurance standpoint.

Yuksel describes their success formula as “Startup and Corporate partnerships”, which is a great approach supported by a Product-Market Fit Planner and working in a collaborative fashion to find the best solution for the end customer.

For the insurance industry, access to the market will be a key area in the future, therefore thinking about new distribution channels is essential; and creating partnerships to achieve that goal through digital and data-driven processes is key.

3- Partnering vs Disrupting: what is the right model for Insurtech in 2020?

By Greg Boutin, CEO of Relay Platform and myself…

In this fireside chat, Greg and I discussed insurtechs having to often choose between partnering with established companies or a more revolutionary path, which usually means “trying to disrupt”. What is the right decision? Can both approaches be combined? What are the pros and cons?

If you think about it, it’s an interesting question: Partnering vs Disrupting. To disrupt, an insurtech would need to identify a great problem to solve where customers will simply “jump” on it; would need to have enough resources to survive and accelerate the process; would need a great understanding of insurance products and technology at the same time; and be able to acquire enough customers to generate revenue and attract the next round of investors to more or less repeat the cycle…

I called this an interesting question because if you are able to partner with an insurance company / broker, you get all the experience, historic data, constant feedback to build your product, maybe a small segment of the customer base to pilot the product / solution, and if you’re lucky you get some initial investment too, to make things work. Of course this is not 100% under the insurtechs’ control, the insurance industry should have an open mind and vision to work with insurtechs, to “feed” them with knowledge and experience to make it work, to support them in every stage and most importantly to be ok with it if the project fails, because startups are like that (!). But if it works, then you really get to transform your business and the entire industry.

4- Partnership is the key to success in tomorrow’s insurance industry

By Christian Macht, CEO of Element Insurance

Element is a tech company offering a Platform-as-a-Service, and is also fully licensed in Germany as an insurer. Element offers technology that can handle the complexity of insurance processes and can offer personalization based on customer needs.

Christian is definitely the right person to talk about partnerships, because his company built a business model purely relying on creating partnerships. Element is able to work with insurance companies, brokers, MGAs, large corporates, and with different vendors (i.e. payment gateway), with the focus on creating the most customized product offering fitting customer needs.

My take from this is: insurance companies have been upgrading their tech footprint, and have created either inhouse tools or partnerships that offer some digital solutions. The key to long-term success though is to have a clear framework for managing partnerships, constantly scouting for better solutions, and on the tech side, having a clear plug-and-play approach to leverage whatever solution or vendor is best complementing the overall product offering to customers.

5- Global Trends in Insurance in 2020

By Meeri Rebane, Cofounder & Co-CEO of Inzmo

1. Customer Experience: Customer experience has become one of the most important trends. For instance the customer behaviour in Asia-Pacific is mostly to have everything in mobile, which “pushes” the insurance industry to service their clients in mobile more. Customers expect to have more benefits in their insurance policies (i.e. home / renter insurance customers expecting assistance services when they lose their home key). Customers’ loyalty is an interesting area where customers choose to purchase from companies with rich customer experience and social presence (!), rather than traditional stuff they’ve been looking at, which we can call an emotional buying behavior. And last but not least, the need for digitally enabled risk prevention tools is peaking.
2. Cost Efficiency: As we all know, operational excellence and cost efficiency will remain as one of the main focus areas for the industry. Core system transformation is another focus areas, especially combining it with the support of rapid automation technology and outsourcing and shared services approach is an increasing strategy.
3. Mastering Disruptive Technology: Adaption of positively disruptive technology is not easy, but that is the challenge insurers are facing right now. Managing massive data sets and creating a connected framework… AI is the big reality of today and the future. In 2019, 1.3bn USD premium was written by AI, and it’s expected to be 20bn USD by 2024 (!)
4. War for Talent: Talent has always been essential to the insurance industry, but it’s more critical than ever given the transformation we’re going through: i.e. the skill-sets required to do the job like underwriting, actuarial and claims are transforming as well, adding more technology skills so insurance professionals can understand and know how to interact with technology and data driven frameworks.
5. Digitizing Distribution: Based on today’s customer expectations, making insurance products available in different platforms and partnering with new distribution channels have become a trend and a necessity; which helps all stakeholders in the industry to reduce costs and increase efficiencies as a side benefit.
6. The rise of full-stack insurtechs: (I think the most interesting trend is this one) We are seeing more full-stack insurtechs everyday, and a good example is the MGAs, they partner with insurance companies, they are technically capable, they are agile to implement new technologies and they bring better results given the fact that they focus on specific niches and build specialization.

Note: This content about the sessions of the event was created with the permission of EXECinsurtech event organizer.

There were so many other topics and great speakers of course, but I wanted to focus on these for now. Many events about insurance innovation, technology and insurtechs are happening; and it’s been a success because when you participate you get up-to-date about real use-cases, you can interact with insurtechs / vendors directly and you can explore opportunities.

Feel free to comment below and ask questions to speakers who I will tag in the post. And if you’ll join an interesting event, feel free to share with us as well below 😉

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Originally published at https://www.linkedin.com and authored by Dogan Kaleli.