Blog: From disruption to collaboration - why insurtechs need to change the narrative in 2020

future-wearable-tech

The coming year is set to be something of a watershed for insurtech. For years, the conversation has revolved around the role that technology will play across various insurance markets and the extent to which it will disrupt this centuries-old institution. Now, we’ve arrived at a tipping point. Craig Foster, CEO at Leakbot, believes far from disrupting the insurance sector, insurtech is beginning to define it and providers now have a crucial role.

Record amounts of funding have been pouring into the global insurtech space in recent years. This increase in investment is symptomatic of the growing momentum shift that many in the industry have been witnessing, with proof-of-concept trials beginning to progress to full scale rollouts across a wide variety of insurance lines.

The challenge now for the providers of these tech-enabled products and services is twofold: one, to demonstrate why insurtech must be a vital strategic focus for any forward-thinking insurer; and two, to concentrate on how they can work with insurers to improve offerings and ultimately deliver a better experience and greater value for the end consumer.

For companies in this space to shift the narrative in the coming year, there are three key things that they must do.

The first may seem counterproductive, but it’s a vital step. For the sector to progress, providers must look to move beyond discussions around the technology itself. Fundamentally, insurtech isn’t about developing exciting tech. It’s about delivering value to insurers by enhancing their capabilities to solve real-world problems. The end goal has always been to elevate the industry by allowing insurers to address more segments of the market and better serve their customers’ needs. Accordingly, the beginning of that journey is the realisation that the details of the technologies themselves matter far less than their ability to solve real, high-value problems for insurers in creative and efficient ways.

Second, insurtechs must focus on how best to use individual and personalised policy data to help migrate insurers from reactive to proactive services. Devices powered by the Internet of Things will be particularly key in enabling insurers to pre-empt the dangers that are more likely to lead to serious, costly insurance claims across a multitude of sectors. Devices can allow domestic property insurers to detect and prevent escape of water damage – which accounts for more than one in four of all UK household claims – in much the same way that black boxes and wearable smart devices enable proactive monitoring in the vehicle and health insurance industries respectively. What’s key is that the bespoke, data-driven insights generated by these devices – often at the sort of granular level that would otherwise be impossible for insurers – are put towards reducing the impact of costly insurance claims, as well as mitigating and pricing future risk accordingly.

Finally, insurtechs must demonstrate their role in reshaping customer engagement and interaction and how this will fundamentally evolve the relationship between customer and insurer – to the benefit of both parties. These companies know that the highest level of benefit for customers comes from products that don’t operate in isolation as simple monitoring or data-gathering devices, but which offer a practical output function. This encourages customers themselves to take a more active role in shaping their own policies by proactively demonstrating positive customer behaviour – as with the example of car telematics, which gives drivers the incentive to act more responsibly with the offer of reduced premiums.

This brings a direct benefit to the customer in the form of cost savings and greater levels of insight for insurers. The ability to know more about how customers are using and interacting with their services is the kind of strategic insight that’s too valuable to forego.

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