The insurance marketplace is entering an exciting new phase in terms of its use of technology. This industry is acutely aware of the need to modernise, and ‘Insurtech’ has been seen by some to be the silver bullet that will create the change. But the idea that technology for technology’s sake will fix old problems is now recognised to be outdated – and unhelpful.
Instead, the insurance industry is now looking to use technology in much more innovative, interesting ways – to do things that have never been done before. And this is where the real power of Insurtech lies, I believe.
The world of insurance can often seem complex or opaque to ‘outsiders’ coming in. And many of its ways of doing business can still appear old fashioned and difficult to navigate – we still refer to a literal ‘pen,’ for example!
We are currently seeing lots of very clever technologists looking at our insurance space and having bright ideas but coming up against stumbling blocks along the way.
For example, oftentimes insurers will require a benefits case to be constructed for funding to be secured, then project management capabilities put into place with steering groups and so on.
But this is just not how most Insurtech firms work – we need to stop trying to make a square peg to fit a round hole. Insurtechs are, to a very large extent, research and development companies. They are trying to do things in new, different ways.
So the insurance market needs to be willing to adapt the traditional ways of doing things, the tried-and-tested processes and mindsets, to be able to take advantage of these innovative ways of thinking and new solutions.
And Insurtechs do need to be able to find ways to navigate this marketplace. Many brokers and insurers have a degree of nervousness about working with small firms, there is a wariness perhaps about risk-taking. Many might feel that regulators will not look favourably upon them outsourcing to smaller firms, for example.
So the most successful Insurtechs will be, I believe, those that can secure solid funding and that have a good understanding of the insurance landscape.
In the Delegated Authority space, technology can play a really valuable role – not least because of the sheer volume of business this marketplace handles. In the Delegated Authority space, there are numerous coverholders, numerous Managing General Agents, and hundreds of thousands of risks, worth millions of dollars, being placed around the world at any given moment.
Sometimes in volume business, it can be difficult to see the wood for the trees. Insurtech can really play a huge role here in creating efficiencies, in cleansing and validating data much more swiftly than we were able to do before.
And once those systems are in place then the data that is unlocked becomes truly valuable.
Looking to the future, I believe we will see companies begin to derive real powerful insights from this data – not just management information but real trading information.
By slicing and dicing data, to give chief underwriting officers at MGAs detailed insights into which areas of their book are performing well, which are not performing, and so on, we can provide real tangible business benefits. CUOs will be able to gain insights that demonstrate where they can make a profit, inform them where they might wish to adjust their pricing, or exit certain lines, or write additional types of business, and so on.
This starts to become really powerful – and the technology is getting so much smarter now. Our customers are really great at feeding back to us about what is beneficial to them, and what developments will help. I think that dialogue is really important.
We need to make sure we are not ‘enhancing’ products for enhancement’s sake; there’s always a new add-on to be developed or new tech that we can use in some way or another. But we need to listen to what our customers actually need, not get carried away with the next, new, exciting thing, but actually create valuable solutions that meet our customers’ needs – it’s a balance.
And we also need to caution against collecting data for the sake of collecting data. Those who perform well in future, who find the competitive edge, will be those who understand the value of the data they harness and mine and use it to good effect. There’s gold in them there hills, as the saying goes, it’s just a question of finding it – and knowing what to do with it once you have!
Insurtech will, I believe, have industry-wide benefits. Clearly, there are business and regulatory requirements around the sharing of knowledge and data. But if there are ways that players in the Delegated Authority marketplace can collaborate, work together and reduce duplication of data, then that will help to improve the efficiency of the marketplace as a whole.
Greater consistency – across what is essentially a competitive, but subscription-model marketplace – will raise everyone up.
This marketplace has changed a lot since I first started working. In those days not everybody had a computer on their desk and look at where we have come now!
Technology is forever evolving and bringing with it untapped benefits in all walks of life, not least in our insurance marketplace. The future is exciting. And I know that by listening to our clients’ needs, adapting and creating solutions to their requirements – rather than imposing onto them what we think those solutions should be – we can play our part in helping the Delegated Authority marketplace face the future with confidence.