Tag Archives: platform

Crowdsourcing 6 Themes for 2021

After the roller coaster of 2020, it’s a brave soul who’s willing to commit to what 2021 will look like. But running a global network of talented and successful people means that Robin Merttens and I have been able to dip into the collective wisdom of 20 of our friends and supporters from InsTech London.

In an hour-long Zoom call, we were able to crowdsource what is top of mind from 20 of the best people to predict the year ahead – those who are part of making it happen.

One investor, two reinsurers, three consultants, five Lloyd’s syndicates, six growing insurtechs and three others – all that was missing was the partridge and the pear tree.

You can now get the audio highlights (scrubbed and polished to perfection by the ever patient Peter Roach), and my match commentary, of the event on the InsTech London podcast episode 118. What follows are the dominant themes affecting risk and insurance that our panelists recommend you look out for — and why. We agree with Robert Lumley of Insurtech Gateway, though – the skill of making good predictions is about following the direction of travel.

Here it comes – from some of the sharpest minds at PKF, Munich Re, Swiss Re, EY, PWC, Deloitte, Brit, Talbot, Convex, Wakam, Chaucer, Concirrus, CyberCube, Blink, Riskbook, Flock, Zego, Insurtech Gateway, Voice of Insurance, Miller and FintechOS

Insurers must regain trust — consumers want more certainty

Charlie Burgess runs Munich Re international specialty business, and his responsibilities now include Munich Re Digital Partners. A major issue for Charlie is that trust in insurance has been dealt a double blow in 2020 — and resolving that must be a priority in 2021. The rejection of COVID-related claims has accelerated the need for people wanting more certainty between their loss and receiving a payout. This, according to Charlie, will drive more interest in new types of insurance such as parametric. We agree, and wrote at length on this in our October report “Parametric Insurance – 2021 outlook and the companies watch.”

The use of “price walking,” the practice by which insurers charge their existing customers more than their new customers, has also undermined confidence in the market. Look out, Charlie says, for a “short-term rush to offer great deals by insurers to win new customers before the new regulations come into place.”

Ultimately, though, the impact will go deeper, he predicts, fueling the rise of trusted brands from outside insurance stepping in to replace traditional insurance brands, particularly in personal lines insurance. 

We shouldn’t be too despondent, though. Nigel Walsh, partner at Deloitte, reminded us that the insurance industry did pay out billions of dollars in COVID-related claims in 2020. Nigel predicts (or should that be hopes?) that 2021 will be the year everyone starts to love insurance – and that the industry will finally fix its complicated wordings.

By the way, Nigel got his homework in early and has already published his predictions for 2021 – and I learned what gets Nigel going when we spoke earlier in 2020.

See also: 2021, We Can’t Wait to Get Going!

Better integration of technology, better standards and Lloyd’s Blueprint gets underway

By far the most popular prediction across our panelists was the rise of the platforms – our experts expect to see meaningful developments in the use of platforms, integration between technology and, in London, the progress and implementation of Lloyd’s Blueprint Two. John Needham, partner at PKF, and our sponsor for the night, is still hearing concerns from insurers he talks to about the lack of ability to integrate with the new tools that are available, and “frustration that they are having to choose a mainstream platform to play it safe.” Could this change in 2021?

Charlie Burgess welcomes the direction Lloyd’s is taking with its Blueprint but warned that implementation will take longer than planned. Charlie expects “a flurry of automation or digitalization among the Lloyd’s of London market players, both addressing the plumbing and digitalization in whole or some of the more complex risk products.”

Chris Payne, partner at EY, sees the development of a “more pronounced two-speed architecture model” as established companies grapple with overcoming legacy. According to Chris, people are “waking up and realizing that they want something leaner, where they can stand up new ideas or quickly test them, and then decide how they want to launch, whether through a new platform or more easily through their main platform.”

Christian Kitchen, head of technology and innovation at broker Miller, is also bullish about Lloyd’s: “It’s going to crack it this year. Blueprint Two is going to be exactly what we’ve always wanted. The core data record and the digital spine is going to be the framework that all of us build our new solutions on.”

