New Insurance Business News / Opinion / Strategy

My humble view on insurance transformation [part III: InsurTech changes the game]

rotten wood of the industry attracts startups

It started at the most challenging spot: the interface to the customer, which is definitively a weak spot of the insurance industry. Le voilà, the mobile insurance manager was born. The idea of a paperless and at hand overview on all insurance policies is so good and charming, however, non-standard interfaces made life a little bit miserable here. It was necessary to develop individual interfaces to each and every insurance company. This made on-boarding of insurance companies very cumbersome.

Some workarounds have been necessary and in the back office of both sides – InsurTech and insurer – a lot of manual processes still prevailed. This, more or less, killed the idea (for a moment). In addition, critical and suspicious insurer and their sales force decided on a broad base to better not work with this new kids on the block. We have to keep in mind that in 2014/2015 insurance companies have been less interested and optimistic about InsurTech than today. Insurance companies feared that they «loose» contact to customer.

Let’s ask a reflective question: Did insurers ever had a (close) customer contact? Doubt it.

How the «Zeitgeist» changes! The more startup dealt with the insurance industry, the more weak spots and issues became apparent – for the avoidance of doubts, insurance companies have been aware of them all before. Like the financial crisis and its loss of trust gave birth to bitcoin, issues from back office to front office fuels InsurTech startups dreams.

In fact, today we have a lot of startups that deal with different areas: policy administration (SaaS), lean underwriting process, faster claims management, telematics, health & wellness programs (telematics for health and life area), electronic health record, artificial intelligence and chat-bots, robo advisors, and so forth.

You will easily find via google hundreds of reports, essays and snapshots on the present InsurTech landscape. And this landscape is growing and already quite complex.

By the way, the snapshot of the InsurTech landscape from today will be out fashioned tomorrow.

The formula for future success of insurance companies will be:

risk carrier + sales channel + new business strategy + technology

It is a puzzle made of several ingredients and probably several InsurTech startups that are already founded or in the founding process. Thus, the task for an insurance company is to put together this puzzle. The good news is that there is not only a single solution for all companies and the picture of the puzzle can still be defined.

Given that, it is not that surprising that currently so called «full digital insurer» emerge, like for example ELEMENT, ONE, FLYPPER or FR:DAY in Germany. All of them are following their individual puzzle. However, in each case the formula from above applies.

Read how the incumbents and top dogs react and act in my next blog post. Read here the introduction to my series of blog posts and also part 1 and part 2.