With the dramatic shifts in the business world due to the pandemic, it seems that every aspect of tech and insurance is being scrutinized. After speaking with dozens of tech companies over the last two weeks – including incumbents, insurtechs and other companies of all sizes, I've seen a theme has emerged. To borrow from Charles Dickens, “It was the best of times. It was the worst of times.” And it all has to do with digital capabilities.
Insurers have adapted remarkably well to the new norm – if there is a norm. Most insurers rapidly shifted employees to work-from-home mode and continued business as usual, producing quotes, handling claims, processing renewals and working with distributors and external parties. The volume and nature of the business have made some dramatic shifts. Fewer people and businesses are buying new vehicles or properties. Claims are way down in some sectors and up in others. But, generally, the industry has adapted. At the same time, big gaps have been exposed. Much of the challenge has been related to manual, paper-based processes – inbound mail that needs to be scanned and ingested into workflows and outbound documents such as printed policies and checks. Suddenly, the need for a fully digital enterprise has become crystal clear.
All of this has significant implications for tech vendors. To put it simply, those that have digital solutions that address the gaps are quite busy. Those that have solutions in other areas are not. Companies that are especially agile at quickly standing up digital capabilities have their phones ringing off the hook. (One tech company told me that an insurance CEO called and asked if a solution could be operational in two weeks!)
See also: Will COVID-19 Disrupt Insurtech?
On the other hand, there are many tech firms that have solutions of high value to insurers – but they may be in areas that enhance current capabilities and are suddenly lower in priority. They don’t necessarily provide digital self-service or digitize processes that get workers out of the office. Where existing projects are underway in these areas, insurers are moving forward so they do not lose momentum. But there is a reluctance to start new projects in the short term if they don’t address the digital gaps that are most acute during this period.
This is a unique point in time. All manner of tech solutions are required for insurers to advance their digital transformation. But the phase we are in has put a spotlight on the specific capabilities that are needed now. When the current crisis has passed, the world will be forever changed. Digital expectations will be different. It is likely that the digital transformation of insurance will accelerate, and there will be new and renewed demands for tech solutions of every kind. But for now, there is one category of tech solution providers that is experiencing high demand for new solutions and another class that is finding it to be a difficult time to generate new leads and sales.