Liga Asuransi – Dear readers. I hope you and your business are always in good shape and continue to grow. This time we will review the development of insurtech around us today.
Insurtech is the joint implementation of hardware, software, and user interfaces to address inefficiencies in the insurance process. Industry specificity solutions and more recently established market players or solutions intersect in its development.
Annual insurtech startup funding volumes have grown substantially since 2015. Global funding crossed the $2.5 billion mark in 2015, up from an average of around half a billion over the previous three years. Insurtech startup funding continues to be strong, reaching a record $7 billion in 2020 despite the pandemic and surpassing $15 billion by 2021. But what is driving this rapid growth in insurtech? Various factors contribute to development: customers, distribution, regulation, and technology.
Customer Experience
Today’s consumers are becoming pickier. They want faster service and the application and claims process to be simplified. Intending to improve the customer experience, many insurers foresee a continuous shift from traditional distribution channels to digital and direct distribution.
Another trend is around more customer-centric products. Several companies are developing more straightforward ways for consumers to have all their Insurance in one place. Surround Insurance, for example, is a startup MGA that provides subscription insurance for city dwellers that covers general needs – renting, driving, biking, freelance, and more. Blink, backed by century-old insurer Chubb, focuses on customizable coverage options and plans to provide a list of coverage options that can be both P&C and Life and Health so customers can choose what’s important to them without trying to buy a separate policy.
Many carriers provide their customers additional free or discounted services to strengthen their brand of delivering value beyond traditional insurance services.
Distribution
There are also direct-to-consumer approaches that include digitization. Insurtech assists in the transition to digital and direct channels and provides a way for traditional distribution channels to compete in the digital customer experience. Zelros, for example, is a startup bringing an AI-powered digital platform to insurance companies and agents. Recently emerged standards documenting model performance over sub-populations, providing transparency on how AI models perform over populations more susceptible to potential bias.
Laws
Anti-rebate laws are anti-rebate regulations introduced by US regulators. These are potential barriers for insurtechs focusing on additional benefits for customers beyond the coverage of standard insurance policies. Many countries have considered exceptions to strike the right balance between protecting consumers and encouraging innovation. Many regulators are willing to interact and have open conversations with the industry, such as Plug and Play’s insurtech: Bridge the Gap event to connect regulators with insurtech startups and corporate partners. In addition, NAIC formed an innovation and technology task force to discuss and explore the implications of insurtech on regulations.
Technological advances drive the growth of insurtech
Legacy systems and IT challenges are embedded in most companies, making them the most significant barrier to innovation. As technology costs decrease and the benefits of adopting a new technology become clearer through other successful adopters, the balance between benefits and costs becomes an easier decision.
While complete system transitions can be huge, expensive, and disruptive, some companies provide application programming interfaces for integration between legacy systems and modern solutions, which can serve as stepping stones to automation.
Opportunities in insurtech
Insurtech can be useful in several areas along the insurance value chain, including underwriting, quoting, binding, and publishing; policy administration; claims and settlements. With many opportunities for actuaries to get involved.
Startups are not the only ones in the ecosystem; large operators and established players are also part of the insurtech space by focusing on innovation and, in some cases creating innovation labs within their companies. At the same time, the insurtech industry focuses on innovation and disruption, which does not necessarily mean competition with many insurtech solutions that partner with insurance incumbents by providing relevant technology and ease of adoption.
In addition, the insurtech landscape is geographically diverse. Silicon Valley isn’t the only place with startups and innovation – we’re seeing startups and incubators/accelerators thrive across the US and in many countries.
The Role of Actuaries in Insurtech
Insurtech adds value across a broad spectrum of the insurance industry. As general insurers and risk gauges, actuaries can add value to many of these spaces. Previously there was a narrow view of insurance experts—when issuing a product or creating a new backup requires their expertise. As insurtech disrupts today’s insurance industry, companies must leverage their strong actuary expertise and broader insurance knowledge base to innovate and integrate new ideas.
Actuaries are the bridge between insurtech and the insurance industry. They have expertise in insurance theory and broad business skills applicable to many roles, and they understand and can measure risk. Within the next 5-10 years, we need to consider what kind of training actuaries need to become essential players in the insurtech and insurance industry.
Undoubtedly, we are seeing changes in the insurance industry, primarily driven by the new types of solutions created by insurtech. The need for technology and actuaries who can use and understand that technology to implement analytics is critical. Indeed, actuaries’ broad business understanding enables them to serve effectively in technical and non-technical roles. Insurtech’s influence on the insurance industry will only continue to grow. Actuaries who embrace this change can become a bridge between insurtech and traditional Insurance, making a more effective contribution to insurtech innovation.
So for Actuaries, this is the time to change and adapt to keep up with current insurtech developments because changes can happen quickly.
Source: Digital Insurance
This article was brought to you by L&G Insurance Broker. A smart insurance broker.
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