Despite a $2.6 billion global investment in InsurTech startups in 2015, many insurance industry professionals are still unaware of what what InsurTech is and how it is shaping their future.
What is InsurTech?
In an over-simplified world, many see InsurTech as being the technology behind insurance. In the real world, however, InsurTech is a term applied to the many segments of new technology that are disrupting the insurance space: smartphone apps, consumer activity wearables, claim acceleration tools, individual consumer risk development systems, online policy handling, automated compliance processing, and more. The below Startup Bootcamp infographic illustrates a number of the different segments of the booming InsurTech space.
Read more about the InsureTech space.
Is InsurTech a Threat to the Insurance Industry?
These numerous technological innovations that make up InsurTech have been primarily spurred by smaller, more entrepreneurial firms. Traditional insurance firms have been slower to adopt new methods, due in large part to the potential switching costs as they migrate to new systems or new processes. That said, spurred by increased demand for self-service and technological inputs from consumers, as well as increased competition from the smaller and more nimble firms, large insurance firms are more actively embracing new technology and seeking to be change agents within the InsurTech space. Read more.
InsurTech's Past, Present and Future
InsurTech came late to the game, mostly due to government regulation and the size and historical switching costs that insurance companies have had to bear to keep up with technology. The ever-increasing size of the insurable market provided additional incentive for entrepreneurs to begin to create innovative insurance products for the health insurance industry. Other industries began to follow suit. Most of the InsurTech roots gained traction in 2011. In 2011 there were 45 investors that made a total of $131 million in growth capital investments. Today, InsurTech is a $2.6 billion sub-industry that stands to either disrupt or empower the incumbents of the insurance industry. In 2016 we are poised to see increased investment in the space, as well as some dramatic changes. Read more about the future of InsurTech.
How to Harness the Disruptive Nature of InsurTech
In addition to the obvious instruction that you should be "embracing technology," there are several items that you need to act on in order to harness the benefits from InsurTech's disruptive nature. Evaluate and simplify processes. Evaluate the four Ws: who, what, when and where:
- Who is involved in carrying out a process? Make a list of who is involved in different processes.
- What is happening in the process? Brainstorm a list of these process points.
- When are customers connecting with you? Introduce a 24/7 self-help approach.
- Where are customers able to access your services? Add a video conferencing option.
Read more about how to harness InsurTech.
No matter the way that you leverage InsurTech to your advantage, it's important to remember that you need to be flexible and open to change. Your openness will ensure that you are not left behind as InsurTech surges forward.
Learn more about the role data will play in the future of insurance in Vertafore's new Digital Disruption ebook.
Vertafore delivers cloud-based insurance software and services that transform the business of insurance. With the largest customer-base in the industry, more than 20,000 agencies and carriers leverage Vertafore’s insurance solutions that are built on today’s most advanced cloud, mobile, and information technology platforms. Learn more and contact Vertafore.