Christian went on: “Now will be the chance for the agile organizations out there, including some of the brokers, to take what Lloyd’s is doing and build out the solutions and the end-to-end journeys that we’ve all been waiting for.” Christian is also optimistic about the opportunities this creates for what he refers to as the “real insurtech companies,” to start focusing on “groundbreaking solutions” as opposed to continuing to try to find work-arounds for legacy systems. 

Karl Lawless, sales director at FintechOS, adds: “Five months of lockdown was five years of digital transformation, and I only see that accelerating next year.” Karl believes the age of the large transformation project is over. “Rather than insurers committing to the traditional big-box solutions that cost tens of millions of pounds and take three to five years to deploy, there’s now an opportunity to deploy best-of-breed digital components, going down the Lego block approach.” Karl reckons we will start seeing components glued together with automation, giving a cutting-edge platform to those that use this approach.

Having spoken to Gary Hoberman, CEO and founder ,of Unqork earlier this year, I am sure low-code and no-code will be a big part of this. And with Unqork having attracted $365 million of funding, according to Crunchbase, clearly I’m not the only one to believe this.

Your platform will be arriving shortly…

Glynn Austen-Brown, partner at PWC, brought a global perspective to the predictions, with a reminder that we all expect technology to make things more convenient and to give us our time back. Insurance will be the next frontier for simplicity. “Look at what people are doing in China. Look at WeChat or Grab. We are going to be moving much closer toward that platform economy that is so prevalent in the Far East,” Glynn believes.

Mark Geoghegan, formerly editor of Insurance Insider and now the “Voice of Insurance” podcast host, advises us to look and see what technology choices the recently capitalized specialty insurers such as Inigo, Vantage and others make. Unlike the previous wave of start-ups 15 years ago these companies, with large amounts of investment, can choose to go with the new solutions and not rely on legacy. (But will they, I wonder?) Meanwhile, Mark predicts that “most of the insurance market is still going to be your friend because they’re not so nimble. They decided that they wanted to digitize three or four years ago, and they’re finally starting to get around to doing it.”

Ben Rose, co-founder of new reinsurance platform RiskBook, picks up on something Christian Kitchen mentioned and says the challenger brokers will rise to prominence in 2021. With the Aon and Willis merger coming up, and the acquisition of JLT by Guy Carpenter that we’ve already seen, Ben reckons that the new breed of brokers, which he observes has been recruiting many star players in 2020, “is really good for reinsurance innovation.”

Ben’s list of challenger brokers to look out for includes TigerRisk, Beach, Capsicum, Gallagher, Hyperion, Lockton, McGill, BMS – all are small compared with the big two. As Ben points out, they can’t replicate what the two giants are doing, so they’ve got to think digitally and about how they can use innovation. “They can’t afford the traditional six-person account team to look after a single client, so they are going to have to explore automation to handle those bigger deals and perform all the analytics expected of them with a much smaller team.”

Ben and co-founder Jerad Leigh are watching closely as these brokers start to move faster and spin up partnerships with start-ups to bring a digital service that’s been missing from the reinsurance ecosystem for quite a while. This is a topic I discussed at length with Rod Fox, CEO and Co-founder of TigerRisk, and with Barnaby Rugge-Price, CEO of Hyperion. And you can learn more about RiskBook from Ben when he joined us for the London leg of the ITC global tour.

Data-powered customers and risk reduction

Jenny Williams from Convex picked up on the theme of data, and she is thinking about it from a platform perspective, too. Jenny pointed to the recent news that S&P has acquired IHS Markit, a company that provides financial services and many insurers with data, for $44 billion: “We’ll see more partnerships and acquisitions in the data ecosystem space.” She added that “lots of different companies offer different variations of data on different assets and their risk and perils.” Companies (and InsTech corporate members) such as e2value and Hazard Hub are doing well in the U.S.

The challenge, according to Jenny, is that each specific data set requires expertise to collect and curate. Jenny is looking out for “more of a one-stop shop, targeted partnerships that may help reduce the offering overlap, while expanding the breadth of useful data that’s available to us.” We go deeper into this topic in my interview with WhenFresh CEO Mark Cunningham.

