What's Trending with the InsurTech Digital Transformation
If you are in the financial services or insurance industries, you have heard the term “InsurTech” tossed around quite a bit in the "Twittersphere" and "blogospheres".
What is InsurTech? And is it hype or is it real? What is driving this insurance trend?
We will seek to answer, in practical terms, the answers to these questions.
The insurance industry is one of the oldest financial institutions known to civilization. The industry seeks to protect individuals and property from financial loss through the law of large numbers and is highly regulated at both a state and Federal level.
The process of acquiring insurance protection, filing a claim, and communication with the insurance company until an outcome is reached, is a universally cumbersome, time consuming, and dissatisfying experience for most consumers.
In the present day, consumers demand more relevant insurance products that meet their unique needs and a streamlined process that delivers immediate results. The distance between the ancient insurance model and that of a more efficient insurance market, is a deep technology gap. Insurance companies, being inherently risk averse, avoid and fear change. Most rely upon old, inflexible, fragmented systems and entrenched business processes.
"InsurTech" is a term used for entrepreneurial insurance technologies designed to improve the customer experience by streamlining insurance processes, improving risk protection, delivering cost savings, improving productivity, and offering valuable insights for data driven decision making and outcomes.
For these new technologies to enter the marketplace, collaboration between InsurTechs and large insurance or insurance-related companies is essential. Companies must adopt a culture that embraces and encourages innovation and change, in order to successfully deploy new opportunities to improve the insurance experience to meet the demands of today’s consumers.
Organizations like the Global Insurance Accelerator, Insurance Thought Leadership, and Plug and Play InsurTech, (among others) are effectively bringing together InsurTechs with insurance companies to accelerate innovation.
What is trending in 2019?
Sally Poblete, Founder of Wellthie, notes three specific trends to watch:
1) sophisticated analytics
3) investments and partnerships between carriers and innovators.
Earnst & Young, an international accounting firm, warns that in 2019 insurers can expect to face intense slowed revenue growth and pressures on profit, digitization and rising customer expectations. However, the firm encourages insurers that these challenges provide an excellent opportunity to find “better ways of working, a clearer sense of purpose, more effective use of emerging technologies and ecosystems as well as our industry’s unique ability to promote financial wellness, provide protection and enable insurance customers to better manage risks”. Indeed, this is the opportunity for insurers to engage with innovators to mitigate some of these pressures and find better solutions to old problems.
And as to the question whether InsurTech is hype or real, we quote these words from Accenture, “InsurTech is not a silver bullet—the real challenge for insurers is to become more innovative in their everyday business”. We caution that early stage startups often present some great ideas but lack a proof of concept or knowledge of insurance regulation. Most late stage startups can demonstrate a compelling business use case and have initial paying clients but are often financially boot strapped. But, what these InsurTechs bring to old, clunky, risk-averse insurance companies is passion and risky ideas stimulating thoughtful dialogue and challenging the status quo in a way that energizes and creates a vision and way forward to what is possible for Insurance that will make all our lives better.
But how do we get there? How do Insurers embrace change and innovation?
According to the Harvard Business Review, there are winners and there are laggards in this digital transformation age. The winners first identify a challenge they want to address, then define an outcome they want to achieve, and they pursue technologies that fit the challenge, rather than adopting technology first, then trying to figure out what to do with it. These winners report a better market position than their competitors with more than 10% revenue growth year over year. What separates the winners from the laggards is that winners formalize a strategy, engage with outside experts and tightly measure results, applying advanced data analytics.
The most remarkable finding in a study involving 874 respondents from an HBR survey, is that the top three reasons for digital failure is due to people, not the technology. Those people reasons were due to lack of commitment, an ill-equipped workforce and siloed organizational structures. Winners promote a learning, innovative culture, committing resources and driving success from the top down and bottom up to ensure success.
To stay relevant, Conduent, a digital services company, focuses on a human-centric digital experience to engage its customers in an intuitive manner when, where and how they want, removing friction points to ensure an optimal customer experience. This is company’s most important differentiator to build brand loyalty.
Conduent serves the top 100 Fortune 500 companies and over 500 government entities. Rahul Gupta, Global Head, Conduent Technology Services, explains the company’s three qualities that enable digital transformation:
1) Innovation DNA to transform business
2) Insights to unlock the power of data
3) A dynamic ecosystem to deliver innovative solutions
These qualities speak to the company’s innovative culture, commitment and advanced use of analytics, the very same qualities identified in the Harvard Business Review’s survey of companies successful with digital transformation.
In the insurance claims vertical, there is a dire need for innovation to address the impending shortage of claims handlers and inefficient workflows. Identifying challenges and friction points in existing claim processes, committing resources, and collaborating with innovators will guarantee better financial results, sustainable growth and customer loyalty.
This is what’s trending in InsurTech in 2019, don’t get left behind!
Deborah Watkins is the Founder and Chief Disruption Officer of Care Bridge International, setting a new standard in forecasting medical treatment and costs for claims using big data analytics and AI technology-based solutions for Future Medical Valuations, Medical Reserve Setting, Medicare Set-Asides and Care Coordination.
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