Some big themes emerged from Insurtech Connect 2017 in Las Vegas – from the sheer scale of venture capital investments to the role of human relationships in a tech-enabled brokerage.
If you’re confused by what’s hype and what’s hyperbole, and you’re not sure where to begin and what it mens for your business, take heart. As we made our way back to Australia, our study tour group agreed that locally, our sector is further ahead than we may give ourselves credit for. We already have an emerging, highly supportive start-up ecosystem, with incumbent providers and entrepreneurs working in true partnership.
But we can’t afford to be complacent. Here are four things that stood out to me as action points for the year ahead.
1. Stay vigilant in the hunt for friction
We’re seeing transformation through digital technology in just about every sector. And the platforms that cut through and thrive are the ones that solve customer friction points. They solve problems and meet needs the incumbent providers were barely aware of.
Buying insurance – and particularly commercial insurance – is an inherently complex process. Distribution is the hardest part of the value chain – and according to Drew Aldrich of venture capital firm American Family Ventures, 70 per cent of those trying to buy commercial insurance online give up during the process.
Even when you have an online broker platform, the advice still needs to be human. We can use technology to take away the friction – the paperwork, the data collection – but people will still be core to the process.
If we want to create useful tech-enabled experiences, we need to find a way to fix this. Our visit to Embroker in San Francisco made the solution clear: even when you have an online broker platform, the advice still needs to be human. We can use technology to take away the friction – the paperwork, the data collection – but people will still be core to the process.
2. Flip your thinking on data
How can you use your data to save clients time and money? And are you collecting the data you really need – or just as much as you can?
Data has been described as ‘the new oil’ – with many businesses unaware of just how much value they have stored in their systems. However, it’s only valuable when you put it to meaningful use.
We saw some great examples of insurtechs using data to create real value for their customers, by automating a lot of the traditionally cumbersome processes in underwriting and claims.
For example, Coverhound can quote 90% of US business insurances in real time by obtaining only the data it needs to underwrite a specific risk, and getting that from any external validated source. Open APIs will make this possible – your clients already have verified income with the ATO and cloud accounting systems.
3. Be hyper-informed
The people we met see technology as an enabler, rather than a threat. Yet, when we asked our clients if they are open to change in last year’s benchmarking, more than 50% of brokers said they are not. To me, that rings a few alarm bells.
To be open to change, you need to understand what’s possible – and that means reading widely, talking to people and seeing what’s happening around us. IAG’s innovation lab in Sydney, for example, is already working on new ways to eliminate the clunkiness in the customer experience.
You could also start by following the money. US$1.69billion was invested in Insurtech in 2016, according to CB Insights.1 You can read more about insurtech on this expertise hub, including Insurtech state of play.
4. Join the ecosystem
The other way to stay ahead of the curve is to be part of the action. We’ve recently joined Insurtech Australia as a founding partner, along with other leaders in the insurance sector.
This network will connect start ups with potential partners – including insurance providers and brokers. Getting new platforms to market will take a partnership approach, and as brokers you can provide a valuable test market or pilot program opportunity.
I urge brokers to be informed, but not alarmed. You still own the relationships, and a bot won’t replace you any time soon. But equally, you can’t afford to sit back and do nothing. Look under the hood of your business, and you will find some ways to do things better. The old ways soon won’t be enough if you want to keep adding value for clients.
Start your journey with these four steps, and you’ll already be ahead of the next wave of change.