What’s Keeping Insurers from Using Insurtech More Effectively?
Innovation can come in many forms and the one thing common to it all is that it goes hand in hand with breakthrough technologies. The insurance sector has seen its own share of digital disruptions. Innovation goes beyond upgrading legacy operations and improving the experience of policy holders, it requires insurance leaders to think and act differently from the norm.
The Deloitte Center for Financial services, has put it most succinctly in their 2019 report — To innovate, insurers must evolve not just transform.
So, what is stopping insurers from evolving? Many insurance carriers have been focusing more on upgrading their existing systems. A lot of time and money goes on this rather than also including dedicated teams to work on new operating models that can differentiate their services from others going into the future. And the troubling part is that the future is here.
Insurance carriers recognize the lacuna. Most say that 90% of resources go to improving current processes while only 10% goes towards innovation. This gap must close.
Innovations spurred on by Insurtech
To cite an example, Root Insurance is an American startup that is the country’s first licensed insurance carrier to offer auto insurance entirely through an app. Good drivers get much lower insurance policy quotes as long as they allow the company to track their driving habits for a while.
Another insurtech company, Hippo Insurance, offers homeowners an insurance quote within 60 seconds through their website. That places a benchmark that insurance agents from traditional carriers just cannot match.
The global insurtech market is growing rapidly and is expected to reach $1019.1 million by 2023. So, what’s holding back traditional insurance carriers from using insurtech?
The barrier to insurance product innovation
The Economist claimed, “The future of insurance is happening without insurance firms.” Digitization in the insurance industry is definitely in full swing and insurers are well aware of that. Yet, for traditional insurers, embracing insurtech comes with many challenges.
Read more about the 5 barriers to innovation and how to address them.
