TLDR Are the InsurTech advocates/enthusiasts ‘preaching to the choir’ and
considering that to be conversion of the masses?
Within the orb of InsurTech press, social media, and conferences one would think innovation and migration to adoption of the most clever of tech and innovative practices is de rigueur within insurance- if one a believes the continuous stream of congratulations, curated lists of players, descriptions of new processes, investments and change that are seen each day. No need to proselytize when the audience is already converted.
But has the message been adequately delivered to the billions of insurance customers, millions of insurance industry staff, and $5 Tn of insurance business conducted? I’m unconvinced based on recent news…
- I noticed that my excellent colleague, Rob Galbraith (aka the ‘Most Interesting Man in Insurance’) has reached the 1200 copies sold mark of the timely and authoritative insurance book, “The End of Insurance as We Know It.” Twelve hundred copies is remarkable, but with a million or so insurance staffers in the U.S. alone one would expect at least 50,000 copies to have been purchased, or provided by carriers- if staffers were encouraged to participate in knowing the future of the industry. The book is a comprehensive outlook on insurance as it is now, and how it will be – invaluable information for insurance employeds around the globe. Far better topical industry guidance than, “Who Moved My Cheese” , a clever book distributed to millions in the late 1990’s.
- Cary Anne Nadeau, RSP (Really Smart Person) vented her frustration with what was noted in a recent The Economist article, The Future of Insurance is Happening Without Insurance Firms, where the reality of innovation investment not being a front burner concern for insurers is cited- Zero of the top 1000 public companies by amount invested in R&D were insurance carriers. Some large carriers in China may be exceptions but by and large as an industry insurance seems disingenuous with its innovation chest pounding, if on average only 3.6% of revenues are spent on research, a rate that is per the Economist less than half that experienced by banks. And banks can’t be proud of that level, either.
- The recent Ridgecrest earthquake in California highlighted two insurance issues- 1) earthquake damage is typically not covered by homeowners policies (that’s not news), and a really cool alternative to item 1) is item 2) earthquake parametric coverage is available in many California jurisdictions from insurer Jumpstart, cover that can provide $10K immediately when the temblor/shake time index is met. The policy pays immediately and is approximately $20 per month. Very cool. What’s not cool? The company’s market penetration is not yet counted in the tens of thousands of policies. Immediate payout, no deductible, no claim filing, no hassle. Why not more participation? Perhaps parametric cover is too exotic, not a lot of industry endorsement, or simply expectation inertia. Want to know more? This is a good article to read https://republic.co/jumpstart/reviews And if you are really interested, founder Kate Stilwell is encouraging crowd-sourced investment in the firm.
- There are many InsurTech and innovation conferences held across the globe, educating, introducing concepts, and vetting ideas. Who attends these? Typically the same set of influencers, vendors, academicians, and influencers. The missing cadre at these events is- those who serve insurance customers (internal and external) every day, the ones who implement change on the front lines. It’s confounding how the insurance industry discourages (and sometimes prohibit) staff from being involved. This same principle applies to all the great discussions in social media- where are the staffers?
- Blogger extraordinaire, Mike Daly, expounded on the Economist’s commentary on innovation, extending the thoughts to needed engagement of claim staff (see his Linked In piece, https://www.linkedin.com/pulse/future-insurance-happening-without-firms-mike-daly/):
“In theory, startups should provide valuable additions to insurers’ toolbox….That suggests that rather than trying to re-invent the digital claims wheel they should avail themselves of competent and proven digital platforms like Snapsheet, RightIndem or 360Siteview.
That strategy would deliver reduced costs of claims, higher customer satisfaction and more efficient/happier claims teams freeing up some time and money to focus on product innovation.”
Don’t re-create the wheel – instead leverage the ‘organizational torque’ innovation can generate.
- There’s an innovation dirty secret- cybercrime, where innovation for bad is exceeding the typical application of innovation for good. The bad guys work 24/7, the good guys work the day shift. It’s not an insurance only problem, but for every Desjardin Bank breach, https://www.cyberark.com/blog/data-breach-at-desjardins-bank-caused-by-malicious-insider/ , there are many unpublicized gambits. (Thank you, Mica Cooper ) There’s not enough discussion of cyber crime, cyber ineptitude, or gambits that are swept under the rug, and the need for penal consequences where company negligence is the proximate cause of data breach. GDPR fines alone won’t change this. And why isn’t the topic more front page news?
- All around InsurTech mensch, Dr. Robin Kiera reported recently through his Digital Scouting site about insurance companies that rank highly in terms of digitization/innovation. A well-curated list generated through use of a proprietary algorithm that weighted toward digital communication and digital integration. A fine undertaking with meaningful output. A quick comparison, however, of digital use rankings with rankings for US P&C companies in terms of claim customer satisfaction as presented by JD Powers finds some contradictions with how innovation is apparently reflected in customers’ claim experiences:
I’ll let the reader fill in the blank bullet point- there are many other examples.
Put all the revenues together for the global InsurTech cadre- some hundreds of billions $US of the $5.2 Tn global activity. Not company valuations, but NWP. So has InsurTech engaged the hearts, minds, and risk management wallets of the masses? Not by financial or insurance culture standards.
There are markets that have grown from little to large solely due to opportunities provided by InsurTech- consider the insurance market in China, for example. The advent of ecosystems provided fertile digital ground for insurance growth. And customers don’t even notice because that is how the industry has been from its inception for most customers.
As for tenured or under-served markets- the industy needs to engage the customers and staffers better if InsurTech force is to overcome insurance inertia.
Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).