In this Opinion piece Andre Symes, Director at Genasys Technologies looks at the insurtech investments that many companies in the Insurance sector are making right now, and asks one simple question; where is the benefit for the customer?
Digitalise or die is the mantra for insurance CEOs.
Faced with the need to transform core business functions such as policy administration and claims while push their traditional distribution boundaries to find new ways to connect with their customers, insurtech has become their go-to catalyst for change.
M&A represents a natural solution to well established businesses looking to accelerate the digital transformation of their traditional business models. It’s no wonder then that we saw the highest ever volume of insurtech start-ups deals last year, with a value of well over £2bn.
However, many predict that we will see far more partnerships emerge this year as incumbents seek to collaborate with rather than acquire start-ups. The inaugural “World Insurtech Report” from Capgemini claims that over three quarters of insurers are looking to partner to develop a new solution.
And there’s no shortage of potential insurtech partners.
Hardly a week goes by it seems without news of yet another fledgling business securing funding. Just the other day, over half the stories included in one of the regular insurtech newsletters I receive covered businesses announcing yet another round of successful funding.
We’ve seen a host of niche innovators emerge, all targeting very specific needs within the customer service and customer experience environments – but how many have actually delivered any true benefit yet to these customers?
I wonder whether those who should be at the centre of the digital revolution have been forgotten – the customers.
The impetus behind the technological revolution going on in the insurance industry was originally the need to adapt to and anticipate changing customer demands. The whole point was to look for new ways to use technology to solve a business issue in how to improve customers’ lives. When I read about some of the start-ups looking to break into the insurance industry, I find myself asking what is the point of their tech?
Don’t get me wrong. I’m not anti-insurtech, quite the opposite in fact. My concern is that many have become side-tracked with the insurance industry’s voracious appetite for shiny new technology and are creating technology solutions for technology solutions’ sake.
Of course new businesses have to successfully raise cash to transform their ideas into reality. I simply don’t see that announcing that you’ve closed off your Series A funding should be considered a measurement of success. It’s an endorsement that those in the know see potential in the idea and the technology and are willing to help take it to the next level.
But what I’m really interested in hearing about are the true measurements of success that these insurtech start-ups are applying to their businesses such as decreasing client fall off in the sales process, or improving claims turnaround times, or simply making insurance more palatable for the average policyholder.
I’m not naive enough to expect a start-up to be able to report policy sales going through the roof straight away, but there has to come a point when emerging businesses really prove that their particular niche is working for the customer in whatever sector of the industry they may be.
Right now, it feels like we’re in a space pen versus pencil arms race.
We’re creating insurtech echo chambers with a plethora of different forums and consultancies and promises – but little in cold, hard delivery to customers.
We need to ask ourselves, how do we actually measure the success of insurance technology or insurtech? I think that boasting about how much capital you are raising ultimately sends the wrong message to the people who we want to buy our insurance products.