Perhaps the single most important theme from the 2018 InsureTech Connect convention in Las Vegas (October 1-3) was that disruption is not coming; it’s already here. For the 6,000+ attendees, the impact of disruption is already felt, and many are either adopting new tools and business models to interact with customers and partners or they are adapting their business approach to the changing environment. Either way, companies that are not adjusting to disruption risk losing in the marketplace. The conference demonstrated that the insurance industry needs information about the implementation of tech, and its effects on the industry. The clear message is that technology trends are critical, inevitable, and changing the business to the core.
Within the broader theme of disruption, two related threads were present. For the technology providers, the focus was on how to integrate solutions from other industries into the insurance process. For insurance carriers, the issue is how to adapt business processes to accommodate changing customer preferences driven by technological change. The overlap, essentially the purpose of insuretech, is where the real excitement is.
In the leading keynotes, one notable statement was that Tech does not change business, rather it is that business models change business. This was illustrated by a case study on Credit Karma which took a product (personal credit reports) which had been a paid service and used it as a lead driver for lending and financial advice. People who want a credit report now get that product for free, but at the cost of reading advertising for credit products. Throughout the industry, new business models that leverage technology are driving change, often putting the customer and not the product, at the center.
Expanding further on the theme that tech does not change business, other speakers noted key trends, enabled by tech, that are changing the business model. These include a growing expectation of a personalized experience by customers, automation technology changing speed and accuracy of every step in the insurance process, and growing partnerships and outsourcing for technology solutions, IT and special coverages.
Identifying where and how disruption will have the greatest impact was covered in a presentation about coming to terms with disruption. The speaker pointed out that the greatest disruption occurs where megatrends collide. For the insurance space, the relevant collision is between behavioral and technological trends. Companies that are aware of the trends, and their implications, have the option to self-disrupt, or can to react to disruption. Successful companies will self-disrupt.
Breakout sessions covered both technology and insurance topics, with a focus on the intersection between the two. One such session was for newly emerging companies or announcements of significant changes. Three interesting uses for technology were shared:
- Targeted towards micro-coverage, Cover has a program with Shopify that allows customers to take a photo of an item and get coverage for the item. Future applications are likely, including coverage for tradesmen tools, art, and personal items. Cover is also offering a way for customers to split bills between users. Currently it is intended for use with auto policies where a parent/owner wants a family member driver to share in the premium payment, potentially at a different rate.
- Jumpstart, another company that announced new products is combining earthquake risk with a micro-policy. This program, intended for use by homeowners who live in designated earthquake risk areas, allows homeowners to purchase micropolicies, under $20,000 that will “jumpstart” their recovery and provide some liquidity until the major homeowner’s coverage kicks in.
- Parsyl offers a tracking system for shipping that makes it easier for carriers to insure a package against spoilage or other damage. Using a small device inserted into the package, Parsyl can determine if the pack was subjected to temperatures outside a selected range (important for pharmaceuticals and foods) to G-forces beyond set tolerances (for fragile items) or if transit times exceed set limits.
One session that we noted which emphasized the intersection of technology with insurance was about how Hippo and Comcast have allied to link the home connectivity from Comcast’s digital network and IoT with coverage from Hippo. This type of link represents a new collaboration between the carrier and the technologists to offer multi-faceted bundles that include a wider variety of inter-related products.
Other technology trends of note at the jam-packed event:
A Cyber session illustrated the importing of talent from outside industries, as most of the panel was new to insurance as a market. Cyber insurance has been a significant growth area for insurers, with challenges ranging from defining what cyber risk is exactly, to how it fits with other coverages. An interesting point made was cyber risk cannot be assessed with historical data like other risks. Dominant technology discussed was AI for both risk assessment and cyber-crime prevention, including the premise that criminals at some point will be using AI themselves.
A Mobility session reviewed insuring drivers in real time based on behaviors as opposed to demographics, using telematic technology. The tech was discussed through the lens of both mobile device and in-car tech. This fits with the greater trend that customers want a personalized experience.
All in all, the InsureTech event highlighted the importance for technology and insurance companies to collaborate and build new business models, offer new products, and change how they interact with customers. This does indeed qualify as a disruption from the old business models but is also a disruption that can create a more customer-centric industry.
As the wave of disruption and emergence of new competitors and business models continues, competitive insight and planning is ever more important. To learn more about how Fletcher/CSI and our 30 years of experience can help you stay ahead of the market, please contact us. For insurance related companies, contact Erik Glitman at [email protected] or for technology related companies contact Mark Gigliotti at [email protected]