Insurance Edge chatted with Andre Symes from Genasys Tech UK, looking at the latest trends in insurance, finding unicorns and how the buzz around insurtech is pulling in a new generation of talent, keen to shake things up.
IE: Do many insurtechs start with the idea that newer is inherently better than the traditional products?
AS: Of course every new start-up thinks their product is better, and fills a gap in the market. But how do you convey that to the people who might buy it? There’s also timing to consider in all this innovation, because let’s say you had a new banking app back in 2008 and tried to launch it then, it might have had a very difficult time.
Right now, there’s a strong will to change and insurance is a thriving industry compared to some others, so the chances of success are better. That said, the core of many insurtech products is exactly the same as, say, Uber or Amazon; you take everything that already exists in terms of tech, and make it work better, plus build in brand appeal. Basically, you’re mashing up an existing set of products and creating something that looks brand new.
IE: Do you think it’s sometimes hard for start-ups to know how thin the margins are within some insurance processes and services?
AS: Yes that is true sometimes and I think a study found that various companies in the underwriting or claims chain all want to get paid a certain amount, otherwise they cannot trade. The thing is that in the long run AI and RPA are going to keep squeezing those admin processes, so companies either adapt to that, or a new insurtech start-up will solve the problem. That in turn, may make their service suddenly appear outdated.
IE: You look at some markets globally and they are slightly different in terms of compliance, is that another area where insurtechs can encounter problems?
AS: Possibly, but if you look at the venture capital that is going into projects and new companies around the world then you realise that any local law/regulation issues are not putting many people off.
The big danger for both traditional insurers and insurtechs right now is large companies deciding they have the tools to do all this insurance stuff for themselves. The Tesla thing shows how a manufacturer can decide that they have the brand appeal, plus the tech, to make car insurance work for their customers. It only takes the same conclusion to filter through at Apple, Amazon or Google and a truly disruptive product could be launched that suddenly takes away a huge chunk of business.
The solution to that danger is for insurers, brokers, MGAs – everyone – to make their products better, more customer-friendly and constantly innovate. That in itself puts off disruptors, because we are back to thinner margins, so there isn’t the fat that can be trimmed off, every business is lean and competitive.
IE: Is it too easy for insurtechs to spend that VC cash on hipster cafes and table tennis in their offices?
AS: You know what, insurtech vs insurance sounds a great deal cooler, more interesting. My feeling is that insurtech has brought in a new wave of talent, all keen to change things and if that talent demands a different office environment then that’s fine. The bottom line is that the work needs to get done, for investors and for consumers.
The thing that struck me recently at a claims conference was that big insurers see much of the insurtech company pool as a kind of nursery school. Yes, they want to encourage the younger generation, but in some ways the big players are finding it easier to put money into these start-ups, instead of doing the hard yards themselves. Some big companies are better than others of course, but there is a danger that the major brands aren’t seeing the bigger picture, which is that younger consumers just want things to work, seamlessly, in the background on their smartphone.
My take is that 95% of what big insurers need, in terms of tech, to truly transform their offer is already built, it already exists. They just aren’t doing it themselves, but outsourcing the R&D to insurtech companies.
IE: Are there too many apps essentially trying to solve the same basic insurance problems?
AS: Yes definitely. Tech is saturated on the client facing side, without a doubt. If you visited the Vegas show recently then you will have seen hundreds of companies, all pitching fairly similar ideas, maybe one or two percent different from their rivals. There are too many people concerned with creating funky logos, instead of solving the problems within the insurance chain. The key question everyone should ask of any insurtech is; how does this add value to the existing process, or solve a problem, rather than try to create something brand new for the sake of it?
Every insurer or broker needs an innovation hub, so they test the latest technology and apply it where needed. That way you become your own insurtech, instead of waiting for the kids to re-invent the tech wheel.
IE: Food for thought Andre, thank you.
This interview is sponsored content, produced in association with Genasys Technologies