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What’s Your Game Plan for Insurtech?

Over a year ago, Stephen O’Hearn, global insurance leader at PwC, predicted, “Insurtech will be a game changer for those who choose to embrace it.” Since then, the insurtech playing field has matured. Many insurers that have operated in the “good enough” zone are finding that it is no longer, well, good enough. The game has changed. Whether you’re in underwriting, claims or exposure management or are a CIO, insurtech will have an impact on you. There’s no option to stay on the bench.

So, what’s your game plan?

Partnership is the way forward

Right now, collaboration should be a part of everyone’s game plan — not just insurers, but everyone from commercial tech providers to managing agents and brokers. Insurance is a team sport and has been since its inception. Insurtech will not change that; it will only amplify the need to partner — quickly. Who insurers pick as their partners to accelerate transformation matters, and the technology they employ to transform matters.

See also: Insurtechs Are Pushing for Transparency  

In the last year, talk of “disruption” has turned to talk of “collaboration” as the insurance community is realizing the fastest way forward is through partnerships. A more mature conversation is happening. Insurers are realizing the benefit — and speed — of leveraging what insurtechs have to offer. Once labeled “disrupters,” insurtechs are now “enablers.” Fact is, the vast majority of insurtechs aren’t looking to oust incumbents. They’re looking to find a niche where they can succeed and leverage the sheer scale of their more established partners. As a recent InsurTech Bytes podcast observed, “Partnership is the way forward. Enablers are leading disruptors across the insurance sector, presenting an exciting opportunity for insurers to drive forward their digital transformation. Insurtech has developed (largely) with a view toward partnership rather than disruption.”

New digital opportunities are opening up more choice for consumers and businesses alike — think Internet of Things (IOT), vehicle telematics and, especially, advanced data and analytics. As customer expectations grow, an insurer’s data and analytics will need to keep pace in an effort to drive competitive differentiation. This includes the ability to hasten and streamline the quote process, more accurately price risk and mitigate and respond to claims. Insurers recognize data and analytics as a leading insurtech priority and, like other digital transformation priorities, are looking to either VC opportunities or partner integrations to accomplish this. In fact, in a KPMG survey of insurance executives, 25% of respondents said they already had a VC unit set up to make investments in technology companies. And 37% said a VC unit was in the works. Likewise, these same insurers are looking for partnerships to help accelerate transformation; three-quarters of respondents said they “will partner to gain access to new technology infrastructure.

Still, while some insurers are clearly making plays toward making insurtech investments a priority, others are still on the bench. Only 39% of insurers believe they are harnessing digital technologies successfully. And one in five property and casualty (P&C) insurers do not apply advanced analytics for any function. This last statistic is mind-blowing when you consider how intrinsic data and analytics is to insurance. So, what is holding a large percentage of insurers back from embracing digital transformation?

The gap between knowing and doing

In a recent column, Denise Garth talks about the gap between “knowing and doing.” She writes, “Even though most companies know they should respond to key internal and external challenges to create promising growth opportunities — and more importantly to ensure survival — many are still only thinking about doing something, at best. Why is there a gap between knowing and doing?”

The gap exists because the list of challenges is long: legacy systems and processes, lack of budget and downright risk aversion. Understanding where to start with digital transformation, and how, is critical for insurers that recognize the need to digitally transform. But the goal shouldn’t just be transformation. It should be to succeed — to lead and compete in ways that produce profitability, efficiency and innovation. However you measure success, integrating insurtech — whether IOT, blockchain or advanced data and analytics — should achieve those goals.

But where to start?

First, “see over the horizon”

Without doubt, insurtech is an epic climb. It’s not a bump in the road, it’s a mountain that will shape the future of the industry. If we’re to succeed, we must start climbing — only by doing can we compete and start shaping what’s next. However, you first must climb to the top and, as Jon Bidwell, former Chubb chief innovation officer and now SVP and underwriting transformation leader at QBE North America, put it, “see over the horizon.”

See also: 5 Insurtech Trends for the Rest of 2017  

SpatialKey is insurtech, and even we’re not immune from the need to digitally evolve. We’ve been providing geospatial insurance analytics since 2011, and we’re constantly evolving our own platform and product offerings to include the latest technology. Our role as an insight hub is to help shorten and accelerate the transformation that’s necessary for insurers to remain competitive. But, at the same time, our insurance clients are recognizing that not all digital transformation has to be hard. Technology integrations can be swift and painless with the right partner.

What is hard about insurtech is making the right choices, making the right investments, prioritizing the right transformation initiatives, collaborating with the right partners. It’s all a risk — but not as big a risk as doing nothing. There is no option to stay on the bench. No one knows what’s over the next horizon, but we all have an opportunity to shape it.

Insurtech Is an Epic Climb: Can You Do It?

“If you try to win, you might lose, but if you don’t try to win, you lose for sure!” —Jens Voigt, cyclist

Alpe d’Huez is a legendary climb, world-renowned by cyclists. A relentless 8.5 miles with 21 hairpin bends and an 8.1% gradient, it’s been a stage that can make or break the Tour de France for riders and determine the outcome of the entire race. What Alpe d’Huez is for cyclists, insurtech is for insurers.

See also: 10 Trends at Heart of Insurtech Revolution  

Right now, insurers are faced with an epic climb: insurtech. A new breed of insurance technology has changed the game and disrupted an industry that’s been largely status quo. A very large bump (actually, more like a mountain) has appeared in the road — making it more critical than ever to “see over the horizon,” according to Jon Bidwell, former Chubb chief innovation officer and now SVP and underwriting transformation leader at QBE North America. However, to see beyond the horizon, you first must climb to the top.

“When we look back at today, the winners and losers will be defined by those that did and did not embrace an insurtech digital implementation strategy.” —Insurance Thought Leadership, “Death of Core Systems.”

The only way to compete is with technology that evens the playing field.

Over the past 110-plus years, the Tour de France has gone from 40-pound, fixed-gear road bikes (and no helmets!), to sub-15-pound, carbon bikes and electronic drive trains. Innovation, technology and engineering have played a role in the evolution of the sport of cycling. Think about it: If the 22 teams that compete in the Tour didn’t progress with some equality in the equipment they employ, there would be a very large gap on the field. It would be abundantly clear who’s still pedaling 40-pound bikes up Alpe d’Huez.

Insurtech is a game changer. What worked in the past will not work in the future. Insurance technology and innovation is undoubtedly moving at race pace. And, what’s “good enough” for now will likely be a 40-pound bike in five years.

See also: Why AI Will Transform Insurance  

From the Internet of Things (IOT) to vehicle telematics and, especially, advanced data and analytics — which is fast becoming a key competitive differentiator — insurtech presents the opportunity to evolve and compete.

But if we don’t get on the bike and climb, there’s no possibility of winning, no possibility of moving the industry forward. With the right partner, or, in true Tour de France fashion, “domestique,” insurers can create a slipstream that accelerates the insurtech climb.

It won’t be long before we start seeing players screaming down the backside — trying to catch the next horizon.