Christen Smith, head of sales at Flock, a growing insurtech company, echoes a point made by many others, that “customers and brokers aren’t going to be happy with the old solutions or with the old way of doing things. UBI (usage-based insurance) won’t be good enough any more.” Christen added that “we’re going to have to take the next steps into exposure-based insurance and really move the needle to impact consumer behavior.” Flock has recently expanded beyond offering commercial drone operator insurance into broader commercial insurance, no surprise then that for them “it’s going to be a big year for stepping things up a notch in the space of connected insurance, and really delivering for consumers and brokers in a new and different way than has been done before.” Watch this space. we say.

Glynn Austen-Brown picked up on an emerging but powerful theme around customers who are “looking for more services that are aimed at risk prevention and other value-add services, for example boiler servicing, energy bill usage reduction and help with home repairs.” Glynn also sees this theme as driving more partnerships and more embedded insurance — “things like Uber and Airbnb partnerships will become much more prevalent in regards to services and products that insurers offer. Customer stickiness will be everything.”

Data-powered automated syndicates

Andy Yeoman, CEO of Concirrus, expects to see meaningful progress from companies using data and algorithms, what he refers to as “technology-fueled market entrants.” We’ve seen Brit insurance launch the Ki syndicate and gain £500 million investment this year (my discussion with James Birch and CEO Mark Allan of Ki has been one of our most popular podcasts). 

Andy expects the newcomers are “going to use those algorithms to replace the work, whether it be submissions or some of the underwriting decisions,” and their role will change: “We’re going to see their use move from follow syndicates, to lead syndicates. And in doing so, all those organizations are going to create investable asset classes because they’ll ultimately have a predictable yield.” This will make insurance attractive for more external capital, with “trillions of dollars of pension funds monies” coming into the market, maybe not in 2021, but soon after. You can learn more about Andy Yeoman and Concirrus from our discussion last year)

See also: 11 Insurtech Predictions for 2021

But we need to deal with the data-ingestion problem

Of course, all these great opportunities for using data will fail if insurers can’t get the data they need. Jenny Williams is hoping that 2021 will “see some real progress in the very difficult area — submission and ingestion of data in commercial and specialty lines.” The problem that Jenny refers to is caused by the volumes of valuable data that is locked up in email attachments in non-standard forms that are received by underwriters. While the data may now be getting to the underwriters, it’s hard or expensive to extract. Jenny explained why. “It’s not just about ingesting standard forms such as ISO or ACORD; we’re talking about the really funky messy Excel spreadsheets with merged cells, multiple tabs and complex risk details that require real expert interpretation to identify the statements of values, loss runs, engineering reports, etc.”

Jenny is encouraged by some proof points from companies such as Eigen Technologies, Groundspeed, EY, Expert AI, that are among those she sees leading the way. There is more need for collaboration between the technology and insurance experts, but for Jenny it “feels like we’re at a tipping point, and this might be seriously commercially viable next year.”

Bringing Transparency to Brokerage Selection

Open enrollment is finishing up, and human resources departments are already in preparation mode for 2021. Traditionally, this is also a time when many organizations set out to find a new insurance broker or begin exploring options.

In fact, 53% of firms offering health benefits reported shopping for a new insurance carrier or health plan, according to the Kaiser Family Foundation’s 2019 survey, similar to the previous year’s percentage. Some 18% reported changing carriers in the previous year, and it stands to reason that the disruptive events of 2020 will drive that figure higher.

Why? Because COVID-19 has upended the way businesses operate and altered daily life for almost everyone. Employers are exploring how their coverage needs have been affected by the wholesale behavioral shifts occurring around them and by adjustments made to their own business models since the start of the pandemic. How should plan features adjust to serve a work-from-home employee base? How can benefits best answer demand for mental health services that have mushroomed under social distancing and the strains of confinement in isolated or overcrowded households?

The employer’s own coverage demands extra attention, as well. How should its coverage change to reflect a smaller office footprint or risks and liability associated with virus outbreaks at the workplace? Do its policies address the elevated threats of cybercrime and damage to company equipment occurring in the homes of a newly remote workforce?

As HR teams confront a host of critical decisions, they want their insurance broker to serve as both an advocate and guide, helping to illuminate the shadowy corners in their risk profile and then walking them through scenarios and coverage options. The need to find the right broker, to align advisers and the organization in the pursuit of human resources objectives, is now mission-critical.

Perhaps more than at any other time in living memory, companies are motivated to comparison shop their markets in the hope of finding the best match to their needs. 

