Modernisation is no longer an option—it’s an inevitability
The development of customer-facing technology has taken priority over fundamental backend processes.
Modernisation is no longer an option—it’s an inevitability. However, it hasn’t always been a holistic pursuit for the insurance industry. Instead, the development of customer-facing technology has taken priority over fundamental backend processes. But rejuvenating these core processes that are critical to your operations can transform your back office.
Modernising these functions can drive profit through greater efficiencies, improved client experience through faster processing, supporting the addition of new products, and drive business expansion—all outcomes that remain out of reach when your business is underpinned by manual processes and inflexible legacy systems. But why spend years updating your technology to achieve these outcomes when you could partner with an insurtech to tap into the benefits sooner?
Why work with insuretech?
There are countless reasons to pursue value creation through digital transformation, and the benefits of partnering with insurtech in particular can have instantaneous organisation-wide impacts. From saving costs and boosting profit margins, to improving underwriting support and customer experience. Essentially, it opens you up to a wealth of untapped opportunity that wouldn’t otherwise be possible with traditional legacy systems.
Take Propeller Inc, for example, the first automated end-to-end surety bond solution in the US. Undeterred by their near impossible mission, the company sought a way to simplify the surety bond process, allowing them to issue over 10,000 different bonds without needing to write custom code for each. Something that was a far cry from the archaic paper-based applications and manual processing used by veteran firms.
Thanks to a partnership with the Axe team and the powerful capabilities of our insurance platform, Axelerator, Propeller went from a concept to a fully operational Surety Bond Underwriting Agency (MGA) in under 15 months. Using our advanced rules engine to handle the complexity and individual needs of each bond, Propeller now has a platform where businesses can enter an online application and, after making their payment online, get the bond policy document immediately rather than waiting for days.
That’s the power of insurtech.
Create a collaborative team
The potential opportunity that digital transformation offers is largely dependent on the insurtech you partner with. It’s important that you approach the partnership process with the aim to court the market and find the optimal counterpart. In doing this, you should come prepared with your high-level business goals, which will serve as your decision criteria throughout the process, helping you scan and assess candidates. These should be used as guardrails to filter through the potential partners, helping you identify the possible role insurtechs could play in your overarching business strategy (and whether that includes more than one partnership within your ecosystem).
It’s critical that your merger and acquisition team is involved from the get-go to ensure vital scanning and assessment behaviour continues throughout the process and your focus on the end goal doesn’t waver. Once you’ve engaged an insurtech partner, you need to define a continuous engagement and operating model with clearly defined synergies so as to carry that mutual focus throughout the life of the partnership.
The argument for outsourcing
An in-house IT transformation is a viable option, but it also comes with its own risks. Assembling a dedicated internal team to create a system from scratch takes time, it also incurs countless bureaucratic hoops and hurdles (insurers are known for risk avoidance rather than agility and innovation) along the way, stretching out budgets and timelines—unfavourable outcomes that’ll fall squarely on your company’s shoulders.
Insurtechs, on the other hand, are structured for agility. They’re designed to make rapid decisions— identifying opportunities and cutting loose impediments—that empower the company with renewed forward momentum.
According to KPMG, more than 180 insurance companies have publicly announced tech partnerships since 2017. The overwhelming motivation for these partnerships is persistent business needs, such as helping to cut costs, increase revenues, or to improve customer experience.
Even so, the greatest appeal of insurtech partnerships lies in their ability to minimise risk and remove the burden of responsibility from the company. With a track record of proven results, this quantifiable success can help eliminate the inherent reluctance to upgrade.
Here’s how to partner with insurtech
1. Pinpoint your needs
To ensure you find the right insurtech solution, you must first determine and prioritise your company’s problems. Companies with dedicated teams tasked with identifying emerging problems tend to have a more mature innovation capability because they can discern from the beginning which opportunities are the best fit for insurtech. If this isn’t the case for your company, simply look at your business strategy. What are your goals? Where are you lagging? What do you want to do, but can’t? This will help you identify your digital transformation needs.
2. Be clear on the scope and goals
From day one, ensure you have a well-defined scope that’ll provide good measurable benefits quickly to both parties, so the partnership gets off to a positive start. Without putting the adequate groundwork into identifying your needs in step one, you’re at risk of losing support when the process begins and measurable outcomes aren’t achieved.
3. Assemble your internal support team
In order to leverage the endorsement of key internal stakeholders, you need to gain their support from concept through to implementation. Try to assemble a support team that represents a cross-section of key players throughout the business. This includes C-Suite executives, line-of-business leaders, and internal IT specialists.
4. Seek internal and external input
To reduce barriers to cooperation, it’s also important you gain support from all levels of the commercial community. This will help mitigate the risk of overburdensome procurement, HR, or legal requirements that inadvertently discriminate against insurtechs and start-ups. This is also a chance to create an open forum to share your strategic intent and crowdsource questions and advice from vendors, including insurtechs.
5. Align your motivations
To strengthen your proposal, incentivise business leaders to co-create solutions with insurtechs. This will facilitate buy-in, as well as create win-win outcomes where motivations are aligned.
6. Develop outcome-based goals
Turn the focus of the organisation, its metrics and its goals towards outcomes, not inputs so that there’s no motivation to do big, burdensome things in house to ensure people look busy. The purpose of a digital transformation is to optimise efficiency, so now is the time to realign your focus and avoid superfluous internal labour and processes.
Suffice to say, successful partnerships with insurtech can produce positive companywide outcomes. Not only does it allow you to remain competitive in a robust global market, but powerful and agile tech can open businesses up to immense value creation including opportunities for expansion, sizable cost savings, and improved customer experiences. The trick is finding the right partner to support your business objectives.