Tim Evershed examines the rise of insurtech and how it can complement rather than replace human advisers
This year has seen the march of the insurtech sector continue with record levels of investment, which are bringing new, technological solutions to the profession and increasingly becoming a part of the insurance ecosystem.
According to figures from Willis Towers Watson, $10.5bn (£7.8bn) was invested in insurance technology startups during the first three quarters of 2021. This investment is driven by a “growing opportunity” for insurtechs as insurers focus on digitalisation.
The World InsurTech Report 2021, published by Capgemini and Efma, suggests boundaries between big technology firms, insurtechs and tech partners are slowly blurring along insurance lines, with providers needing to focus on product agility, customer-centricity and intelligent processes to remain competitive.
Traditional reinsurers are providing insurtech carriers with underwriting capacity while other incumbent insurers are partnering with insurtechs to improve their offerings and reach to customers.
However, the report adds that insurtech potential is on the rise as the sector’s participants are now competing more aggressively with incumbent insurers as their target markets expand.
The report says insurers must be prepared to tackle a broad range of future scenarios. Modular offerings, systems and organisational structures will be indispensable to creating a robust and responsive value change.
Seth Rachlin, executive vice-president, chief innovation officer of insurance at Capgemini, says: “Insurtechs are pushing underwriting into a straight-through, no-human-touch approach. Definitely in the personal lines space, even in the small commercial space, insurtechs have accelerated the movement towards straight-through processing, no-touch underwriting, and instant quotes and binds.
“The benefit to insurance companies is that it is less expensive to write from an operational perspective. It is also more beneficial to customers, who get an immediate response and the immediate ability
to buy insurance in real time.”
It will mean hyper professionalisation within insurers, because the people who are there will be experts
Mr Rachlin says that although human underwriters will remain in the loop in the middle-market and large commercial space, insurtech will drive greater efficiency in the processes surrounding the underwriting itself.
He adds: “It is using artificial intelligence (AI), image capture and all those types of technologies to capture and structure all the information around an insurance submission, so that by the time it gets to the underwriter it is decision-ready. Secondly, insurtechs are bringing rich sources of third-party data to the underwriting process. Therefore, they are enabling better pricing decisions and better risk decisions.
“For the customer, it is definitely quicker and more straightforward. They will be able to get multiple quotes, multiple prices for whatever it is they are trying to insure. That is driving a level of price transparency and price competitiveness that we were not seeing
10 years ago.”
However, it is claims that has been the most active area of insurtech to date.
Mr Rachlin says: “A lot of that is geared around getting the information around a loss, whether that is accidental damages or a property survey, or evidence of loss, in a much more straightforward and painless way.
“For all but the most serious claims, it is taking the adjuster out of the loop and by doing that there is much greater speed, but also greater predictability of outcome because human judgement does not come to bear – the machine is doing the work.”
Despite the advances in insurtech, the insurance professional will still be required to evaluate non-standard risks and settle the most complex claims.
Mr Rachlin says: “It will mean hyper professionalisation within insurers, because the people who are there will be experts. They will be relieved of a lot of the mundane activities and able to focus on true value creation, but there is a lot of potential around areas like AI and data to inform professionals to do a better job. There will be greater capability as well as greater skills.”
Consequently, insurance professionals will need to update their knowledge and skillsets for the future. The CII’s Professional Map will provide employers and individuals with a framework of knowledge, skills and behaviours expected of them now and into the future.
Ian Simons, customer director at the CII, says: “It recognises that there is a balance between the technical expertise that has typically been required – in particular for those in core functions of underwriting, claims and broking – and skills enablers such as ethical working and data and technology, together with behaviours such as customer focus and the drive to deliver.
Mr Simons says that insurtech has brought many new solutions that complement existing processes and functions, and that the Professional Map is designed to be inclusive of anyone involved throughout the
He continues: “In practice, this means that those in more conventional roles are expected to understand relevant technology and data techniques to deliver good customer outcomes, and those in complementary functions should understand the customer, regulatory and market context for any technological solutions. And of course, it gives the CII clarity over the CPD, qualification and guidance that it should support its members and wider community to help them gain and maintain that expertise into the future.”
Tim Evershed is a freelance journalist