A the 2017 PCI Annual Meeting, a panel discussed the impact of innovation in the insurance industry. The panel included:
- Tony Trivella – EVP, Treaty Division, Hartford Steam Boiler
- Tim Attia – CEO, Slice Labs
- Jacqueline Lesage Kraus – Managing Director, Munich Re/HSB Ventures
- Ed Largent – President, CEO and Board Chair, Westfield Insurance
- Keith Moore – CEO, CoverHound
What is different about innovation in the insurance industry?
- Customer expectations are changing across all industries. Insurance is just part of that bigger picture.
- An industry that is looking to take on new technology to improve what they do is not disruption, it is positive change.
- Innovation used to be driven by vendors looking to bring new services into our industry. Now we are seeing innovation being driven by companies willing to go to market on their own and take risk.
- Is the innovation is filling a need in the marketplace that is positive? Innovation just for the sake of innovation is not sustainable. With ample capital available, new companies can start a new carrier on their own quicker than they can integrate into another carrier’s claims system.
- There are regulatory barriers to innovation and distribution.
What is trending now in insurance innovation?
- We have seen companies that started providing services to the insurance industry go on to become risk-taking entities. We are seeing a heavy focus on data science. We are also seeing an evolution from InsurTech to RiskTransferTech. There is innovation around the actual transfer of risk.
- For years, innovation in the insurance industry focused on the process, not the product. We are seeing more of a focus on customer interactions and on the product itself.
- Specialization is key to rapid innovation. If you are trying to do too much, it bogs you down. Speed to market depends on being lean and nimble.
InsurTech – is it a threat or opportunity to our industry?
- Small percentage of InsurTech is focused on true disruption. Most are focused on improving the customer experience and supply chain.
- Most InsureTech companies will fail. Some will be absorbed by their clients. Some will become an integral part of the industry. InsurTech can be an opportunity.
- Most insurance companies lack a substantial budget for research and innovation. The best way to do this is to invest in these InsureTech companies rather than trying to do things by yourself.
- Start ups can innovate, but lack scale. They need to partner with insurance carriers to achieve their goals.
- The lack of speed and agility in the insurance industry has led some InsurTech companies to take the next step and become risk takers to compete within the industry.
How should the insurance industry be addressing innovation?
- We need to embrace it by partnering with InsurTech start ups.
- The recent InsurTech event in Las Vegas had over 4,000 attendees. Clearly there is interest in this area.
How does InsurTech and carriers find the right partners?
- Carriers look at the financial viability of the start up. How far along are they in their capitalization process?
- InsurTech needs to be able to sell their dream and raise capital.
- You should work with multiple InsurTech and carrier companies for comparison purposes. You do not know what’s good if you have nothing to compare it to.
- You need to partner with someone that matches up well with your intended scope and scale. Innovation that only impacts a small percentage of your clients and prospects is not very useful.
What trends are you seeing related to supply chain disruption?
- Opportunity for supply chain disruption is with smaller businesses, not large complex risks.
- Technology can replace agents when it comes to distribution, but it can’t answer questions.
- There needs to be a balance between speed of distribution and the knowledge and expertise of an insurance agent.
- There is opportunity to lower expenses relative to the supply chain.
What are the current opportunities with technology?
- Data, including data from the internet of things, has the opportunity to reduce claims and prevent losses.
- Cyber provides the opportunity for constant touch points with your clients. These constant touch points build the relationship.