Searches in an Opaque Industry

Most communities host a variety of insurance offices from which to choose, operated by providers, independent brokerages or both, and often with multiple locations. 

The employer’s challenge in finding the right broker is to make an informed selection from an abundance of options. As many HR managers can attest, however, there are surprisingly few reference points to help distinguish a brokerage’s quality and advantages, or to make comparisons among the insurance businesses in a market. 

Standard internet search engines are a common starting point but often yield disappointing results. The initial list built through a web search will offer scant context, requiring earnest seekers to research each name for specializations and credentials or even to determine which brokerages are still in business. Traditionally, the search for a good insurance brokerage has been a form of research project, often requiring hours of online investigation, perhaps soliciting referrals from brokers and gathering recommendations from colleagues.

See also: Technology and the Agent of the Future

On the other side of the match-making equation, brokerages are typically motivated and eager for the opportunity to inform potential contacts about their successes, affiliations, special training, longstanding client relationships and other distinguishing characteristics. They may regularly purchase local advertising to that effect, in addition to the networking, community involvement and word-of-mouth promotions that insurance professionals have relied on for decades.

Yet these traditional approaches lack consistency and efficiency. Just as there are surprisingly few resources to help an employer search for the right brokerage, there are few forums where an insurance team can clearly showcase its expertise and capabilities for fair comparisons with competing firms.

AI-Powered Alternatives

Technology is poised to transform the brokerage marketplace, however. For instance, our firm, Mployer Advisor, recently launched a platform that promises to bring a new degree of transparency to the insurance brokerage space. Built to help employers search, evaluate and select business insurance brokers and employee benefits consultants, the system draws real-time data across multiple private and public sectors. Powered by algorithms and artificial intelligence, the platform enables users to conduct rapid searches of brokerage data and drill down into results by their size, industry, geographies and product offerings to narrow results.

The Mployer Advisor platform also introduces a brokerage rating system, M Score, which leverages public and private datasets to understand and quantify a brokerage’s experience. Scores range 1-5; the higher the M Score, the broader the broker’s experience. While a brokerage cannot directly change its M Score, it can claim its profile and fill in any gaps in its listed expertise, which might trigger a recalculation. The platform also showcases reviews of each brokerage.

See also: 2021’s Key Technology Trends

Millions of Americans rely on employer-sponsored health coverage and benefits obtained through an industry that historically has lacked clarity. For too long, those companies have been forced to navigate the broker selection process with limited resources. Technology, powered by today’s advanced algorithms and artificial intelligence, now provides the means for change. It is time to address this deficiency and give employers the transparency and tools they need to find the insurance broker best suited to their industry, company size and product needs.

Framework for Better Comparative Ratings

As customers press insurers for the best possible rates — especially in the wake of COVID-19 — companies must map their position against competitors to be able to offer optimal prices. The market offers several online tools and platforms to compare general insurance quotes based upon the details that prospective customers provide. However, for insurers that wish to compare their quotes with competing products in the market, not just in terms of price but in terms of attributes such as coverage and benefits, these platforms and tools are insufficient.

A 2015 survey by Earnix of North American insurers engaged in personal lines, almost every company surveyed (93%) performs rate structure and rate competitive analysis. Other common types of competitive analysis include product features (79%), coverages and contracts (70%), financial metrics (58%) and underwriting guidelines (56%).  

To perform such multifold comparisons, insurers require access to a business intelligence solution that is interactive and allows users to analyze across different consumer segments and product/policy features. Such a business intelligence (BI) tool should not only be capable of extracting the quote information from various raters/agents/online-platforms/competitors but also consolidate this information so insurers can compare other metrics, by:

  • Providing a clear understanding of the standing of client vs. competitor quote, by dollar amount. 
  • Generating insights to develop predictive models that can assist in increasing the conversion rates of policies.
  • Focusing on the binding and issue rates, to measure success.
  • Assisting in cross-selling, marketing and targeting of customers from other lines of business.

This article provides a framework for developing a quote comparison BI solution and contains metrics for assessing competitiveness across multiple lines of business.

DISCLAIMER: Because insurance consumers often purchase home and auto insurance at the same time, while building a quote comparison BI solution it is essential to include the competitiveness of both lines together by combining multiple line of business reports into one. This entails setting up specific data warehousing processes in the background, which are needed to power up the visualizations in the dashboard/report output.  

