All Aboard the Great InsurTech Hype Train…

Choo Choo! Everybody hop on board the Great InsurTech Hype train, calling at all stations…

There’s a whole lot of talk about the rise of InsurTech; you don’t have to scour the internet too far to find some article or other proclaiming its meteoric rise in the industry. But how many people truly understand it? And how many are truly doing it to any great success? In this article, we’ll take a look at the InsurTech phenomenon, exploring some of the brands who’ve made it work; and examine whether some are innovating merely to be deemed a part of this new breed of insurer, or if a simple overhaul of industry UX would deliver greater user experience, and customer engagement.

Understanding InsurTech

At its most simplistic level, the term InsurTech stems from the modern trend of fusing two words into one new short-hand buzzword – in this case: insurance and technology.

Like Brexit, or Brangelina.

And, while it doesn’t have the political baggage, or tabloid pulling-power of those particular portmanteaus, InsurTech is making plenty of waves, and the topic of much discussion within the ancient insurance industry.

Essentially, InsurTech is the collective term for new technologically driven start-ups, software suites, and applications that have swept into an industry famed for its stout adherence to the ‘good, old ways’. Tried and trusted methods of analysing risk, and serving a client base, applied now as they might have been a century ago. Maybe even a century before that.

But they are methods all too often at odds with modern society; a society that’s been shaped and changed to its very core by the rapid advances in technology. The underlying principle of InsurTech, therefore, is the application of technology to deliver insurance products and services in a way that’s compatible to, and reflective of, modern societal needs.

Misunderstanding InsurTech

The concept, however, can be hamstrung by some popular misconceptions about the nature of InsurTech, and its relationship with what we might call the traditional wing of the insurance industry.

An idea that InsurTech is at odds with the fundamental values of the industry, a force that threatens the very existence of the old guard of insurers and brokers. A misunderstanding that seems to stem from both sides at the same time.

On the one hand, there are traditionalists within the industry who’ve put up a resistance (or perhaps, reluctance) to embrace the changes; offering a steadfast caution against the progress of technology. Maybe even taking the view that, rather than dynamic start-ups, the new tech-oriented players in the market are no more than opportunistic upstarts. Fly-by-nights sweeping in and trying to make a fast buck while their flame burns briefly bright.

However, it’s a misconception that can be further fuelled by some of the InsurTech set themselves. Driven on by the new idea of the digital age:

Disrupt. Disrupt, Disrupt.

All technology, it seems, needs to be disruptive in its market, these days. Every innovation claiming to be the disruptive force in its industry, with insurance no exception. InsurTech start-ups are clambering over each other to proclaim themselves industrial disruptors. The modern, streamlined insurance providers, equipped to survive the changing landscape, watching on with glee as the dinosaurs fail to recognise the digital meteor heading their way.

Embracing cloud and mobile technology to deliver products and services at a speed and convenience that old methods simply can’t match.

“So preoccupied with whether they could, they didn’t stop to think if they should”

Dr Ian Malcolm, Jurassic Park

It’s always nice to squeeze a bit of Jeff Goldblum into an article, and, while we keep the dino-theme alive for a few sentences more, this quote from the film can be taken to represent the challenge faced by those who race to change the market founded on technological innovation alone; in an industry founded upon risk assessment, and bound by regulation.

There’s no doubt that those who fail to recognise the need to adopt modern outlooks and new technology will struggle to maintain a meaningful share of the market. But that’s not to say that success is a guarantee simply because you’ve come to the game with strong tech-credentials.  

Tech alone is not enough; it’s only one half of the newly invented word.

Success in any sector is dependent on your knowledge of the market into which you’ll immerse. Insurance is no exception, and the reason so many InsurTech start-ups have failed to gain the traction they probably assumed they would.

In fairness, this is not entirely an issue exclusive to the insurance world, but a common failing of start-ups in general. Businesses founded upon an idea, or an innovation, but lacking sufficient industry knowledge, can be a perilous path to take. Leaving you exposed should you be confronted with a nuanced challenge specific to the industry.

Who’s Making It Work?

