January 29, 2018
Strategies to Combat Barriers to Insurtech
by Dax Craig
The industry may be having a technological revolution, but a Valen report suggests that barriers to insurtech adoption and engagement remain.
The insurance industry may be in the middle of a technological revolution, but Valen’s recent 2018 Outlook Report: An Industry Divided suggests that barriers to insurtech adoption and engagement remain.
79% of surveyed insurers believe new functionality and features will make their teams more efficient in the long run, aligning with much of the optimism around insurtech acceleration. EY reinforced this notion in its Fintech Adoption Index 2017, explaining that the surge of adoption is positioned to hit the mainstream, driven largely by consumer demand. In fact, customer expectations for technologically advanced solutions for insurance providers have surpassed those of financial planning or investment platform providers.
This reflects positively on the industry for fostering innovation and making smart, data-driven decisions. It should also encourage more insurtech investment, but Valen’s study finds there are many hurdles to overcome.
See also: Insurtech Is Ignoring 2/3 of Opportunity
Here are four steps insurers should consider when they’ve made the decision to modernize a workflow or process through insurtech to get beyond these barriers to create a replicable approach to successful rollouts:
Identifying the goal
One of the biggest reasons why insurtech solutions fail is the wrong approach to thinking about technology. Insurers should begin with the end-goal in mind, identifying the actual business needs they are looking to address before considering which technologies are available to them. This step will help to secure buy-in from employees and streamline the rest of the process for putting new technologies in place. For leaders at insurance companies, examples might be “lowering claims,” “identifying/limiting the number of policies with high risks in a book or business” or “improving client retention.”
Getting the team on board
Once a business need is identified, it’s important to secure buy-in from the teams that will be most affected by new technology. For example, when data analytics first began to permeate the insurance landscape, many underwriters resisted the change. The sentiment of “machines taking people’s jobs” was prevalent, but the reality is the opposite. Predictive analytics enables underwriters to have a larger impact on an insurer’s overall business.
The challenge doesn’t end with underwriters. 55% of front-line employees are observed to be somewhat or highly resistant to new technologies. Major barriers can include a lack of proof-of-value, understanding of the new functionality, leadership in rolling out the innovation, time for training sessions and user acceptance. These can culminate in resistance to adoption from employees and, ultimately, derail deployments.
By taking each of these barriers into consideration, insurers can ease on-boarding and create strategies to simplify the learning curve and ensure adoption of the new functionality.
Once a new technology’s value is clearly established and the need is confirmed by key stakeholders, the implementation process must be carefully planned. Insurers should choose a leader to oversee the roll-out process, as well as the point of contact for all questions and concerns.
With regard to training, this leader should create and execute a roll-out plan to foster user acceptance by having the training sessions be fun and interactive. This can be achieved through a carefully crafted presentation, having a charismatic training leader or incentives such as gift cards, free lunch and other perks.
Even once implementation is complete, there may still be objections and employees who are hesitant throughout the organization. Overcoming this is a result of communication, highlighting the successes of a technology implementation.
Naturally, the ability to communicate success goes back to identifying a specific business goal. With each success, it becomes easier to implement other new technologies. This is where insurers can really thrive from an insurtech perspective, creating an continuing cycle of new technological additions that increase efficiency and drive profitability.