5 InsurTech Trends to Watch
“[INSERT LATEST TECHNOLOGY HERE] is going to revolutionize insurance and risk management!”
Without a doubt, if you’ve been part of the insurance industry for a while, you certainly have heard this claim many times before.
But despite the relentless hype, some new technologies have had a profound and lasting impact on the industry. And while there is no shortage of technology options, what’s needed is the ability to distinguish meaningful InsurTech trends from less important fads.
Bill Diaz is an accomplished technologist and insurance industry veteran with the experience and industry knowledge to help identify and develop these trends.
With more than 20 years of experience in data analytics and claims administration, Diaz has led the global insurance technology businesses at Marsh ClearSight, FIS and Oracle with solutions spanning property/casualty, life/annuity, and health.
Now, he’s recently become CEO of Ventiv Technology, which provides innovative software solutions to P&C carriers, TPA’s, brokers and risk managers.
“For too long, innovation within the insurance industry has lagged. Finally, we are seeing rapid change enabled by technology. The question is who will be able to adapt and thrive under these new conditions,” he said.
According to Bill, the 5 most important InsurTech trends are:
“Digitization is an incredibly hot topic in the industry today,” Diaz said.
For the most part, digitization has helped to remodel distribution processes but can “carry across any part of the insurance value chain, from buying through to servicing,” he said. True innovators in digitization are more focused on creating on-demand products offered through mobile applications, so they can get the right product or service in front of customers at the right time.
Take travel insurance as an example. Based on location services from their mobile phone, a carrier can offer travel insurance when a potential client enters the airport.
“Carriers with a location-aware app can provide a transactional buying experience that is much easier and faster for the end customer. Insurance buying is becoming more transactional and innovative carriers or agents can take advantage of those opportunities,” Diaz said.
Of course, improved customer experience is not the only driver of digitization. Amid a continuing soft market, insurers are constantly looking for ways to cut down on administrative costs and increase efficiency. Digitization offers a way to do just that.
“Many processes within insurance are still paper-based, so it’s a very ripe area for digitization to be an effective tool,” he said.
Disruption of Traditional Channels
Technology also enables new, non-traditional players to get into the insurance game, blurring the lines around traditional roles and processes.
Alternative pools of capital in the form of private equity investments or peer-to-peer insurance, for example, put pressure on carriers to differentiate themselves in the market and refine their value proposition.
Technology also changes how service providers connect with customers, allowing them more direct access to end users and more leverage with carriers. Technology companies can now more easily expand into areas served by traditional service companies.
“Don’t be surprised if you see providers move into what’s historically been considered service or distribution areas. Technology is forging these new channels between insurers, service providers and customers,” Diaz said.
“Carriers have to be able to define their value, and that value has to go beyond geographic borders or compliance, because technology is breaking down barriers and making it easier for smaller, non-traditional players to compete,” he said.
Fight for the End Customer
As technology enables more direct interaction between the marketplace and end consumers, competition for customer attention is getting fierce.
“Whether you’re an insurance carrier or a broker, everyone is fighting for access to the end consumer,” Diaz said.
The primary strategy to gain that consumer’s attention is to create a unique buying experience with proprietary tools, technologies and underlying services. This appeals especially to millennials, who increasingly are the end insurance buyers, even in the B2B world.
Brand loyalty doesn’t matter so much to millennials as much as partnering with a company that’s doing something new and transformative. They’re the perfect fit for the unique services, ease of use and quick communication that insurers are striving to offer.
“It’s a challenge for carriers and brokers. Everybody is trying to make a name for themselves and create some level of distinction. Just saying that you’ve been in business for 150 years is not enough for the new generation of consumers,” Diaz said.
Focus on Loss Control
The advances in insurance technology that get the most buzz are those that aim to re-tool distribution. Emerging companies have differentiated themselves by offering policies direct to the consumer through web-based apps, making the process easy and fast.
But with traditional carriers implementing similar technologies, it’s unclear how these InsurTech startups will fare in the future. The real value of insurance technology, Diaz argued, lies in loss control.
“Our core value as an industry is to help customers identify what’s happening in their risk management programs around risk control, avoidance and mitigation,” he said.
More and more, investors are realizing the benefit of loss prevention in order to reduce claims and lower insurance premiums in the longer term. The growing popularity of wearables, fleet telematics and corporate wellness programs demonstrate this shift in thinking.
“The transformation in analytics is progressing at an incredible pace,” Diaz said.
Previously, companies took a very broad approach to data, where an analyst could take all of a company’s structured data and sort through it to identify trends and drivers. But this isn’t so much “analytics” as it is standard business intelligence and reporting.
True analytics involve pulling information from multiple sources, both internal and external to the company, to develop unique insights.
“There’s been an explosion of data, whether it’s email or social media or data that exists on corporate servers. It’s so exponential that people struggle to make sense of it and see the value,” Diaz said.
The sheer amount of data has necessitated a shift from a generalist approach to a specialized approach. Data analysts now must focus on a specific domain where they have expertise.
Ventiv Technology is at the forefront of these trends, with solutions for everything from claims administration and safety management to analytics and data transformation. To learn more, visit http://www.ventivtech.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Ventiv Technology. The editorial staff of Risk & Insurance had no role in its preparation.