The pandemic has digitised the global economy, and the insurance sector is no exception. Despite a squeeze on revenue streams, investment in insurance startups (companies often referred to as insurtechs) soared to nearly £1.6 billion in 2020.
These investments are also more concentrated than ever before, feeding into a shrinking number of key market players. The consolidation of services and increase in investment demonstrates how insurtechs are establishing trusted reputations across an industry that has been reluctant to adopt new digital technologies —- until now.
So why are digital insurance platforms now indispensable to insurers across portfolios? How can other legacy insurers, brokers and MGAs take advantage of the benefits of digital insurance platforms? How are tech startups changing the insurance game?
Technology has long been touted as the answer to the insurance industry’s greatest challenges. But up until recently, a lethal mixture of code-heavy design, internal risk aversion and disappointing results from legacy tech has made the realisation of responsive solutions elusive.
Insurtech technology has now proven that this no longer needs to be the case. Digital insurance platforms provide no-code or low-code solutions that allow stakeholders to design and adapt their systems to best suit their unique businesses. Long established aversion to risk is being challenged by demonstrable benefits and cost reductions. New products are scalable, unlike systems reliant on legacy technology.
As a result, more insurers, brokers and MGAs than ever are onboarding digital insurance platforms and at record pace. But why is this happening now?
Whilst the pandemic has been a significant factor in driving adoption of these technologies, it has only accelerated a trend already in motion. Only 38 new insurtechs have been created in the past 3 years, compared to the hundreds that emerged before.
The capacity to access more and better data is one of the main drivers of the insurtech phenomenon. This has only become possible in the past 10 years, with exciting advances in IoT (Internet of Things) and AI (Artificial Intelligence).
In addition to this, customers have experienced a massive increase in the quality of service across multiple industries over the past 10 years, enabled through technology. The pressure on insurance companies to provide hyper tailored, flexible and relevant services has made digital insurance platforms essential for safeguarding the long-term future and viability of their businesses.
The consequences of failure, such as losing the next generation of customers to more agile competitors, are simply too high for a risk averse industry to ignore.
Radical change can seem intimidating for legacy insurance providers, brokers and MGAs. But insurtech technologies have the power to turn current challenges into competitive advantages in ways that modern customers understand.
For mature companies, with prominent customer bases and curated brand awareness, the opportunity could not be more exciting. The combination of customers hungry to endorse innovation with companies that can rapidly underwrite new policies, generate new product lines and dynamically assess risk could empower the industry to achieve levels of growth that would otherwise remain impossible.
Larger insurance providers can more easily embrace insurtech by doing a combination of the following:
Remain data focused: guide decision making with data, decreasing risk and enabling confident innovation.
Encourage ideation: source ideas from across the business, at every level of seniority, identifying priority areas for partnering with insurtech startups.
Survey customers: open up interactive channels with customers.
Startups use a variety of technologies to achieve competitive customer service, reduced cost and improved efficiency. These include:
AI: typically used by insurtechs to automate processes that would be laborious and expensive for humans to manage. An example of an AI application would be chat bots, that can simulate human conversation and produce invaluable insights for insurers, directly from their customers.
IoT: The Internet of Things is a term used to broadly describe the digitisation of items in the environment for real-time data collection. This is particularly useful when assessing a data set that is constantly in flux. Insuretechs can use this technology to estimate risk at a highly personalised level.
No-code platforms: Platforms provide customers with a set of digital tools to help them with a variety of tasks. Insuretechs can now provide platforms that don’t require code to customise. Insurers, MGAs and brokers can then tailor platforms to suit their individual needs.
Configurable APIs: Application Programming Interfaces go one step further than nNo- code platforms. With APIs, insurtechs rapidly design completely new product lines and tools to specifications. With configurable APIs, insuretechs can help insurers, MGAs and brokers quickly differentiate themselves from competitors.
UX / UI mapping: In a process known as User Experience (UX) or User Interface (UI) mapping, insurtechs consider and meticulously design tech products with the end customer in mind. This means that every piece of technology is easy to use, providing intuitive and simple experiences that help companies maximise revenue opportunities and customer satisfaction at the same time.
Although legacy insurance providers have the unique benefit of managing a great amount of capital within stringent regulations, insurtechs play an essential role in the value chain.
By acting as partners to established players, insurtechs help incumbent providers connect with digitally literate, expectant end customers. Insurtechs utilise their expertise to augment product offerings, provide greater feedback to businesses and ultimately bridge the gap between the modern customer and legacy brands.
Insurtechs have the power to turbo-charge the insurance industry. With greater flexibility, customer-centric design and improved data collection, insurers that embrace digital insurance platforms will thrive in spite of a challenging economic environment, setting themselves up for continued success long into the future.
INSTANDA combines all of these features into an effective, easy-to-use digital insurance platform that flexibly meets the requirements of your business. With an international reputation and multiple implementation options, insurers, brokers and MGAs across L&H and P&C portfolios can set up their digital offerings with confidence.
Whether digitising an entire business and multiple books, taking a vertical slice of an existing business, or launching a new innovative product, INSTANDA provides everything needed for data migration or designing new products.
Get in touch today with our team of friendly professionals to streamline your insurance life-cycle today.
Kick-start your journey by requesting a demo of INSTANDA.