Key Metrics to Use in This Rating Methodology

An insurer trying to compare the pricing of its competitors needs to establish a set of metrics to rank different quotes for a given consumer profile, created by analyzing past policy purchases and consumer details data collected by brokers.  

One of the several challenges is that the competitiveness information received for quotes belongs to a single business line. This information is sometimes categorized and not in absolute numbers. In most cases, a carrier gets the following values directly: its premium, low/median/high carrier premiums and rank for a quote. Thus, there is a problem with joining auto and the home quotes to form a combined quote.

While a carrier can determine its own combined premium (auto premium + home premium), it cannot do the same for the low/median/high carrier premium info. For instance, one does not know whether the carrier that quoted the lowest auto premium is the same carrier that quoted the lowest home premium. In fact, the combined low premium (set to low auto + low home) is, in most cases, going to be lower than the actual combined low premium. The opposite is true for combined high premium info; the estimate will uniformly be higher than the true high combined premium. The combined median should be higher than the actual combined median just as often as it is lower, so the overall median combined premium should be roughly in line with the actual combined medians.

The carrier performing the rate comparison can use different approaches to determine the best estimate of all the competitiveness measures used in the views of a single line of business. Some of the metrics used in this approach are:

  • Ranks based on the premium dollar value quoted for both auto/home.
  • Categories based on the ranks where the insurer is No. 1 in a category, and rank sorting among the top few ranks.
  • Number of carriers quoted for that policy. 
  • Difference in premium dollar value quoted for both auto/home and the low/median/average/high of all the premiums quoted.
  • The average rank based on premium dollar value quoted for each line of business.
  • Percentage of quotes issued. Issuing is the act of completing a quote and binding a policy (generating a policy number). The issue percentage (issue rate/close rate) is the percentage of quotes in which a policy is issued at the end.

See also: Best AI Tech for P&C Personal Lines

Ranking Insurance Quotes

The ranks given to competitors do not have the information about the number of competitors quoting for a given consumer persona (or a consumer). P&C carriers can adapt a new ranking methodology that identifies the most robust metric that combines rank with the number of carriers quoting for a given consumer persona/profile. For example, consider a scenario where a customer gets three auto insurance quotes from his independent agent. Here, to be ranked second isn’t as impressive as being ranked second out of 10 quotes. The following three rules can be used by carriers when determining ranks in their dashboards:

Expected win rate: Expected proportion of Rank 1 quotes.

Rank scale metric: This is essentially distance from “expected win rate.”

LOB filters constraint rule: Consider an insurance carrier offering home and auto and wanting to be able to offer them alone or in combination. The BI solution for price and rank comparison should provide filters for visualizing such combinations.

Analysis and comparisons

Geography-Level Analysis 

One can showcase metrics like numbers of quotes and conversion rates, etc. Analysts have access to line of business and geography-level filters like state and county, urban vs rural, etc.

Rank Level Analysis

Here one can show product performance based on ranks for different lines of business for metrics like quote vs. pre-quote.

Line of Business Analysis

Each line of business has specific attributes — for example, driver age and vehicle age for auto insurance — so one needs line-of-business-level views for auto and home and a combined graph.  

Competitive Market Analysis 

This involves relative quote ranking to understand the insurer position concerning competitors, analysis around quote distance from average market price and segmentation analysis to understand which insurers are incredibly expensive.

Price Elasticity Analysis 

This focuses on price sensitivity and customer profile. Segmentation analysis helps understand the pace at which the rates can increase or decrease to accept the change. Similarly, different studies can be carried out for the sales and marketing team to increase the retention of profitable customer segments.

Price Optimization 

Price optimization is more of a prescriptive analytics approach. A scenario-based analysis can help check price sensitivity by market segments and build a reusable platform for carrying out state and countrywide optimization analysis.

Quote & Coverage Optimization and Customer Segmentation 

An insurer may not offer the best price but may still bind the policy because of better coverages, or the insurer may have the best price but not win the business. These are the scenarios that a carrier needs explicitly to look into as they will help the carrier while quoting new customers.

Location-Based Analysis

Location has a significant effect on premiums. Differences in competition, state and local rules and cost of living account for this. Insurers take into consideration this information when they decide on the premium dollar value. For example, in a region with higher car theft rates, one may pay a higher premium than a place where car theft rates are low.

