InsureTech Connect (ITC) was bustling with 9,000 attendees, including carriers, agents, brokers, and a whole host of solution and technology providers, both incumbents and startups alike. With over $4 billion in insurtech funding so far this year, the industry is full of inspiring ideas on how to improve insurance. As the industry and the insurtech ecosystem continue to mature, however, there’s still a struggle to connect all the pieces and scale effectively. Here are five key takeaways from the conference.
Everyone is talking about AI, but how many are using it? At past conferences, it has felt like attendees were on a hunt to solve problems using AI. Now, we are seeing real implementations of AI in claims, fraud, and internal knowledge management. All these use cases are still standalone solutions focused on operational efficiency and productivity gains. We have a long way to go before AI takes on the challenge of profitable topline growth. But significant advances in the technology and pressure from the C-suite to deliver ROI are leading to more sophisticated conversations about AI. Carriers will need to improve their data postures if they want to scale AI and see some real gains that contribute to operating performance. To have nice things, you first need to have nice data; very few are able to do this at the moment.
A refreshing focus on fundamentals has emerged. The industry and the insurtech ecosystem have a renewed focus on insurance expertise as a core competency for building novel solutions. Gone are those outsider buccaneers — the provocative disrupters — that knew little about insurance but were there to revolutionize the industry with the backing of fast and loose venture capital funding. Venture funds now refuse to invest in founders that lack core insurance expertise, bringing a noticeable level of humility to insurtechs, both small and large. The industry now has a better focus on innovation within the realities of the highly regulated, nuanced, and intentionally conservative business of disciplined underwriting and claims management. Offerings containing old-school underwriting and claims along with new-school solutions are now better able to address the reality of the insurance industry.
Embedded insurance is poised to make its mark on insurance. Two factors favor embedded insurance in the current climate. First, the hard market is driving carriers to diversify and to a certain degree differentiate through alternative distribution models. Second, changing customer preferences favor embedding insurance seamlessly into customer journeys and making it available at the point of need. Technology providers like Bolt offer a platform that helps insurers provide embedded insurance products by digitally connecting distribution partners and end customers to carriers. These capabilities seamlessly allow insurance products to be part of other existing customer journeys.
Hyper personalization is a winning solution for the industry. There is a shift toward customizing life and P&C insurance based on individual customer behaviors and preferences. Distribution partners, including agents and brokers, are increasingly facilitating tailored offerings in both life and P&C lines. This is proving to be a winning solution for customer acquisition and retention. Insureds are very receptive to customized solutions, since they provide transparency into coverages. Driving customer engagement is a rare silver lining in an increasing-rate environment. The question remains: Is personalization the answer to an industry that struggles with customer engagement? Time will tell. In the meantime, strong partnerships among insurers, insurtechs, and other value-chain participants are driving innovation and streamlining policy and claims administration in pursuit of delighting the customer.
Carriers are begging to modernize their aging tech stacks. Incumbent insurers continue to maintain aging technology stacks. Some of them are still running business-critical functions on mainframe systems. The industry desperately needs to modernize but has struggled due to expense pressures and risks of impacting existing books of business. Luckily for the industry, new solutions such as InsureMO are now offering carriers middleware infrastructure powered by APIs and microservices that is bringing new life to these old tech stacks. These solutions sit on top of legacy systems and provide a bridge to modernization, but the risks of additional tech debt from these solutions demand that carriers have a deliberate strategy for them.
ITC was a packed few days with lots of energy and inspiring ideas. Clients interested in discussing these and other themes can chat with me via an inquiry or guidance session.
