The insurance industry is hundreds of years old and full of ingrained perceptions and antiquated processes, which continue to cause frustration among customers. Insurers know they need to innovate, but the question is – how? How can global insurers, which have been operating in and underwriting insurance the same way for hundreds of years, know which types of technology they need to meet consumer demand and remain competitive in a rapidly changing market?
Insurance technology is the missing link. The insurtech market is growing rapidly, and players have to be prepared to adapt. There is little time to sit idle, because, if you can’t keep up with consumer demands today, there is a small chance you’ll keep up with them tomorrow. Whether it’s the need for small business cyber insurance or the necessity for pay-per-use homeshare insurance, insurance is moving away from the traditional model.
The on-demand culture and sharing economy continue to disrupt industries across music, entertainment, transportation and payments. The wave of acceptance by consumers flags a fundamental shift in consumer behavior, where consumers can get what they want now, without delayed gratification. The insurance industry is the next in line, ripe for disruption. With the continued explosion of rideshare and homeshare applications, the traditional models for car and home insurance are not substantial enough to protect individuals using their personal property as a commercial asset.
While the battle of insurers vs. insurtechs continues, we firmly believe that both parties have equally valuable offerings to bring to the table. To truly drive the industry forward, an open-source cloud platform that allows insurers to quickly build, test and deploy their own on-demand insurance products will be the beginning of the insurance industry transformation in response to the sharing and gig economy.
Legacy carriers have centuries of experience writing insurance policies and have the historic industry knowledge that insurtechs need to be able to grow – emerging industry players that don’t see that are missing a huge opportunity. On the flip side, technology is changing fast and, therefore, changing the way people work and live. It’s the new norm for consumers to get what they want, when they want it; and while insurers might have the industry knowledge needed to be competitive, what most don’t have is the ability to be agile to protect against emerging risks and meet increasingly demanding customer needs. Largely due to the lack of technology and resources available, our partners tell us there is much higher value in cooperation, as insurtechs have the technical resources insurers need to improve time to market. For both parties, it’s a win, win.
Cloud platforms are allowing insurers to quickly ideate, experiment, test and deploy new, on-demand insurance products. Since making our Insurance Cloud Services platform publicly available in January 2018, we’ve experienced higher-than-anticipated demand, causing us to make a heightened focus on global expansion as insurers increasingly realize the need to adopt agile technology.
AXA XL and the Co-operators both launched their first on-demand cyber and homeshare insurance products in the last two months. Through cooperation vs. combat, the two are now ahead of the curve, with AXA XL’s product being the first ever on-demand cyber insurance product in market, and Co-operators launching the first on-demand homeshare insurance solution in Canada, allowing the company both to reach and work with customers in a way that works for them vs. the other way around.
See also: A New Way to Develop Products
The path forward for fully digital on-demand insurance is moving quickly, and, as the industry continues to experience disruption, it’s critical that insurers consider not only what type of technology they need to improve internal processes and compete in the market, but also the changing, increasingly in-demand needs of their customers. Insurtechs that are able to provide solutions for insurers that allow them to quickly ideate, experiment with and launch new products are set to lead the future of the insurance evolution.