The insurtech phenomenon reached new heights at the InsureTech Connect 2016 event in Las Vegas in October. More than 1,600 attendees spent two days absorbing new ideas, connecting and making followup plans to explore working together.
I’ve participated in many of the insurtech and emerging tech (in insurance) events over the last couple years, but I have recently noticed a distinct shift. Most of the initial events included insurtech startups, investors and industry consultants and influencers. The focus was all on the “new” – exciting new ideas, developments and companies that were poised to transform the insurance industry. While a few insurance executives participated, the vast majority of people with insurance business cards were representing the venture capital arms of the companies. Recently, there has been a dramatic shift in the participants in everything insurtech. Companies and individuals representing the traditional, incumbent part of the industry are now actively participating. So, I am going to coin a term here: I’m calling this group MatureTech.
Insurance executives leading key parts of the business, driving innovation and creating strategies are now involved in force, representing all sizes of companies and all lines of business. Incumbent tech players are on the scene, as well. While there have been a few leaders involved in some of the early events and insurtech activities, there has now been a ramp-up of participation from these companies.
See also: 8 Exemplars of Insurtech Innovation
This blending of the old and new is, in fact, a great development. Our central theme at SMA has been the need to bridge from today’s insurance company to the Next-Gen Insurer of the future. And it is really much more about transition and adaptation than disruption. This is not meant to downplay, in any way, the revolutionary ideas, new business models and innovative products and services emanating from the insurtech world. But there are some fundamental realities about the insurance business and operations that make it difficult to change overnight. Insurance is complex and highly regulated, especially once you get beyond the personal/individual products. Some of the key themes emerging that show how insurtech and MatureTech are beginning to blend are the following:
- Partnering and new ecosystems are the path forward: All types of players are looking to create value in new ways and with new types of partners.
- Core systems are called that for a reason: One way or another, there is still a need for automated solutions for policy, billing, claims and other core areas of the business. Although there can be new approaches, the reality is that integration with the existing systems that every insurer has today is important.
- The MGA model is appealing: It allows companies to create and sell innovative solutions and own the customer relationship but not have to hold the risk and raise the level of capital required to be an insurer.
- Insuring new things and offering new services are huge opportunities: Perhaps one of the greatest opportunities is microinsurance, which is now much more possible in the digital era. Offering new services in conjunction with insurance cover is enabled by the broad availability of real-time data.
There is no doubt that the world of insurance is changing. There is an open debate about how rapidly that will occur and what parts of the business will be most affected. But one thing is for sure. Bringing together the strengths of the existing insurance world with the emerging new approaches is inevitable, and it is beginning to happen. And as insurtech collides with MatureTech, insurers must develop bridging strategies to become Next-Gen Insurers and capitalize on the opportunities ahead.