Innovations in insurance technology – insurtech – are allowing insurers to make better and better use of increasingly large and sophisticated levels of data and services.The advantages of these are clear, as the better an insurer understands their customer and the item being insured the better their underwriting, pricing and customer service. However there are newer challenges facing the industry, and RDT’s session at the ABI Motor Conference will outline the nature of these and how they can be tackled.
The immediacy and control of using your smartphone for diverse and complex transactions is what consumers have come to expect.
In terms of technology, other sectors overtook insurance long ago. The immediacy and control of using your smartphone for diverse and complex transactions is what consumers have come to expect. You can book and manage flights or hire a car with no need to print out the documents. You can pay for shopping with your smartphone and use it to transfer money into somebody’s bank account, with the money arriving in seconds.
Time for an alternative
This is the level of convenience that we now see as normal and anything that seems laborious in comparison is not going to be popular. Unfortunately for insurers, that is still how it is when you buy insurance. Using an aggregator means filling in a long form with about 50 questions. The aggregator then returns a list of quotes, all of which are ‘one size fits all’, so after choosing one you have to answer even more questions – and then the quoted price is likely to change.
So judging from the way other sectors have gone, if an insurer were to offer an alternative to that scenario, with minimal questioning and the right price straight away, it would be a hit. And – another sticking point – the consumer in this example is applying for an annual policy. Is there any reason why policies should be annual? The lifespan of a policy as well as the cover should be flexible.
The insurance market has been in a state of change for a few years, but that change has very recently started to accelerate. This is because some insurers have recognised the need for new technology and large levels of data enrichment, and they are the ones now competing most comfortably in the market. But a new threat is emerging as well; start-up companies are being launched with the sole purpose of creating exciting new ways of packaging and selling insurance.
insurtech in the cloud
Very soon there will be a proliferation of services for insurers that will sit in the cloud.
The bad news for traditional insurers and their outdated systems is that these start-ups are making headway. But the good news is that there is a raft of new technology coming that will enable them to compete. One way they can avoid being left behind is by using the insurtech that’s being built to reside in the cloud.
Very soon there will be a proliferation of services for insurers that will sit in the cloud. Some will be platforms for building online services that help consumers buy, tailor and manage their policies. Others will be there to save insurers time and money, such as data enrichment services. These will provide data enrichment whenever an insurer’s system calls to it, in exactly the same way that banking services are used by retail websites.
New administration solutions
So there will be a situation soon where insurance companies, either brokers or insurers, will have a wide range of services provided for them in the cloud, which they can use to put products together quickly and manage their customers better. That is the way I believe things are likely to go. Policy and claims administration solutions are unlikely to be provided by a single supplier anymore; instead they’ll be created from a range of cloud-based services. Traditional systems will first be augmented by these services and eventually complete solutions will be constructed entirely from cloud-based services.
In an increasingly tough market, it’s time to bring out the big guns. Only those who are well positioned with their technology, and who have a well-constructed digital strategy, will be left standing.
By Mark Bates
Mark Bates is Chief Executive Officer at RDT Ltd
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