Oct 4, 2018 | By: Denise Garth|Topic(s): Business Transformation, Digital Strategy, Fading Industry Boundaries, L&A, P&C
To: Insurance Business Leaders
From: October 2016
Subject: InsurTech Will Rewrite Your Insurance Story
'The energy, engagement and enthusiasm was infectious. It had the feeling of the 'dot com' era… but with more substance. This gathering sent a clear message to the insurance industry that we have rapidly entered a new era that is more profound and impactful than in the past … a renaissance. It has placed the importance of innovation and technology on a stage and signaled that from here forward, insurance must and will be innovating. While insurers have different strategies and paths to their future, we are convinced that InsurTech will be a big part of that future. We have every reason to believe that this trend will continue and will rewrite the story of insurance and your business - either with your help or without it.'
What a difference that two years can make! In 2016, 1,500 executives met at InsureTech Connect. In October 2017, 3,800 executives attended. This week, over 6,000 executives from over 50 countries crowded into the MGM venue in Las Vegas. It's official: InsurTech is rewriting business stories and it will rewrite the insurance story before it has run its course. From three years ago to today, it is reshaping insurance … just like we said in our blog last week: Memo from the Future: 'InsurTech Erased Your Business Model.'
The story goes way beyond numbers, but numbers will help drive home the force of InsurTech and its power to change the industry.
Over 2,100 companies were represented at InsurTech Connect 2018. (It's more impressive if you scroll this list, because you can get a feel for the level of interests from government entities, insurers, MGAs, venture capitalists, tech companies, and industry associations.)
Investments in InsurTech are continuing to grow, with no slowdown in sight. In just one month, May 2018, InsurTech funding across 22 deals was $422.6 million.[i]
InsurTech funding from Q3 2017 - Q2 2018 was $2.2B vs $1.7B for the previous four quarters.[ii]
InsurTech investment in 2018 is already over 80% of 2017's total and putting it on track for a record-breaking year.[iii]
There is a clear trend towards larger deals as the InsurTech industry develops, with deals over $10m increasing from 19.4% share of total deals in 2014 to 51.4% share of total deals in H1 2018.[iv]
InsurTech Innovations Go Beyond the Numbers
Innovation is like gravity. Its irresistible force is pulling executives out of their offices and gathering them together at InsurTech related conferences like SVIA, GIS, InsureTech Connect, and more. More importantly, it is attracting customers to innovative insurance business models, products and services that meet new, unserved, and underserved needs … creating Digital Insurance 2.0. We are now seeing a range of ideas across all segments of the industry turn into practical innovations with valuable business impact.
Innovation is also where the fun lies. Somewhere in all of the networking and brainstorming and trend watching, our minds grab onto the exercises that drove us all to love this industry in the first place. We've always been about protecting and covering people. Now, we have the opportunity to prevent claims. Now, we have the opportunity to serve people with convenience. Now, we have the privilege of changing the nature of insurance relationships.
InsurTech - Finding 'Happy Endings' Inside Digital Stories
Like the memo alludes to - the story of each insurance organization is now open for review, revision and rewrite. The plot you thought you knew has an alternate ending. The reason that so many insurers, tech companies, investors and reinsurers are gathering is the sense of opportunity that they all seek in determining a new direction.
In last week's blog, we discussed a few of the reasons that some organizations are having difficulty capturing the InsurTech momentum. When people attend InsurTech events, and in particular InsureTech Connect with the size and energy on display, they begin to grasp the nature of insurance innovation from a new angle, leveraging it to power a new growth strategy and shift to Digital Insurance 2.0. What would it be like to grab hold of the reins of innovation and use the momentum to truly capture new, unserved or underserved markets to grow the company?
There are so many other stories beyond the first ones discussed two years ago with Lemonade, Slice, Oscar and others. Just consider the Digital Insurance 2.0 stories from companies like Urban Advantage (personal lines startup MGA), Ategrity Specialty Insurance (specialty lines startup insurer) and DFV Deutsche Familienversicherung AG (a German life and health startup insurer) that were shared. Each company had a vision of being a digital insurer focusing on unserved or underserved needs in the market - not just from a risk product perspective, but also from the customer experience and services offered. Each have redefined the business and operating model, the products, customer engagement and services offered, and the technology solutions and platform that enable their business. The result is a growing interest and excitment from the markets they are focused on that is resulting in success. For Urban Advantage and Ategrity, their journey has just started, whereas, for DFV it is accelerating from their beginning nearly 10 years ago.
While initial InsurTech development focused on channels, we now see a growing focus on digital and data to create new products and engage customers. Can life insurers improve mortality predictions PLUS extend the length of lives? Can P&C insurers use data to improve claims rates through better predictability PLUS reduce or eliminate claims through seamless AI and communication with policyholders? Can health insurers begin shifting some responsibility for care and monitoring over to the individuals who are most at risk? Technology, available APIs, better data management and whole life solutions are beginning to show how we can improve our customers' needs, their lives and their businesses in valuable, substantive ways.
In the end, InsurTech has the capability to not only improve corporate bottom line results, but also to improve our businesses, economic foundations, lives and society through reinvention of the insurance business model. This is the key to the alternate ending for insurers. Better insurer results are going to begin with better customer engagement and results, whether those policyholders are individuals or businesses. Happy endings at their level will drive happy quarterly (and long-term) earnings at our level.
If you are one of the authors of your company's Digital Insurance 2.0 story, you can rest assured that some components of your plot are necessary and non-negotiable. Innovation is the fuel to power a new growth strategy for a new digital world. Agility and flexibility provided by a plug and play architecture will allow your organization to adapt to continuously changing market dynamics easily. And speed can be achieved using a new cloud-based platform that will allow you to quickly catch up with current innovations by plugging in new capabilities and data sources so you can personalize your customer experience, create new products and services that will meet the demands of a new generation of customers in the era of Digital Insurance 2.0.
Majesco's platform strategy can help give your digital story a happy ending. Inclusive of core insurance platforms for P&C and L&A, CloudInsurer, and the newly launched Digital1st Insurance platform and its EcoSystem Exchange, a valuable network of partners with traditional and innovative capabilities and data sources, our platform strategy offers innovative solutions for incumbent and startups alike, helping them rapidly shift to Digital Insurance 2.0. We are working with a growing number of innovative Greenfield and startup initiatives, helping them embrace InsurTech as a set of value-added solutions and not as a disruptive threat. Join the Digital Insurance 2.0 shift and embrace the InsurTech movement as an opportunity for your future.
[i] Mandal, Diwakar, May 2018 FinTech Funding - InsurTech, B2B FinTech & Blockchain Topped the Charts, Medici Global, June 11, 2018
[ii]Quarterly InsurTech Briefing Q2 2018, Willis Towers Watson/WillisRe/CB Insights, September 2018
[iii]InsurTech funding on track for a record-breaking 2018 with $1.7bn in capital raised, Fintech Global, August 22, 2018