Why commercial insurance companies should make friends with insurtech

Commercial insurers are operating in a fast-changing landscape. As your customer base undergoes generational change, they want to interact with you in different ways. Meeting those expectations means being digital and agile, including a willingness to embrace new technology.

Going digital is easier said than done. There are lots of obstacles, including legacy systems which make any transition costly and complex. You can’t simply bolt insurtech onto the front of your policy and claims processes. To go digital effectively you need a complete transformation.

Enter the insurtech companies. Rather than view the newcomers as potential competitors, traditional insurers can take advantage of their digital skill. Insurtechs lack scale, while commercial insurers lag behind on technology. The solution? A partnership.

By embracing insurtech, you can:

Exceed customer expectations

With personalised service and tailored product offerings your customers will be delighted.

Save costs

By offering customers self-service options you can save on administrative costs and provide immediate responses to queries.

Use data to drive insights

Increase the profitability of business lines by better understanding the factors leading to claims and adjusting your rating formulas accordingly.

Increase profit margins

By being able to adding options and new benefits to products (as in do you want fries with that) to boost revenue.

Offer multi-platform usability

Enable interaction across mobile apps, websites and other digital platforms.

Expand your product range

Embrace new market opportunities or expand the features offered in existing products.

Streamline claims management

Reduce operational overheads and processing times while improving the customer experience.

Improve underwriting support

Improve data capture and analytics for better insight into behaviours and aggregated patterns

Cross selling

When a customer is applying for one product you can suggested related products such as bundling PI, Management Liability and D&O.

What areas of your business can benefit from insurtech?

Customer experience

AI is any type of software technology which can reason and learn. A common use-case is chatbots. They can respond to frequently asked questions about insurance products and claims procedures, thus freeing up human resources to field more complex queries. This creates better interactions, builds brand loyalty and drives deeper customer engagement.

In 2017, an Accenture study found that 68% of respondents already used AI-powered virtual assistants in their organisation.

Risk evaluation

Insurtech can change the way insurers evaluate risk and assess claims.

Drones are useful for accessing areas that are hard for humans to get to. This is particularly useful for property assessors, allowing them to inspect hazardous properties or map a flood- or fire-prone area. They are estimated to save the insurance industry nearly $7 billion per year.

Tractable uses AI to assess asset damage from photos that can be taken from a smart phone in real time to settle claims faster. Farmers’ Edge combines field-level data, remote sensing, AI-driven models, and secure automation technology to evaluate crop damage, detect insect plagues and employ long range weather forecasting.

Automating new business and underwriting

Manual processing of data is tedious and inconsistent, making it harder to manage claims and process new business.

AI and automaton can recognise and process data in seconds, allowing providers to create quotes almost instantly. Machine learning can be used to analyse claims data, predict future demand, identify fraud and automate the end-to-end claims management process.

Untangler uses AI to recognize inbound customer or employee data in any format and transform it into readable data in seconds from which providers can create quotes.

One leading paper predicts that machine learning and automaton will reduce the underwriting process to a matter of seconds by 2030.

Digital platforms and aggregators

Digital platforms allow multiple participants to connect and interact with one another. For insurers, aggregator platforms allow consumers to access a ‘one stop shop’ where they can compare and buy insurance products from across the market. For insurance carriers, aggregator platforms offer an additional marketing arm so that they can quickly and cheaply reach a customer base they wouldn’t otherwise have access to.

Cover Genius is an award-winning platform that aggregates a wide range of insurance products, from property to auto, travel to logistics. It uses machine learning to optimise pricing via its distribution platform BrightWrite.

How can you make friends with insurtech?

Bolt-on-Products

Buy products which act as ‘add ons’ to your current system. Whether this is practical will depend on your current system, and what products you are adding. A chat bot or telematic device will be easier to add than machine learning software, which requires greater integration.

Partner

Jumpstart yourself into the insurtech space by partnering with an insurtech. For example, Propeller offers insurers a branded self-service portal for their clients to access so that they can get copies of their insurance and purchase new bonds. Partnering with insurtech companies offers the opportunity to share the risk, as your insurtech partner will have some skin in the game.

Acquisition

Purchase an insurtech that has the skills and technology that will benefit your business. For this to be successful it’s important to also consider factors like how easy integration will be and the cultural fit of the organization with your own.

Joint Venture

Rather than a partnership or acquisition a Joint Venture may be the best structure so the InsureTech can retain their culture and you can bring in your Insurance knowledge, industry connections and funds.

How do you decide what insurtech is right for your company?

Nobody has an unlimited budget. To decide what types of insurtech to invest in, you need to know which of your business lines are the most profitable. The catch 22 is that without the tech in place to capture and analyse your data, it’s hard to make a strong business case for one over another.

Don’t fall into the trap of assuming that you only need insurtech to increase sales. To be effective and agile, it isn’t enough for you to bolt insurtech capabilities onto a legacy system. To compete with insurtech companies, who are 100% digital, you need to be 100% digital as well. Without a complete solution, you will be left with pockets of old technology that need to be operated manually. This adds to your cost base and puts you at a permanent disadvantage.

When deciding what insurtech is right for you:

Throw out your existing rule book:

You can’t bring in your big corporate ways of doing things, forget the 100 page Capex funding proposals, bringing in top shelf advisers, and an army of lawyers. You need to think like a start up.

Identify the best opportunity:

This may be an area you are in now but not doing very well in or a brand new market. You’re looking for a market segment where good technology can make a significant difference and where good profit margins are feasible.

Get buy-in:

For this to succeed you need your stakeholders onboard and willing to support it from concept through to implementation.

Find the right partner:

Whether you’re partnering, acquiring or bolting-on a product, you want to know you’re working with the right people. Look at their track record for implementation, their values and their commitment to your business and ensure you’re aligned.