Spoilt for choice: the COVID-19 tech boom leaves insurers with some tricky decisions

The COVID-19 pandemic has changed the landscape for insurtech. According to analysts, funding rounds for insurtechs raising hundreds of millions are no longer rare—a reflection of changing consumer habits.

“The pandemic has accelerated the demand for digital and personal insurance services and increasing consumer demand for digital services shows no sign of abating,” according to GlobalData in a June 2021 report.

The change will outlast the virus because it’s not the only driver. As a recent session of the Re/Insurance Lounge discussed, COVID-19 has merely accelerated changing behaviours and built on continually evolving technology.  A diverse panel joined Intelligent Insurer’s online platform for on-demand interviews and discussions to explore the future for insurtech and the wider insurance industry:

One thing quickly became clear: there’s no going back, but the way forward is not always easy to discern.

Click here to watch the full video

Rich pickings

Joost explained that the shift of consumers online and the success of moves to remote working have not just inspired companies to be more ambitious; they have also made discussions of insurtech more practical.

“It’s helped business leaders and technologists talk openly about what works, what’s required to make this work,” he said. Much of the discussion in the past has been “aspirational” and focused on the macro level.

“What I’m saying is, there are lots of microsegments in insurance. That’s where the technology applies in many cases, and that’s where you see the value.”

The opportunities go far beyond moves to move distribution online and automate processes. They draw on a wide range of technologies, from the internet of things and intelligent wearable devices to artificial intelligence—as well as looking outside the industry.

“I like to look for tech that works in other industries and see if we can apply that to the insurance sector,” Roudaut explained. That might mean drawing on military solutions for weeding out potential militants when hiring support staff to develop a triage system for identifying insurance fraud or, as Cuscó detailed, using machine learning and image analytics for diagnosis in healthcare or inspections and assessments for auto and property claims.

It’s not just that COVID-19 has bolstered demand for insurtech; technological advancements have also expanded the possibilities.

“That’s a project that I think every single insurance company has been trying to pursue in the last five years, but the technology was just not there,” said Cuscó.

“In the last 18 or 24 months, the level of accuracy has become good enough to go to market.”

Priorities and partners

The range of possibilities is a challenge as much of an opportunity for insurers, however. They must decide where to concentrate their efforts.

“That is almost the $64 billion question,” said Bell. The key should be to approach it from a commercial perspective, he added.

“Insurance is about managing risk and managing money. You need to look at the area where the greatest return on investment is, not the thing that is easiest to implement.

“It is simple to implement the claims management system; it is relatively easy to improve go-to-market tech; it is very difficult to improve your data capture,” said Bell. Yet, that is where the value is for most.

“It all starts with the use case,” said Roudaut. “We define the use case; we define the pain point; and from there, we scout for who can help us provide solutions.

“What matters for us is that the dog wags the tail, not the opposite.”

Joost agreed, saying: “What I find with a lot of these things is the technology, and the people, work—that’s not the debate. The question is, can it fit into what you’re trying to do?”

Click here to watch the full video

A realistic approach

That means identifying not only the right technologies to prioritise but also finding the right partners and the best way to work with them, according to the panellists. There needs to be realism about pricing, for instance, since, ultimately, it is likely to be borne by insureds.

“They may be willing to pay more for innovation for the value they get out of it, but it can’t be so much more,” said Roudaut.

“If the innovation costs more than 10 percent of the insurance premium, most likely we won’t be pursuing it.”

There also needs to be humility—on both sides.

“Arrogance is the real impediment,” agreed Joost. “In simple terms, if you believe you’re smarter than everyone in the room and everyone you’re selling to, you’re not going to listen very well. As a result, you’re not going to translate well to insurance which can be a more complex environment,” he said.

“Normally, the cycle of not listening goes on until they run out of money.”

The need for humility cuts both ways. Fortunately, according to Cuscó, there is no shortage of expertise and insight insurers can draw on.

“The more you dig into insurtech, especially health tech, the more you discover that those teams are highly skilled. They are extremely professional. There are people coming from outside the industry who know the industry better than some of us do,” he said.

“It’s very exciting, and we get to learn a lot by working with those teams and chief executives.”

To view the full Re/insurance Lounge session click here