If you’re like many professionals in the P&C industry, you’ve no doubt read about all the promised disruption of InsurTech and the billions being invested by VC firms. For some, this new breed of competition looks like cause for uncertainty. How will the roles of underwriters and actuaries change? What about agents and producers? Will these new business models overcome the barriers to entry and undercut the industry the way Uber and Airbnb have?
The good news is that nimble, tech-savvy companies are riding this wave, rather than letting it take them under. This industry that has traditionally taken a stand-offish approach to new technology is demonstrating a shift in attitude and a willingness to with new tech, not against it. A recent study published to the research firm International Data Corp (IDC) reports that worldwide, spending on IT will climb from around $936 billion this year to $1.1 trillion by 2020. Cloud-related services, business process outsourcing and systems integration make up the bulk of this increased spending, but predictive analytics and R&D spending is also on the rise. In fact, analyst firm Celent reported that in 2015 data analytics initiatives outspent core systems replacement for the first time in over a decade for P&C insurers.
In addition to making greater investments into their own technical infrastructure, many companies are creating joint ventures with InsurTech start-ups and creating divisions within their own organization that focus on innovation. Liberty Mutual and USAA, for example, are backers of Snapsheet, a new entrant that’s developing virtual auto claims technology and services. These companies recognize that while established insurers have the upper hand where financial resources, reputation and big data are concerned, the modern insurance consumer is demanding change in the form of easier, more transparent interactions with their insurance company.
This is not to say that all InsurTech startups will have the longevity to make a lasting impact on this well-established industry. Like many tech disruptors of the past, some are rich in drive and outside-the-box thinking, but poor in the industry-specific expertise that’s needed to stand the test of time. Having a great idea is not enough. The value and sustainability of this idea will have to be tested and retested over the course of months and years to come. Supporting this test-and-learn approach requires a seismic shift in the culture of many insurers. Insurers will benefit from keeping a watchful eye on these disruptors and looking for ways in which new ideas can be applied to old business to reduce costs, increase profitability and improve the customer experience.
ABOUT THE AUTHOR:
Kirstin Marr is the chief brand advocate for Valen Analytics, paving the way for prospective clients to lead the innovation initiatives required to compete in today’s marketplace. She has a passion for building companies that invent leading-edge technologies to improve customers’ lives and solve the inefficiencies that exist in many traditional marketplaces. Kirstin also has a long-standing commitment to philanthropy and community leadership. She was most recently Board President for Colorado MESA, a non-profit that serves underrepresented and economically disadvantaged students to graduate from college and successfully pursue careers in Science, Technology, Engineering and Mathematics (STEM). She also co-founded a non-profit to benefit the Teen Lounge at Children’s Hospital Colorado.