Andrew Hellard is a Product Marketing Manager, based in Columbus, OH. His focus is on the insurance industry worldwide. His responsibilities include go-to-market strategy for insurance, as well evolving Inspire to meet the changing needs of Quadient's insurance customers. He has around 10 years of experience in insurance, as well as 15 years of experience in software development and team leadership. He holds a Bachelor of Science from Miami University and a Masters of Business Administration from The Ohio State University.
This morning, I had the pleasure of listening to a panel discussion webinar presented by Insurance Post and Quadient on the future of Insurtech in the mainstream UK insurance industry. The panel covered many topics surrounding the impact of Insurtech - and came to the conclusion that the future of Insurance Technology is to move beyond point solutions to a focus on the full customer journey.
For more information on how to take the next steps to focus on the customer journey in insurance, please be sure to join next week's webinar entitled "A Customer Experience Perspective - The Past, Present & Future" where I will be presenting, along with Ryan Hart, Principal Analyst serving CX Professionals, Forrester Research.
In the meantime, here are some of my thoughts on and highlights from today's conversation.
Has it gotten harder for startups to raise money?
From 2010 to 2016, investment in Insurtech has grown 64%. The second Quarterly InsutTech briefing recently released by Willis Towers Watson revealed that total funding had reached $985 million for the quarter across 64 transactions. They also reported $289 million in early stage funding had been committed across 27 technology investments, setting a new record.
However, during the webinar the panel agreed that, at the embryonic stages, it has become harder for startups to attract investment, as more investors are focused on semi-safe investment models. According to a 2017 Strategy meets action report, there are now over 1,200 Insurtech startups focused on innovation in the insurance space. Certainly, the number of startups is making it more difficult for Insurtechs to carve out a niche for themselves.
There has been a mindset change with incumbents as well. 2-3 years ago, most large financial services and insurance companies weren't thinking about investing in Insurtech - they were watching it from the sidelines. Today, most organizations have a strong plan or strategy for how they will deal with onboarding innovative technologies and channels. Some are investing, some are buying, some are building and some are investing into Insurtech providers. But what has become more important is addressing the fundamental question that has always driven insurers - what is the use case, and what are the economics behind the idea?
Do companies have a defined strategy when it comes to insurtech?
Some do - most organizations are getting better a defining their strategy. It is now part of the agenda at the executive table, and the magnitude of investments is increasing.
There is a danger though, for companies to get mixed up between technology, people and processes and lose sight of what they are trying to achieve. While pursuing a transformation to digital is an important step, it isn't in and of itself a disruptive force in the market. According to a 2017 report by AXA, the top disruptors that need to be addressed are:
With all of these points of disruption, not many insurers know exactly how to adapt Insurtech to their environment. Companies today are still testing the waters and doing a little bit of everything. While a scattered approach might work for now, it will need to become more defined over time, as insurers need to deliver results against innovation quickly. In response to the forces listed above, Insurtechs are "adopting new technology and concepts, especially within big data and machine learning".
Due to the sheer number of forces involved and the complexity of the proposed solutions, Insurers that have not started to address Insurtech have not missed out on the opportunity to be bold and have a significant impact on the markets they serve. The panel discussed the danger of the insurance industry suffering the fate of retail over the long term. There is a load of retailers that are looking back and saying "how did we miss that?". Without changing in adapting, in 20 years time many players in the Insurance industry will be looking back and saying the same thing.
Are people becoming more cynical about Insurtech?
There is a balance between cynicism and optimism in the industry - it depends who you ask. The best opportunity for most insurers resides in improving the customer experience - in particular using data to enable new ways of doing things. In many ways, companies are struggling to figure out how to apply these new technologies and as a result we've only just begun understanding how data usage and front-end technologies will enable the long-term customer experience.
- Better overall connectivity
- Well-defined, customer-driven product concepts
- End to end automation
- Decision making that is driven by insights and data
- Strong engagement via social platforms
- More frequent interactions
- Supporting key moments in the customer journey via digital engagement
But those Insurtechs, for the most part are looking to enable the current insurance ecosystem, rather than disintermediating the customer:
McKinsey suggests incumbents look for ways to partner with insurtechs, and the panelists agree. They brought up a compelling analogy - to think of insurers as oil tankers, who knew that they need speedboats. But insurers aren't sure if they should become a speedboat, make a speedboat, rent a speedboat or buy a speedboat. Insurtechs can provide a quick time to market for incumbents.
How is Insurtech impacting customer experience?
Today, many insurers are focused on individual experiences and trying to optimize those, rather than focusing on the overall customer journey. As a result, the application of Insurtech is still fairly immature and in development.
The panel discussed NPS score - in particularly how Net promoter scores in the Insurance industry are terrible overall, causing customers to wish that the entire industry was a whole lot better. Customers just haven't seen the industry improving - the value propositions and route to markets haven't kept pace with the innovation of other industries.
If you look at the revenue numbers, you'd say that insurance isn't broken, but in many ways, insurance is becoming less empathetic regarding the overall customer experience. Just like retail, the future of insurance will be customer-driven, and companies focused on providing the best customer journeys will end up having the most success in the long run.
The conclusion - it's all about the customer
The biggest conclusion is that the insurance industry is not moving fast enough today - and the speed of change impacting the industry is only increasing. As an example, it was mentioned that the world's most valuable insurance company didn't exist 30 years ago - a relatively short time for an industry as well established as insurance. The panel agreed that consumers will decide what the "Uber moment" will be for the industry, based on the which companies are able to leverage technology to provide exceptional products and experiences that customers are demanding.
For more details on the next steps that you can take, please join us on December 12, 2017 for the complimentary webinar "A Customer Experience Perspective - The Past, Present & Future" available here.