Decoupling insurance from its legacy constraints
Today, as InsurTech matures into the mainstream, we are seeing the evolution of new insurance models and the decoupling of the traditional business from legacy constraints. This has been fuelled by the rise of digital platforms, delivering on the promise of speed to market, product flexibility and omnichannel distribution in a way that has foxed the traditional software platforms for the past 2 decades.
This was a theme I touched on in last month’s InsurTech Insights’ article. In that piece, I looked at a new holistic model for the insurance value chain based on 3 elements; Digital Brands, Risk Capital and Digital Platforms.
Continuing on this theme of the redefined insurance value chain, the subject for this month’s InsurTech Insights takes a closer look at digital platforms. Without doubt, the attraction of the new breed of cloud-enabled digital platforms is their flexibility, speed of use and lower cost. This translates into improved speed to market, many more options for the use of data and a completely joined-up approach to the customer’s digital experience.
Digital platforms are here to stay
This is more than just hype and marketing bluster. In this July 2019 survey from NTT Data, they reported that almost a quarter of the financial services firms surveyed had adopted a digital platform approach. They also reported that of those firms with a digital platform approach;
- 46% provide a better customer experience
- 44% respond faster to market needs
- 44% grew revenue
- 41% increase customer retention
- 24% are able to expand the number of partners in their ecosystems
Of course, so much depends on the strategy of individual insurers, particularly how they are developing their digital brand and presence. That’s where APIs (Application Programming Interfaces) are increasing pivotal as the tech plug-ins that support this interconnectivity between digital services, the InsurTech platforms and, if necessary, legacy IT.
We’ve seen in the banking sector how the PSD2 regulation (a.k.a. Open Banking) has opened the doors to third-party apps and services by enabling instant and open access to customers’ data. There is no insurance equivalent yet but nonetheless, it could still represent a huge business opportunity for the industry.
In any case, API initiatives, such as the Open Insurance Initiative are emerging as the industry adopts greater use of digital platforms, spreading API understanding among incumbents.
tigerlab: An InsurTech digital platform success story
Regular readers of InsurTech Insights will remember this article I wrote last year. The theme was AI-enabled insurance platforms and in the articles I featured two of the digital platforms worthy of note; RightIndem and tigerlab.
To find out more about tigerlab, watch CEO Tobias Bergmann explain in this short YouTube video.
To begin, I asked Daniel to explain how tigerlab was working with the insurance industry as a digital platform. Daniel explained, “In the UK, tigerlab have been working with UK General Insurance, the largest Managing General Agent (MGA) in the UK. UKG are going to market with a range of specialist insurance products built and delivered using the tigerlab i2go digital platform.
“The first of these products is Wedding Plan Insurance. The flexible characteristics of our platform mean that UKG were able to deliver the Wedding Insurance product quickly and efficiently, directly into the general insurance consumer marketplace.
“Traditional, IT has always been on the critical path for any insurance product launch, often frustrating the rest of the business who want to get the product out into the marketplace. With tigerlab’s digital platform, the Wedding Plan Insurance product was delivered in a relatively short time.”
Digital platforms are flexible and versatile
As I was writing this article the latest tigerlab customer example to mention went live. This is for a UBI (usage based insurance) and telematics auto insurance product with a major auto manufacturer. This insurance product, similar to the Tesla insurance offering recently launched in the US, has been rolled out in a few countries initially.
The basis for the product is to directly link the telematics and real time data in the vehicle with the analytics and policy details on the tigerlab digital platform. By directly accessing the data, the digital platform captures from the auto manufacturer’s built-in telematic “black boxes” to use on their insurance products.
The key to success of the InsurTech digital platforms is that they offer a plug and play, modular approach for their corporate customers. In the case of i2go from tigerlab, this means that their customers can choose the features they want to turn on, from Policy to Claims Management; Rating and Quoting; Sales and Commission; BPM; and API Integration.
I asked Daniel to explain what this meant for his customers, “There are three key areas of benefit to our corporate insurance clients. First, it enables them to take a customer-centric approach when launching new products. It is all about making it easier to buy the product or giving their customers the means to resolve questions and queries quickly and effectively with the insurer.
“Second, it is also about speed to market and how quickly we can deploy the new product. And then once it is deployed, getting feedback on the merits or any gaps in the product and acting on them quickly, making changes based on the direct experience of the product in the market.
“Third, is the increased use of data and access to new sources of it. Whether that is IoT, telematics, big data or using AI to handle it. We are in a generation of unparalleled volumes of data from many more sources than we had as little as a decade ago. The i2go digital platform enables insurers to use these many new sources of data to better assess risks and make data based decisions with it.”
Hype or reality of digital platforms?
That all sounds great but is it real or hype? I asked Daniel to be specific on what actually improvements had been seen on, for example, the Wedding Plan Insurance product. Daniel explained, “UKG re-launched Wedding Plan Insurance product in late March this year on the tigerlab platform. After just 6 months UKG are reporting improved efficiencies in terms of access to data, consumer quote to conversion ratios and a measured reduction in the need for consumers to need human intervention.
“Importantly, UKG have seen an uplift of nearly 25% in sales since the re-launch of the Wedding Plan product 6 months ago!” Daniel Longhi, MD, tigerlab
To understand how this can be achieved from digital platforms such as tigerlab (when compared to a traditional software solution) is to recognise the richness of features built into the i2go core modules. In tigerlab speak these are known as micro applications.
These features and modules have evolved in part through the requirements gathered from across all of tigerlab’s clients worldwide, and through selling and distributing all types of different insurance products. These clients range from innovative InsurTech start-ups, to established MGA’s, to tier one reinsurers like HanoverRe.
‘Out of the box’ digital platforms
The result is that i2go is a very customisable, flexible, end-to-end solution, which can cater to omnichannel distribution, agnostic insurance line product configuration, and full ratings and policy management. Having all these features “out of the box” means that tigerlab’s clients are able to focus on their business requirements for the bespoke configuration, giving the business total control of how their product is sold, managed and underwritten.
The other key characteristic of the digital platform is the speed with which new products can be built, configured and launched. As Daniel put it to me, “the builds are very fast, most of them in a matter of weeks. This is down to the core being already built, with just the bespoke configuration elements of each project needing to be done. This saves a lot of effort in the product build phase.
“For example, having a micro application core that is interconnected via API allows us to very simply include any third party data enrichment tools our clients need. We can achieve this because the APIs are already built and ready to use. This gives our clients the ability to incorporate best of breed third party tools into their journey, increasing conversation, accuracy of data and customer satisfaction, all built at fast speeds.
And finally, from a cost of IT perspective, tigerlab, in common with most InsurTech digital platforms, operate a commercial model based on commissions. This allows their insurance clients to pay as they grow and reduces the upfront cost typically associated with the launch of products to market.
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The author, Rick Huckstep, is the Chairman of The Digital Insurer. Rick has been advising, investing and commentating on InsurTech start-ups since 2015.