The innovation imperative continues
Article Synopsis :
Innovative technologies and business models are changing the way people think about insurance — giving rise to new products, services and opportunities to enhance customer value. To spur innovation many insurers are turning to InsurTechs, via partnerships and/or formal investments.
“The innovation imperative continues” from KPMG offers guidance to insurance CxOs on evaluating InsurTech investments, and innovation in general. Specific recommendations include:
- Define current problems: Too often, companies get caught up in an exciting new technology without looking at how that technology can help them. Before deciding which innovations to invest in, define the problems you want to solve.
- Identify InsurTech opportunities: Once the problems have been defined, map to relevant InsurTechs and reach out.
- Address integration challenges: Technology is only as good as your ability to implement it effectively. As part of due-diligence, evaluate InsurTech integration with your own operations. This is both a technical and a cultural exercise.
- Bring together the right partners: Insurers are looking for innovation; InsurTechs are searching for scale. Many successful InsurTechs have developed strong symbiotic relationships with traditional incumbents. You too can make it work.
Key high-level trends shaping your specific InsurTech strategy over the next 12-24 months include:
- Technology enablement: Legacy systems are a big barrier to innovation for incumbent carriers, and InsurTechs know it. Expect a wave of technologies – such as application program interfaces (APIs) – aimed at accessing/exploiting legacy systems.
- Cross-industry applicability: Keep an eye on technology innovations in other fields such as retail, banking and automotive. As these sectors converge with insurance, they’ll provide new opportunities as well as threats. Seek out partnerships.
- Proactive technologies: Expect a wave of technologies to help insurers provide more proactive services to customers. Examples include Helium, which provides environmental sensors that notify users when conditions change; and Kinetic, which has designed wearable devices aimed at reducing workplace injuries.
- Improved customer experience: Most insurance companies have immense amounts of data on hand. But they’re not able to use this data to proactively provide tailored services to customers. InsurTechs are targeting this problem, aiming to help insurers vastly improve customer experience through data and analytics.
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Digital Insurer's CommentsInsurers need to do more than understand the importance of innovation and the opportunities presented by InsurTechs. They must take the next step, actively identifying, leveraging and integrating InsurTech solutions in their enterprise environment. Given the clash in technologies (new v. old), and cultures (also new v. old), easier said than done.
Insurers able to overcome the significant challenges, able to make the most out of working with InsurTechs, whether through acquisition, direct investment, innovation labs or services agreements, are climbing the steep mountain to market leadership.
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