In his latest article featured in Digital Insurance, Euan King, EVP at INSTANDA offers his insights on how incumbent insurers are truly becoming disruptors.
Insurance isn’t easy. But, with its myriad of regulatory bodies, lines of business, outdated processes, and overly (or overtly) complex policy language, nobody said it was going to be. However, money talks, so interest in insurance from new players is high. Watching insurtech start ups bend, flex, and pivot to handle the business pitfalls inherent to insurance could leave one wondering if the approach is worth it, however. Interestingly, as start ups struggle with product-market fit, incumbent insurance organizations are those most worth watching. With changes necessary in order to compete and continue to control the industry, incumbent insurers are the new market upstarts who are plowing green fields, building robust APIs to integrate emerging technologies, and considering customer experience from a whole different point of view.
Plowing green fields
Recently, the drive to stay relevant and compete has insurance companies launching new greenfield divisions to drive organic growth through new lines of business and emerging coverage types or classes. The first examples of this largely went for the low-hanging fruit of pet insurance and coverage for high-net worth individuals. This led to incumbent insurers creating new brands or standalone divisions not reliant on the mothership’s internal processes and IT infrastructure, such as Nationwide Pet Insurance and Berkley One.
The next challenges for incumbents include developing underwriting criteria and software solutions to handle coverage for types or classes the industry has no track record of writing, such as drones (think AIG) and cyber (think Chubb). Emerging areas of new business provide risk and potential return if the price is right. Emerging coverages, however, have potentially very different processing and billing requirements. That said, it stands to reason the software enabling insurers to handle these new and emerging coverages may not look like the industry’s more traditional solutions. Incumbent insurers who have relied on suite solutions for core administration must now err on the side of flexibility and begin to move back toward a best-of-breed approach to technology.
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Written by Euan King, EVP at INSTANDA
Published on Digital Insurance, the essential resource for senior executives leading the digital transformation of the insurance industry. Across events and member forums, original research reports, and editorial news and analysis, Digital Insurance examines business-critical topics in technology innovation, data advancements, insurtech market trends, and transformation strategies. The brand convenes the community around these transformational ideas and insights so they need to stay ahead of the competition and the real-world examples of impact that they can bring back to their companies.