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InsurTech sets the stage for ‘Great Expectations’
But fundamental challenges remain as carriers seek new solutions
InsurTech may not have been around in Charles Dickens’ day, but the themes of some of his classic works resonated with what I heard from the international insurance community during my recent trip to London, where carriers characterized the accelerating pace of innovation and transformation as both a game-changing opportunity and existential challenge.
October 18, 2017
A blog post by Sam Friedman, Insurance Research leader, Deloitte Services LP.
Echoing the opening of Dickens’ A Tale of Two Cities, it can indeed be the best of times for companies with a well-formulated and executed InsurTech strategy, but could also turn out to be the worst of times for those that hesitate, stumble, and fall behind the pack. And in the spirit of “Great Expectations,” many of those attending the International Insurance Society’s Global Insurance Forum marveled at the gold rush mentality of the past few years in
At the same time, however, most forum speakers emphasized that as carriers catch their breath and assess their options, we seem to be entering a normalization phase when it comes to
Looking at the bigger picture, many of those at the forum pointed out that
A big part of this transition is the way
I believe this movement will take the industry in a very positive direction. If carriers can be more proactive than reactive, it should alleviate one of the biggest complaints about insurance—that most people don’t perceive the value of their policy unless they have a claim (one that gets paid with a minimum of stress, that is). Connectivity could change that dynamic, laying the groundwork for an ongoing, interactive relationship with policyholders.
If carriers can be more proactive than reactive, it should alleviate one of the biggest complaints about insurance—that most people don’t perceive the value of their policy unless they have a claim (one that gets paid with a minimum of stress, that is). Connectivity could change that dynamic, laying the groundwork for an ongoing, interactive relationship with policyholders.
Bridging the gap with InsurTech
InsurTech is also an avenue to bridge the gap for underserved policyholders who might not be able to afford a personal insurance and risk management specialist. The obvious example is robo advisors for those of more modest means looking for help in planning their retirement investments, as well as for millennials and others who prefer to do all their transactions virtually. But robo advisors might be a welcome option for personal lines buyers and small business owners as well. Since their premium dollars may not justify a lot of attention from a live agent, perhaps they could get more individual service and industry-specific advice through artificial intelligence and cognitive technologies.
Insurer “relationships” with property may also be revolutionized by technology. One speaker suggested that a smart car could become a “moving wallet,” able to pay for purchases of gas or electricity, tolls, or other goods and services (including insurance) via a chip in the vehicle. By the same token, connected cars can report to insurers directly when accidents occur and repairs are made, perhaps with copies of the bill emailed to the auto carrier. The damaged vehicle might even be automatically steered to a participating repair shop by the insurer’s chip.
There were also caveats raised, in terms of taking technology too far. One CEO at the forum warned insurers that becoming fixated on automation and adopting a more virtual model run by chat bots and artificial customer service reps could fatally distance them from consumers. Client disengagement, he noted, could quickly reach “epidemic proportions” as actual people working at insurance companies are squeezed out of the sales and service equation.
While automation may reduce costs and artificial intelligence could broaden the scope of people-free interactions, overreliance on InsurTech-driven disintermediation may also undermine the fundamental human connection with clients that adds value, personalizes b-to-c relationships, and helps avoid commoditization. Dealing with customers solely on an electronic basis could backfire if insurers totally lose touch with the individuals they cover. The required balancing act between InsurTech and people power will be tricky, but could pay dividends for carriers that manage to pull it off.
The required balancing act between InsurTech and people power will be tricky, but could pay dividends for carriers that manage to pull it off.
InsurTech: Challenging insurers’ traditional boundaries
This also doesn’t mean
One CEO warned that the ultimate disruptor is not going to be
One CEO warned that the ultimate disruptor is not going to be InsurTech. It will be your customer, who wants insurers to standardize and streamline yet customize at the same time.
QuickLook is a weekly blog from the Deloitte Center for Financial Services about technology, innovation, growth, regulation, and other challenges facing the industry. The views expressed in this blog are those of the blogger and not official statements by Deloitte or any of its affiliates or member firms.