See also: Foundational Tech for Personal Lines

Conclusion:

With COVID 19, pricing has become more crucial than ever as it can become a great source of competitive advantage. A useful quote comparison tool that encompasses various metrics of comparisons and different data elements can lead to better customer acquisition and retention. The visualizations provide an effective way to stay on top of customers’ expectations and price right to keep your organization ahead of competitors. Deploying data analytics to integrate home and auto and customer personas can help deliver the right products and the correct prices to existing and prospective customers.

However, to kick off this transition, it is crucial for insurers to carefully collate a list of metrics to compare, rank the insurance quotes to take into account the number of competitors and then perform the needed analysis. The best way to determine this is through a comprehensive, systematic audit of the current quote comparison process. A carefully planned audit will help insurers to: 

  • Identify gaps in the current quote comparison process. 
  • Identify the right personas and the right metrics.
  • Prioritize the customer population who are more likely to expand the wallet share and purchase a policy.
  • Build a single source of truth of quote information for effective pricing decisions

Darwinian Shift to Digital Insurance 2.0

Brian Solis, a digital analyst and anthropologist, studies the effects of disruptive technology on business and society, calling it “digital Darwinism.” Solis borrowed Darwinism to describe how organizations adapt to changing customer behavior (anthropological view) and rapidly changing technology through digital transformation. As Solis says in various articles, the effect of digital Darwinism on business is real, and it’s enlivened through evolutionary changes in people in their views, expectations and decision-making.

And we are seeing it rapidly unfold in the insurance industry.

The pace of disruption and dramatic changes are truly evident when we look at Majesco’s first Future Trends report from February 2016 to the second one in March 2017…and now in 2018. This year’s Future Trends report takes a deeper look at the current state of insurance disruptors across people, technology and market boundaries, and how they are pressuring insurers to adapt, pushing them out of their traditional orbits and toward new models and opportunities — “digital Darwinism” — to Digital Insurance 2.0.

The Insurance Darwinian Shift

Majesco’s consumer and SMB surveys show that customers seek “ease in doing business” across the research, purchase and service aspects of insurance. In addition, they are rapidly adapting to the digital age, and they have a rising interest in innovative products and business models emerging in the market, posing a threat to existing insurers.

See also: Digital Playbooks for Insurers (Part 1)  

Startups like Lemonade, Slice, Zhong An, Haven Life, Bought by Many and Neos are embarking on Digital Insurance 2.0 business models using digital platform capabilities and ecosystems that exploit untapped markets and address under- or unmet needs that strengthen customer relationships.

New business models are serving different markets, have different products and services and use different strategies. While customer demographics and expectations, emerging technologies and data, and insurtech have had a majority of the focus, one area that has been a catalyst for these companies to shift to Digital Insurance 2.0 is platform solutions.

Platform solutions provide these innovative companies speed to value, unique customer engagement, a test-and-learn platform for minimal viable products and value-aligned optimized costs. Their platform solutions also catalyze digital technologies and processes, AI/cognitive, cloud computing and an ecosystem, into a powerful new force to expand capabilities and reach well beyond those of the traditional Insurance 1.0 model. They are creating new paths, energizing the market and lowering operational costs.

Digital Adaptation is Just Beginning

As a result, incumbent insurers must aggressively begin to define their vision and path to Digital Insurance 2.0, leveraging today’s catalytic lever, platform solutions.

And Digital Insurance 2.0 is just the beginning. The catalytic effect of platform solutions in the shift to Digital Insurance 2.0 is rapidly evolving, gaining momentum and laying the groundwork for future reactions. Will the next catalyst be blockchain or some other trend that will propel us toward Insurance 3.0?

See also: Digital Insurance 2.0: Benefits  

Insurers’ abilities to adapt and rapidly move to Digital Insurance 2.0 will likely define their future. As such, insurance executives and leaders should ask themselves the following:

  • Are we appealing to customers’ motivations, making our processes simple and creating compelling triggers to act?
  • What is our business strategy, and how are we incorporating a platform and ecosystem approach?
  • In which markets and with what customers will we find our future growth? What will they expect?
  • What is our partnership approach today, and how will it need to change to extend to a broader ecosystem?
  • Is our technology platform the foundation for our growth?

