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March 29, 2019

Insurance Has a ‘Triple-Legacy’ Problem

Summary:

Insurance is stuck with legacy technology, built for legacy processes, operated by a legacy mindset. Each problem must be corrected.

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I talk to a LOT of executives on a weekly basis from all parts of the insurance industry:

  • Senior executives at the reinsurer level
  • C-level executives at the insurer level
  • C-level executives at the intermediary level
  • Regulators
  • Reporters/writers/bloggers
  • Wholesalers
  • Advisers
  • Administrators
  • Other insurtechs
  • Literally anyone who will talk about the sexy subject of Insurance!

These conversations give me an extremely interesting perspective about not only the current state of the insurance industry, but also about where we are heading.

A few themes consistently emerge during these conversations: Machine learning, AI, the role of advisers in the future and the most prevalent topic “disruption.”

Let me start by offering a perspective:

“No one needs to be disrupted unless they choose to be.”

Innovation and technology at large are about inclusion and raising the bar of a particular industry. Innovation DOES NOT mean people have to LOSE for other people to WIN. There is a WIN-WIN-WIN; we just have to be motivated to find it.

See also: Is Insurance Really Ripe for Disruption?  

We, in this part of the world, are lucky enough to truly have equal opportunity. Technology democratizes our ability to compete. WE determine what is possible, who we choose to work with, which problems we solve, etc. To turn around as an industry and say “we are being disrupted” is a completely inaccurate way of looking at the future and exceptionally unfair to those individuals/companies who are looking to create meaningful change.

Here are a few thoughts:

1) Advisers will be around in the next generation of financial advice (and the one after that). Their role will remain the same (helping people feel better about the financial decisions they make), but how they do their job will fundamentally shift. As we streamline parts of the industry that are siloed, cumbersome and antiquated, we will allow for advisers to re-invest their time into what matters: the customers they serve and their own development. Technology will allow people to UNLOCK their human potential and do what they love.

2) Technologies such as machine learning will AUGMENT, not replace, the role of amazing advisers. Many believe that as technology and automation come into the insurance space, fewer advisers will be needed. The contrarian view is that if people are able to focus on WHY they love the industry (helping people!) and we automate the functions they dislike (administration, compliance, etc.), more people will be drawn to our industry. Insurance (and all financial services) is about people, not paperwork. This may actually INCREASE the number of advisers. That is my hope.

3) You simply cannot solve a systemic problem with technology alone and expect everything else to take care of itself. Technological innovations will make today’s systems better, but they will inevitably become legacy in the future. This is the nature of technology. It is a moment in time, until the next moment.

What will be everlasting is the MINDSET that executives take to navigate the future. There is NO SILVER BULLET. This is about systemic change. We must THINK DIFFERENT and forget some of the preconceived notions that stifle our ability to effect change.

Currently, our industry is being hampered by a “triple-legacy” problem: Legacy technology, built for legacy processes, operated by a legacy mindset. Addressing each part of the “triple-legacy” challenge is required to ensure the future success of our industry.

See also: Insurtech vs. Legacy Insurance Carriers  

At Finaeo, we are dedicated to solving many of the problems that are holding back our industry and are starting our journey by helping the hundreds of thousands of advisers around the world get their time back by streamlining processes and providing them with elegant, intelligent and thoughtful technology to manage their day. We are actively seeking partnerships with insurers, reinsurers and intermediaries who also believe that advisers and their customers (the policy holders) DESERVE a better experience.

Want to know more about why you should join Finaeo? Check us out here.

This article first appeared here.

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About the Author

Aly Dhalla is the CEO/co-founder of Finaeo, a venture-backed insurtech startup that is reshaping insurance distribution to help independent advisers thrive in a digital era.

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