Of course, the reason that InsurTech has risen so fast, and so prominently, is on the back of those who have captured a niche in the market, or capitalised upon a need from a demanding customer-base.

Technology being the means by which to service this need, or niche.

Companies, such as Trov, who’ve made hay by recognising a shift in traditional models and wishes of the market. In their case, applying newfound flexibility to traditional contents-style insurance; utilising mobile app technology to allow customers to simply log specific items they wish to insure (be it a phone, or home computer).

Of course, many of these niches are created out of the new capabilities of modern technology. The Internet of Things (IoT) and Artificial Intelligence (AI) has allowed companies to deliver more personalised insurance through the granular capture of real-time data.

On the one hand, mobile internet, digital apps, and the rise of social media has created a flow of data unlike anything before in history. While at the same time, smart technology has evolved with the capability to capture and analyse it, at a rate that humans simply could not manage.

It’s a huge shift away from risk analysis based on historical data, towards analysis gleaned directly from the source.

Companies such as Everquote, or Metromile, the former dealing with over 1,000,000 customers per month (making them one of the top 10 InsurTech companies in the world). They offer car insurance where the rates are based upon the number of miles, and type of driving that you do – sourced from in-car data.

It’s not just motor insurance, either. Personalised health insurance is a possibility thanks to the advent of health and fitness monitoring apps offers the ability for insurers to see real-time information on how much exercise you take, what your calorie intake might be, and so forth.

In fact, there are few sectors in the market where this level of instant data analysis can’t impact a major change in the way insurance is underwritten and delivered to the customer.

Is InsurTech Replacing the Human Touch?

This is a big question and, perhaps, one of the great fears about the rise of InsurTech, from the traditional powerhouses.

It’s certainly a possibility that start-ups founded entirely upon an app or piece of software might be offering a service that’s devoid of genuine human contact, and by consequence, lower levels of traditional types of customer service.

The extent to which this might be a problem will probably depend upon the niche however. For instance, if you’re providing a simple mobile phone policy then the expectation of the customer is likely to be somewhat basic: lost or damaged phone, make claim, process claim, receive pay-out.

Not a great deal of human interaction required, or most likely, desired.

If your house has been ransacked by burglary, or ruined in a flood, on the other hand, the reality is that most of us would welcome the reassuring support of a friendly-faced broker, trying to resolve the problem as painlessly as possible.

And herein lies the challenge, and the opportunity not just for InsurTech, but for the entire insurance industry.

Better UX Across the Industry

For it’s not whether the industry adopts and adapts to the technological age; it’s how it adapts. It’s not, or shouldn’t be, innovation for innovation’s sake, but an intelligent application of the technology that will help drive your business.

Automation can reduce the laborious admin processes that make old model businesses so cumbersome and bloated. But that’s not the exclusive preserve of the InsurTech companies. It’s technology that all companies, new and old can benefit from. A chance to bring new efficiency to a business; new productivity, and potentially, greater profit.

This is where the industry as a whole can reap the real benefits of technological innovation. Companies such as UK-based SchemeServe, who leverage the opportunities made possible through cloud-hosted Software as a Service (SaaS), AI, and automation. Blending these new solutions with industry know-how, promising seamless UX for end-users, alongside streamlined back-office admin, and efficiency levels almost unheard of in the old days of manual processes.   

And it certainly shouldn’t come at the expense of the personal touch or customer care that would have been the hallmark of the quality brokers of the past. In fact, quite the opposite. When you have the right technology, that can handle the admin, and take care of all those ‘back-office’ tasks that were once a part of the broker’s daily routine; or even tech can deal with the routine claims that don’t especially need human intervention, then you have the efficiency and the time in your work to focus on customer care, where it’s needed. To talk to your clients about their needs, and the meet them with a laser precision never before possible.

And to be there, in person, when needed.

Technology should not just be the thing that sets the InsurTech crowd apart from the ‘old guard’, but a chance to improve user experience (UX) throughout the industry. To deliver the kind of service, at the speed, and upon the appropriate platforms, that modern customers have come to expect, and demand, from their suppliers.