What is Insurtech?
Technology continues to disrupt the way we do just about everything—including insurance.
For the last 20 years, insurance has been largely seen as a low-tech industry. Recently, we’ve seen a greater influx of technology companies focusing on the insurance industry, understanding that there’s an opportunity to modernize it and deliver a more frictionless customer experience.
With that, a new industry has emerged, and billions of dollars are now being invested annually into Insurtech (insurance + technology). In most of 2018 and 2019, over $1 billion had been committed to funding—each quarter.
Technology has already provided the insurance industry with significant improvements, ranging from cloud-based agency management systems to risk management assessment and data analytics.
We’ve also seen improvement in:
- System interoperability: When systems can talk to one another, efficiency improves and companies can better leverage existing technologies.
- Customer experience: Fast and easy insurance has been a key area of focus for many consumer-focused companies like Lemonade, CoverWallet and Embroker.
- Insight-driven decision making: Analytics continually improves underwriting decisions or operational efficiency.
- Operational efficiency: In addition to encompassing all of the areas above, improving operational efficiency spans across the entire industry, including employee management, customer management, business development, and more.
How Insurtech is Reshaping Insurance
With insurtech expanding and evolving, there is a range of new solutions currently being tested in the market.
Some of the exciting developments include:
- Educating the insured: Education on coverage in a customer-friendly way, versus traditional policy language.
- Offering mobile access: Bringing insurance closer to the insureds by enabling mobile access, including buying insurance directly on the phone or instantly submitting claims.
- Utilizing the Internet of Things (IoT): Adding sensors to enable “usage-based” insurance, while providing Insureds additional value by using data to provide risk prevention advice.
- Leveraging analytics: Identify the necessary coverage for insureds based on data and their needs.
- Digitizing information flow: Improving information share between carriers, agencies, and brokers to increase operational efficiency, information capture, and the speed at which decisions about policies can be made.
- Robotic Process Automation (RPA): Automating manual steps can eliminate many repetitive, low-value processes and provide significant company cost savings.
Challenges to Implementing New Technology
The new technologies coming into the industry have the potential to provide significant benefit and value, however there are challenges to consider:
- Market fragmentation and lack of standardization: Many of the parties involved in insurance distribution lack the incentives to create standardization and an ecosystem that allows for sharing of information. For many in the distribution network, it’s in their best interest to remain closed off to protect information privacy. However, this makes it challenging to implement certain technological advances.
- Regulatory compliance: Insurance regulation happens at the state level. Every state oversees insurance in their own way, which means insurance processing will have many different variations to ensure compliance across the US.
- Legacy technology: Legacy systems, while costly and inefficient, are still the norm for many in the industry. They often require data reentry and can’t interact with other software. What’s more, the once-revolutionary use of PDFs has become another hurdle due to the difficulty of extracting data from these files.
How Third Parties Help the Insurance Industry Get Ahead
Insurance-focused business partners can step in to help insurance organizations benefit from insurtech innovations without taking on the risk of investing in digital transformations. ReSource Pro integrates innovation and technology into everything we do. Here are some of the ways we bring the benefits of insurtech to insurance organizations:
Find a research and development partner. With the Innovation Lab, clients bring their complex business needs and ReSource Pro provides the expertise, technology, and resources to execute on them.
ReSource Pro works within clients’ systems, so the data stays secure, and then also help companies leverage that data. We help clients collect data and then implement improvements as a result of the insights.
Standardizing workflows is a critical step in improving operational efficiency and sets the groundwork for introducing new automation technology. For example, you can automate high volume and standardized task steps through Robotic Process Automation (RPA).
While there are certainly other technology trends, the ones listed above are currently creating the largest overall impact on operations and outsourcing within the insurance industry.
Don’t see what you need here? Develop a customized tech solution with our experts in the ReSource Pro Innovation Lab.