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May 4, 2020

Time to Retire the Term ‘Insurtech’?

Summary:

It's not that technology is no longer a key driver for the insurance industry. Far from it. But "insurtech" is losing its descriptive power.

Photo Courtesy of Brett Sayles

When I founded and edited what became known as a “new economy” magazine in 1997, to explore all the strategic possibilities created by the internet, a friend told me a curious thing.

“You know,” he said, “there were magazines with names like Popular Electricity back in the early 1900s, when it was this great new thing. Then electricity just became part of daily life, and the magazines went away.”

Sure enough, after half a dozen fine years, my magazine, Context, faded away, as did all the similar publications, including Business 2.0 and the Industry Standard, which once were so thick with ads that they looked like phone books.

It may now be time to start retiring the term “insurtech,” too.

It’s not that technology is no longer a key driver for the insurance industry. Far from it. In fact, the pace of innovation has been picking up for years as companies have become more knowledgeable about the possibilities of various technologies, about how to incorporate them and about how to innovate, in general. Now, COVID-19 is making the industry step on the accelerator because so many interactions must happen virtually.

The issue is that technology is now so ubiquitous that it’s time to stop treating it as this new, alien thing. Yes, the many technologies now at the industry’s disposal — blockchain, the various flavors of artificial intelligence, etc. — are wildly complex. But so is the laptop or phone you’re using to read this right now, yet you treat your device as a tool, a simple extension of your hand or your brain. It’s time to start thinking of insurance technology — not insurtech — the same way.

We’re solving business problems, not technology problems, as we innovate within our organizations. We want to have the most efficient operations, the smartest underwriting, the fastest and smoothest claims processes for clients. Technology will play a role almost everywhere, often a key role, but the goal isn’t simply to have the best AI or the coolest blockchain application.

The industry has been migrating toward a more balanced view of technology and innovation. You see that, for instance, as companies try to rethink the customer journey, where the focus is squarely on the customer and where technology facilitates much of what happens, but in the background.

Some technologies will still require great attention, in and of themselves. Something like blockchain, for instance, could provide a competitive advantage if you figure it out before your competitors, or it could be an expensive bust for you, so you need to develop a deep understanding of the technology. But even with something like blockchain, you’re starting with that business problem you’re trying to solve.

I suspect the term “insurtech” will play out rather as “digital strategy” did at the consulting firm that published my magazine.

When the late, great Mel Bergstein founded Diamond Management & Technology Consultants in 1994, he had the then-radical idea that digital technology could drive corporate strategy, rather than just be an afterthought. The firm did a lot to popularize that concept, especially when one of our partners, Chunka Mui, co-wrote a best-seller in 1998, “Unleashing the Killer App,” whose subtitle was “Digital Strategies for Market Dominance.”

The notion of digital strategy stayed popular through 2010 or so, I’d say, and plenty of consulting firms will still sell you one, but every strategy has a digital piece to it these days. Try to imagine a strategy that isn’t digital. So, “digital strategy” has gradually become “strategy.”

Likewise, while a few people still talk about “e-commerce,” it mostly has a simpler name: “commerce.” Amazon was treated as a technology company for the longest time even though it sold books. Now, it’s treated as what it is: a retailer (that’s extraordinarily sophisticated in its use of technology) and a provider of technology services through its AWS cloud business.

“Insurtech” hasn’t been around nearly as long as “digital strategy” or “e-commerce,” and the combination of insurance and technology in innovative ways will only pick up speed from here. But the innovation needs to happen as part of, well, the normal innovation process and not as a sort of excursion into foreign territory. So, I think “insurtech” will soon enough be referred to by a different name: “insurance.”

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About the Author

Paul Carroll is the editor-in-chief of Insurance Thought Leadership. He is also co-author of Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993. Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.

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