Where Insurance & Technology Meet

When the term ‘InsurTech’ first entered the business lexicon, ‘disruption’ was a frequent follower.  Typically, the new technology impact was targeted at Insurers and licensed distributors (agents, brokers, MGAs, etc.).  However,  we may be entering a collaboration period.  Will this truly take hold?

Where did the InsurTechs come from?

While there had been digital tech developments for some years, most observers pin the origin of ‘InsurTech’ on 2015.  Driven by smart geeks who had some exposure to insurance, there began a firehose of applications that had been developed in labs, garages, and, occasionally, insurer IT departments.

As in previous iterations of new technologies, there were mixed reviews – ranging from ‘minor interest’ to ‘possible revolution’.

The next year – 2016 – pushed the centre of gravity closer to ‘Revolution’ and raised the discussion volume to ‘threshold of pain.’   Moreover, the cacophony came with a raging fire that could destroy existing insurance applications.  Or so it seemed.

And what do they want?

The number of InsurTech startups ballooned.  Development labs and hubs opened to provide space and support.  In addition, insurers provided support and presence at these locations and, periodically, participated in development.

These communities developed relationships, some of which were contracts between the insurers and InsurTechs.  All very up-beat.

However,  there was a conflict that grew around the communities.  InsurTechs were frequently praised (rightly so) for the ability to provide new functionality expeditiously, frequently with phone friendly interfaces.

And this was good, but the majority of InsurTechs were delivering point solutions which limited the value of the InsurTech’s offerings.  In some instances, the InsurTech tools would have API capabilities to extend the functionality, but not always.

Regardless, there was new, exciting options that went beyond existing ‘legacy’ systems.’ functionality  As a result, some InsurTech folks denigrated  the ‘old-fashioned ‘ IT folks.  This caused return fire, dismissing the new functionality.  I don’t think this is wide-spread inside organizations, but the internal push-pull did not help.

And there were consequences….

The InsurTech activity in the labs has not slowed down, however there is increased interest in addressing enterprise level functionality.  Unfortunately, some of the critical extant systems are 10 or 20 years in production, and have significant customs enhancements.  These would not work well with InsurTechs.

On that basis, the existing staff have become critical to the new functions.  So where do we leave this?

It appears that insurance companies are becoming the de facto standard for taking InsurTechs to the market. Writing in ITL, Mark Breading  from SMA-StrategyMeetsAction notes: “Early insurer participants were primarily the large Tier 1 insurers, but a new wave of activity is reaching companies in the middle and smaller tiers.”

On this basis,  Mark poses the question:  “Will InsurTech disrupt the industry, or will the movement fizzle out?”

So, where do we go from here?

Does all this mean that insurers will take control and, possibly, dull the InsurTech knife?  My conversation with Canadian insurer executives says “No”.  Customer experience is becoming a major differentiator and the ability to deliver bespoke service is a critical success factor.

Matteo Carbone, Director of the Connected Insurance Observatory, was quoted recently  in Business Reporter, and put a different twist on the topic: “I believe all the players in the insurance arena will be InsurTech– that is, organizations where technology will prevail as the key enabler for the achievement of strategic goals.”

What do you think?

If you are an insurtech, do you think the insurers can utilize the new technology>

If you are working for insurers, brokers, MGAs, do you feel comfortable with the new entrants.

Editor’s Note:  The 2018 Insurance-Canada Technology Conference – 27-28 February 2018–  will have sessions focussing on InsurTech and the management / application for insurers, Brokers, and MGAs.   Information and registration .