Insurtech is changing the industry faster than many like
Insurance companies around the world are agonising about how to respond to a series of fast-changing technologies which will, undoubtedly, transform the industry. Some are excited by the improvements which developments such as artificial intelligence (AI) or blockchain might deliver, while others are terrified about the scale of change that is coming, and which will radically reshape the way they do business.
Insurance is in a period of change and uncertainty
What unites them, however, is that no one has a clear idea about what the future insurance landscape will look like, and which technologies will provide the infrastructure on which the industry will run.
Insurance is such a data-driven industry that it is hardly surprising that it has attracted so many technology companies promising a bewildering range of solutions. Investors are now sinking serious amounts of money into the insurtech world. According to Willis Towers Watson’s Quarterly InsurTech Briefing, there was $1.3 billion of insurtech funding during the third quarter of last year – double that of the previous quarter.
Insurtech is now centre stage for the industry
This week’s Insurtech Insights conference in London was well attended. As well as the expected array of shiny technology start-ups, the conference attracted a high calibre of speakers from traditional insurance and reinsurance companies – a sure sign of how the seriously the industry is taking insurtech.
What should drives the change – data, tech or firms?
One of the most pressing issues the industry faces when it comes to insurtech is trying to determine who or what is driving the whole process. Should the technology companies come up with really smart ideas and insurance companies then adopt them? Or should the insurance industry be setting down the parameters, effectively saying to insurtechs, ‘these are the obstacle which the industry is facing, now go away and find me a solution’?
At Insurtech Insights, Hamilton Insurance Group CEO Pina Albo took what I think is the correct approach. She said it was vitally important that at the start of the insurtech journey insurance companies try to identify what they are looking for rather than “chasing the next shiny object”.
Do insurtechs actually get insurance?
A major criticism which I think can fairly be levelled about some insurtechs is that they don’t understand the industry properly. I doubt if the vast majority of insurtech companies will still be around in a few years’ time.
Some of the ideas are extremely radical and will ultimately not be applicable to insurance in a meaningful way, take-up will be slow, and there is always a high level of failure involved in the start-up world.
My sense is that while most will fall by the wayside, there will be small number of insurtechs which will hit upon some really ingenious solutions that will be genuine game changers for the industry.
I think some of the solutions will be so good and make such sense that there will a tipping point when almost everyone in the industry adapts them.
Why insurance and reinsurance needs the insurtechs
While it will be important that insurers try to stay at the heart of the insurtech revolution, they will not be the true drivers of innovation.
Motoring’s Henry Ford is famously supposed to have said that “If I had asked people what they wanted, they would have said faster horses”. In other words, the punters – in our case the insurance industry – will never have the imagination to come up with the ideas that will transform our lives. It will be the tech dreamers and entrepreneurs who will come up with the magic.