Insurers are having to come to terms with the fact that technology is changing their industry, but more importantly the everyday experience of their customers. The industry is undergoing what could be described as an ‘ecosystem disruption’ with tech-savvy players entering the insurance sector and leading with evolving, innovative and opportunity-led goals.
While there should be excitement for the potential of technology that can change the industry, there is an urgent need to be mindful of the challenges that both Insurtechs and Insurance companies need to overcome, together.
It is not surprising that it won’t be simple; traditional insurers (some that are more than 300 years old) and 87% of companies agree that technology is climbing at an exponential rate. It is one thing to jump on board and spot a popular trend, but to make it profitable for your company is a different ball game altogether.
Being at the forefront of new technology will lose its impact if it is short-lived
Innovation can be risky. Insurance is a data-hungry sector in which advanced analytics and AI will act as a key factor in improving customer-centricity.
It is not unheard of for organisations, including Insurers, to focus their efforts on a short-term revenue goal. Sure, you can implement a tech-heavy piece of software that looks good on the business sheets and puts you ahead of a competitor, but without the correct data set up and delicate approach to an already established system – it can go wrong.
Equally, Insurtechs need to understand how they can integrate themselves into an industry that does want to change but doesn’t know how to just yet.
The Insurtech sector is shiny, new and full of promises with technology that is on another level compared to that of traditional Insurers, including legacy platforms that are vital for system integration; and lack such cutting edge capabilities. Insurance companies will be going on their own ‘transformation journey’, trying to break down the walls of a traditional, decentralised house.
Innovation can only go so far unless it is embraced on a daily basis. Insurtech is not a magic wand that spontaneously solves all problems; it requires a commitment to implement it into the everyday workings of the company. There is no opportunity to be scared of new technology, this attitude can have a crippling effect on other aspects of the business if innovation is self-contained to just one area. An effective recipe that includes strong company culture, financial backing, an innovative strategy and an open mind are all important.
Is tech innovation enough to entice new tech talent into the sector?
According to a report issued by the Insurance Journal, the beginning of 2019 saw a 66% increase in insurance companies looking to increase their staff size focused on tech-savvy masterminds.
The insurance industry has often held the perception of being a traditional, corporate workplace and it is in a fundamental state of repositioning itself as a forward-thinking and progressive sector. For young tech-savvy professionals to see themselves working in insurance, there needs to be a focus on building an image that is accessible and attractive to the next generation. These tech ambitious individuals want to make an impact and creating such a culture will allow them to see career opportunities available to them.
Retention of staff and recruiting skilled talent still remains a fundamental part of an insurer’s success; a connected and thriving organisation needs good people. A machine can only function to its full potential if all the cogs are turning in the right direction
What do we need to take away from this?
A widely developed, well supported and innovative tech strategy will be a huge benefit to insurance companies taking their plans out of the draft stage and into production.
Moreover, the support from Insurtechs is needed to help the traditional Insurers with not just their leap of faith into new technological advances but, also their adjustments in cultural functions and company outlook.
Another step forward in acknowledging the cultural shift is most importantly leaving behind the old mindset and perception of the insurance industry to fill the demand with emerging talent that is missing from insurance.
Insurers need to embrace innovation across all areas of the business and cannot feel threatened by new start-ups- who at the end of the day are designed and built on a structure completely different from theirs.