With the rise of InsurTech, the new world of insurance is indeed a playing field—players jockeying for positions, making plays, aligning their teams, and acquiring new ones. Then, there are those who aren’t really sure what position they’re supposed to be playing. For these reasons and more, the sports world is relevant to the present state of InsurTech—it requires a game plan and guts. You can either stay on the bench and watch it unfold, or get in the game and start making plays.
Over a year ago, Stephen O’Hearn, global insurance leader at PwC, predicted, “InsurTech will be a game changer for those who choose to embrace it.” Since then, the InsurTech playing field has matured. Many insurers who have operated in the “good enough” zone are finding that it is no longer—well, good enough. The game has changed. No matter your title or role—from underwriting to claims and exposure management—InsurTech impacts you. There is no option to stay on the bench. So, what’s your game plan?
Partnership is the way forward
Right now, collaboration should be a part of everyone’s game plan—not just insurers, everyone—from commercial tech providers to managing agents and brokers. Insurance is a team sport, and has been since its inception. InsurTech will not change that. It only amplifies the need to partner—quickly. Who insurers pick as their partners to accelerate transformation matters. The technology they employ to transform matters.
In the last year, talk of “disruption” has turned to talk of collaboration as the insurance community is realizing the fastest way forward is through partnerships. A more mature conversation is happening. Insurers are realizing the benefit—and speed—of leveraging what InsurTechs have to offer. Once labeled “disrupters,” InsurTechs are now vastly “enablers.” Fact is, the vast majority of InsurTechs aren’t looking to oust incumbents. They’re looking to find a niche where they can succeed and leverage the sheer scale of their more established partners. As an InsurTech Bytes podcast observed, “Partnership is the way forward. Enablers are leading disruptors across the Insurance sector, presenting an exciting opportunity for insurers to drive forward their digital transformation. InsurTech has developed (largely) with a view towards partnership rather than disruption.”
McKinsey & Company: “Insurers’ Digital Reality--fewer premiums, more competition”
New digital opportunities are opening up more choice for consumers and businesses alike—think Internet of Things (IOT), vehicle telematics, and especially, advanced data and analytics. As customer expectations grow, an insurer’s data and analytics will need to keep pace in an effort to drive competitive differentiation. This includes the ability to hasten and streamline the quote process, more accurately price risk, and mitigate and respond to claims. Insurers recognize data and analytics as a leading InsurTech priority and, like other digital transformation priorities, are looking to either VC opportunities or partner integrations to speed the transformation process. In fact, in a 2018 PwC survey of insurance CEOs, 85 percent reported they're at least "somewhat concerned about the speed of technological change."
Still, while some insurers are clearly making plays toward prioritizing InsurTech investments, others are still on the bench: Only 39 percent of insurers believe that they are harnessing digital technologies successfully. And, one in five property and casualty (P&C) insurers do not apply advanced analytics for any function. This last statistic is mind-blowing when you consider how intrinsic data and analytics is to insurance. So, what is holding a large percentage of insurers back from moving their digital game plans forward?
The gap between knowing and doing
In an Insurance Thought Leadership column, industry expert Denise Garth wrote about the gap between knowing and doing. She stated, “Even though most companies know they should respond to key internal and external challenges to create promising growth opportunities—and more importantly to ensure survival—many are still only thinking about doing something, at best. Why is there a gap between knowing and doing?”
The gap exists because the list of challenges is long: Legacy systems and processes, lack of budget, and downright risk aversion. Understanding where to start with digital transformation, and how, is critical for insurers who recognize the need to digitally transform. But, the end goal shouldn’t just be transformation. It should be to succeed—to lead and compete in ways that produce profitability, efficiency, and innovation. However you measure success, integrating InsurTech—whether AI or advanced data and analytics—should achieve those goals. But, where to start?
First “see over the horizon”
Without doubt, InsurTech is an epic climb. Not a bump in the road, but a mountain that will shape the future of the industry. If we’re to succeed, we must start climbing—only by doing can we compete and start shaping what’s next. However, to see beyond the horizon, you first must climb to the top; and, as Jon Bidwell, former Chubb Chief Innovation Officer and now SVP and Underwriting Transformation Leader at QBE North America, put it: “see over the horizon.”
SpatialKey is InsurTech, and even we’re not immune from the need to digitally evolve. We’ve been providing data enrichment and geospatial insurance analytics since 2011 and we’re constantly evolving our own platform and product offerings to ensure we provide clients with the latest technology to meet their needs now and in the future.
InsurTech is a monumental climb for all of us—everyone has a stake in this game. For SpatialKey, our role as an insight hub is to help shorten and accelerate the transformation that’s necessary for insurers to remain competitive. But, at the same time, our insurance clients are recognizing that not all digital transformation has to be hard. Technology integrations can be swift and painless with the right partner.
What is hard about InsurTech is making the right choices—making the right investments, prioritizing the right initiatives, collaborating with the right partners. It’s all a risk—but not as big a risk as doing nothing. There is no option to stay on the bench. No one knows what’s over the next horizon, but we all have an opportunity to shape it.