The impact of insurtech on today’s carrier is easily seen. McKinsey notes that investment in insurtech skyrocketed from $140 million in 2011 to more than $2.7 billion four years later. The PWC 2017 Global InsurTech Report shows that nearly half of all respondents are currently partnering with insurtech. With so much buzz around the risk and opportunities insurtech offers, it can be difficult to extrapolate what these potential changes mean for today’s carrier.
Competing through insurtech
One thing is certain, technology will become a critical battlefront for carriers. As Bernhard Klein Wassink, partner, Global Insurance Customer & Growth Offering, EY states in IA Magazine’s What to Expect as More Carriers Engage with InsurTech, “It’s competition using technology, which is not how it was traditionally done. It used to be competition was based on product features and commission structures. I have a hypothesis that you might see a reshuffling where perhaps some of this technology will create tighter linkages between groups of agents and their primary carrier.”
AI, IoT, and wearables are the biggest focus
From the ever-expanding menu of available innovations, the insurtech industry remains highly focused on artificial intelligence (AI), the internet of things (IoT), and wearables. Cindy Forbes, EVP & Chief Analytics Officer of Manulife Financial notes, “In the P&C space we are seeing a real focus on IoT and how devices can give better information and be part of an insurance programme. Wearables are going to make even more inroads...”
The numbers support this idea. According to the Internet of Business, in 2016 nearly 8 of every 10 insurtech deals were in the AI and IoT categories. Why the narrow focus? These are technologies that transform a carrier from reactive to proactive. The upside of that transformation can be enormous.
Examples of insurtech paying off
Zurich Insurance reported how their cognitive automation AI pilot achieved dramatic results. “We went from 58 minutes to 5 seconds per medical report; we achieved a significant reduction in leakage through standardized decision-making; and we went from depending on employee availability to 24/7 availability,” said Monika Schulze global head of marketing at Zurich Insurance.
In a Risk & Insurance article by Andy Hosman, a UK company highlighted how using wearable technology reduced the amount of time bricklayers were in a significantly bent over position by 85%. Shifting from processing back-related injury claims to preventing them from happening in the first place is a win for employees, employers, and insurers. As Sam J. Friedman points out in InsurTech sets the stage for 'A Tale of Two Industries', “If carriers can become more proactive than reactive, it should alleviate one of the biggest complaints about insurance — that most people don’t perceive the value of their policy unless they have a claim (one that gets paid with a minimum of stress, that is). Connectivity could change that dynamic, laying the groundwork for an ongoing, interactive relationship with policyholders.”
Insurtech means lots of data
The potential upside of this technology is clear, but only if carriers can manage all of the data. As Hosman puts it, “Wearables have the potential to bring companies safety-related data that was once considered unattainable. But with this amount of data comes real challenges, such as the potential for data paralysis. Companies will need to find a way to cut through the data in sensible ways that give them the information they need to help keep their workers safe on the job and insights into problems across their safety-reporting culture.”
Legacy systems can struggle with processing high volumes of entirely new types of data. Without the ability to turn the data from these technologies into measurable results, the proactive benefits will be lost. The right solution can connect new insurtech systems with the claims and safety data to show exactly what effect these programs have, and quantify the value a carrier adds to clients through that technology.
What all this means for your policy administration system
When evaluating the impact of new potential insurtech opportunities, the ability of a policy administration system to connect the data from IoT, wearables, and AI technology with a reduction in the number or duration of claims is essential. Additionally, flexible technology that lets your clients report on those savings is critical. If these pieces cannot be easily connected so that data flows between all of the technology, the upside of insurtech may be limited. If carriers ultimately will compete on technology, as Wassink suggests, those with legacy systems will fall behind.
Leveraging the flexibility of Origami Risk
Origami Risk’s inherent flexibility allows you to offer your clients powerful linkages between claims data and new insurtech technologies. With Origami Risk, you not only gain the policy administration tools today’s carrier requires, but also access to the RMIS functions that can fully connect insurtech functionality with claims and safety data.
Seamless data integrations connect all the data sources, creating a single platform for reviewing metrics. Customizable portals, reports, and dashboards allow your clients to provide 24/7 access to the data proving your insurtech is driving their bottom line. Additional tools such as audits and our mobile app can further push the adoption of new technologies down to end users, and spread the proactive benefits across the organization.
Ready or not, insurtech is forcing its way into the strategic plans of carriers. The PWC study notes, “Ultimately, for insurers, it’s no longer a question of whether or not they are involved with InsurTech, rather it is about how they leverage the InsurTech ecosystem… In the end, no matter the source of innovation, insurers need to ask themselves how they mainstream it into legacy cultures unaccustomed to the speed and agility of InsurTech.” With Origami Risk, you’ll have the speed and agility you need to adapt.