The insurance industry is observing technology innovations and their adoption rate carefully. The impact of artificial intelligence, robotics, machine learning, driverless and connected cars, IoT, cloud, wearables and blockchain cannot be ignored. Many leading insurance companies are now focusing on themes such as “Re-imagining insurance” and “Shaping the future of insurance” and “Discovering the future.”
The current economic uncertainties, sluggish growth environment, geopolitical risk and cyber risks are affecting every industry not just insurance, so you are not alone here!
A “wait and watch” approach, hoping for the environment to stabilize, would be foolish in today’s fast-paced world. Insurers simply cannot confine themselves in a “current year” strategic trap. That approach limits your plans, actions and imagination beyond the current financial year and makes your behavior tactical.
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Here is how aggressively some companies are moving:
If you are thinking that the above companies are the industry biggies with deep pockets that can afford innovation, you are giving mere excuses. There are more than 80 insurance companies today that are already working or experimenting with insurtech companies worldwide today!
You cannot blame budget constraints or company culture/resistance to change, senior leadership lethargy or inaction in sponsoring innovation. I am confident that no CEO today would say “no” to fund or sponsor innovation.
It is true that not all startups succeed
(90% fail), so you must exercise caution while picking a startup. Note that a venture capitalist (VC) assessment of a startup must differ from an insurer's. While most VCs fund or invest in a startup by buying equity to make quick returns and move out, insurance companies must pick a startup based on how its offerings align and integrate into the company ecosystem for generating long-term value to its business and customers.
There are 1,000-plus startups today (backed by funding of about $18 billion) that are already challenging the business model of insurance companies and have potential to disrupt the insurance industry. You don’t have time to assess such 1,000 companies? Relax. In the context of your country, your industry, your line of business and the product lines where your company specializes, this list is much more manageable.
See also: Insurtech’s Pay-As-You-Go Promise
Insurance companies must seriously explore partnerships with the startup ecosystem. If you continue to focus on cost reduction or worry about finding the solution to legacy challenges or think about why business-IT alignment is not getting fixed in spite so many attempts, you will remain inward-focused and lose precious time for innovation. Any forward-looking insurance company cannot ignore the potential that insurtech has to disrupt the industry and redefine business models, plus the agility, passion and out-of-the-box thinking that startups can provide.
Insurers must partner with insurtech companies to reimagine insurance, discover the future and reshape the industry. The investment in insurtech is going to grow significantly during the current year.
Are you thinking you are too late to get involved? Let me assure you, you are not late!
The only caution is that you must act. The time is now!