The future is still unfolding. New technologies and ecosystems will continue to emerge. And with those changes, over the next decade, we will likely see the beginnings of Digital Insurance 3.0 emerge.  Organizations will need agility to adapt and respond, a keen focus on innovation that encourages experimentation, and a priority on speed to value to succeed, or even survive.

5 Things to Know on Insurtech Partners

At Bolt, we have been working with insurers since 2000, and I am often asked about the new startups entering the market and how traditional insurers can compete. The first thing I usually want people to understand is that not all insurtech is intent on disrupting the market. Bolt, for instance, is what we like to call an insurtech innovator. Our goal is to partner with existing insurers and help them find answers to the contemporary challenges they face. This explanation naturally leads to the next question I’m frequently asked: What should insurers look for when seeking an insurtech partner?

Finding an Insurtech Partner That Brings Value

The insurance industry is unique. Guarded by strong regulations and financial requirements, it has been relatively closed to new entrants, developing a culture and method of doing business that’s different from other industries. That makes finding a good partner from the growing list of insurtech innovators a challenge.

See also: Insurance Coverage Porn  

Below are the top five factors I think an insurer needs to consider when partnering with an insurtech innovator:

  • Don’t fear change: While insurtech innovators need to understand the complex regulatory environment and the culture of the insurance industry, I also think that traditional insurers could learn a little from the newcomers. Silicon Valley startups, for instance, are at the forefront of cutting-edge technology. Consider the tremendous consumer backing that a company like Apple has, and you realize that these techy new entrants have tremendous insight into what makes the customer tick. Adopting a little of this can take insurers a long way in the customer-centric era, so don’t be afraid of a little give and take when it comes to merging your culture with an innovator’s.
  • Have a plan: Some insurtech innovators are eager to enter the industry and will promise you the moon and stars, but do you really need the whole universe of what they are offering? For instance, most insurers have a strong agent channel, and their customers like working through agents. One insurtech may promise superior results by eliminating agents in favor of a straight D2C play. As we’re seeing with many new insurtech disruptors, consumers want to interact through a variety of channels, so you would be better served by digital capabilities that can support both D2C and agent channels.
  • Avoid the culture clash: I’ve worked in both the technology industry and the insurance industry, so I understand the culture shock that can occur between the two types of organizations. Earlier this year, we attended the Auto Insurance Report National Conference (AIRNC) 2017, where Patrick Sullivan spoke about the wave of insurtech entrants. Based on his experience speaking with many of them, he concluded that the movement won’t change the world, but niches abound. What this means is that disruptors won’t be able to unseat existing insurers, but innovators with a strong insurance background can merge their technological skills with this knowledge to help insurers navigate the changing environment. The key is to find partners with strong industry experience.
  • Support innovation: The insurance industry is well-known for being resistant to change, so it’s important that a spirit of innovation comes from the top down and that leaders support the progressive steps you’ll be taking with an innovator. For instance, at Bolt, we’re always asked by companies that sell products on our platform why they should want to bundle in products from others in our network. We’ve seen companies greatly increase their results by doing so, because they show the customer they are committed to all of his or her needs. But making the commitment to bundle with competitors wouldn’t have been possible without an organization-wide commitment to change.
  • Dedicated resources: Regardless of the change initiative underway, partners can only take you so far. Internal change management is the responsibility of the insurer, and you need to make certain you have a plan, and the dedicated resources, in place to support the new initiative. Over the last few years, we’ve worked with a major insurer on expanding product selection and giving agents access to top digital tools that streamlined the buying process. The company instituted internal ambassadors that led the change and supported agents throughout the transition, ensuring the success of the launch and beyond. The result was a $26 million increase in premiums over two years.

See also: Why AI Will Transform Insurance  

Adapting to the industry evolution underway isn’t going to be easy, but insurers can pave the road to success by partnering with insurtech innovators that have solid insurance experience. By merging their native digital expertise with the ability to support and navigate the industry complexities, innovators can help traditional insurers become top-tier digital enterprises, capable of delivering the customer-centric environment consumers are demanding.

To learn more about partnering with InsurTech Innovators, read our thought leadership piece, How InsurTech Will Revolutionize the PC Insurance Industry: Partnering Into the Future.