Why ‘insurtech’ is fundamental to the future of insurance

Efma feature

01 February 2018

Matteo Carbone, a thought leader at Connected Insurance Observatory and co-author of ‘All the Insurance Players Will Be Insurtech discusses the need for innovation across the industry.  

What are the key changes happening in the insurance industry at the moment?

The insurance sector is now seeing the same dynamics as many other sectors, including financial services, with startups and other tech firms innovating one or more steps of the value chain traditionally belonging to financial institutions.

Insurtech startups raised almost $8 billion in the last three years based on the last figures from FT Partners. In our hyperconnected world, risks are changing, digital assets are more valuable than physical ones, people don’t accept waiting to be served anymore. Software is also eating the insurance sector after it digested other industries. Due to this, the word ‘disruption’ has been abused at insurance conferences over the last 12 months.

What does this mean for traditional insurers?

It’s unthinkable for an insurance company today to not pose the question of how to evolve its model by thinking which modules within their value chain should be transformed or reinvented via technology and data usage.

But it’s an extraordinary opportunity.

Insurance is about protecting the way people live. The new technologies have enhanced the ability of insurers to assess, manage and transfer risk. Thanks to this “superpower” that is technology, insurers can do it all so much better if they not only accept insurtech and embrace it, but truly become it. This is the reason I believe that any player in the insurance arena will be insurtech.

Tell us about your new book All the Insurance Players Will Be Insurtechand how it will benefit readers

It is the first international book dedicated to insurtech. It explains why I believe all insurance players will be insurtech, meaning organizations where technology will prevail are the key enablers for the achievement of strategic goals. I summarized in this book – together with friend Andrea Silvello, co-author of the book and founder of Neosurance – many of the discussions I had both physically around the globe presenting at more than 60 insurance conferences from San Francisco to Seoul the last two years and online exchanging daily with the almost 130,000 insurance passionate innovators follow me on Linkedin.

This book provides a critical review of insurtech at an international level, along with concrete frameworks to rationalize these waves of innovation are crossing on all the insurance markets. I did my best to demystify some common perceptions and to challenge some the concepts on hype in the discussions on insurance innovation. I have to admit, this book has a strong bias: the love for the insurance sector. The book affirms on clear and bold thesis: insurtech can make the insurance sector stronger and therefore more capable of achieving its strategic goal: to protect the way people live!

What new technologies do you think will have the biggest impact on the industry?

There are many technologies with great potential and a large part of them are interrelated. The combined usage of those technologies is the best way to exploit their value.

If I have to pick one, I would have to say IoT. Without any doubt, I see an incredible potential in the hyperconnected world for all the insurance solutions based on sensors for collecting data about the state of an insured risk and telematics for remote transmission and management of the collected data. IoT improves insurance profit and loss and allows insurers to share part of this value with the customer in order to increase product adoption. It enhances proximity and interaction frequency with the customer while creating a new customer experience, increasing retention and expanding relationships. IoT approaches also create and consolidate knowledge about risks and the customer base which will lead to the next generation of products and services. Last but not least, IoT enables a new virtuous role for insurers by providing positive externalities for a sustainable society.

The average understanding of this opportunity in the different markets is low and there are many misunderstandings from the analysts in the different markets. But I had the opportunity to see with my eyes some players obtain amazing results and create the foundation for a brilliant future in insuring the hyperconnected world: Unipolsai, Groupama, Discovery, American Family, Allstate, Swiss Re and Munich Re only to name a few.

Are you a game-changer in insurance? Show it! Submit your innovative projects for the 2018 Efma Accenture Innovation in Insurance Awards. The awards are open to all insurance player including insurtechs, brokers and aggegators and participation is free of charge.

Keywords : Digital/Mobile channels , Fintech , Internet of things , Insurance Products & Services

Geography : International