The global insurance industry - like every other strand of commerce and government agency - is feverishly focused on leveraging the benefits of a digital environment. The development and adoption of insurtech has a clearly defined progression. The first of these two phases began with a focus on digital distribution and data, the second was heavily focused on sales and marketing.

In the first phase, the underlying insurance product remained more or less the same, but some parts went digital. The second has seen the emergence of risk carriers that are changing the underlying insurance product and using insurtech to automate the value chain.

This second phase has seen a considerable advances in new sources of data and the ways in which data is processed.

Clear and present danger

Those carriers that show the greatest innovations also pose considerable threat to traditional insurers' models. This is not only because they are doing things never previously conceived, but because they have the technology working now and incumbents have yet to build - or adopt others' - technology platforms.

That may not pose an immediate problem, but insurers must start preparation now if they are not to see their businesses damaged by 'early adopters'.

Adoption is not a simple case of bolting on a few peripheral systems. Or be seen as a chance to refresh the business in a piecemeal fashion by simply moving traditional business online. It offers the opportunity - and requires - total transformation of the existing business model.

How they handle this repositioning of the business strategy will likely determine whether they are considered a tinkerer or transformer and indicate how sustainable their business will have become.

Market commentators suggest the industry will have been transformed in as few as 3 or 4 years and no longer than a decade1. This means insurers must have a digitally focused and automated digital-first/customer-first business that would be comparable to the tech giants of today.

Building the future on partnership

Some incumbents have been investing in insurtech already with mixed results. They have accepted they cannot easily build tech themselves and may increasingly view insurtech companies as partners rather than competitors.

Most of the tech to be deployed in the next phase is expected to be on value chain innovation, to reduce cost, improve efficiencies and generate ecosystems that will support future insurtech developments.

This will represent a complete 180-degree shift in focus from processes to placing the customer at the heart of everything insurers seek to achieve. Focusing on the customer allows insurers to develop a service that is considerably better than the existing model.

Products can launch quicker, meet customer needs better, capitalize on a broad range of existing data and build on practical experience. These foster services and products that are relevant, and operate on a high-speed, customer-centric front-end.

Where to start?

There will be a major trend to API or microservices architecture in order to work around the transactional legacy systems, but also allow interconnectivity with many other systems.

At all times, the customer must be at the center of the process design, and robotic process automation (RPA) will increasingly be deployed to offer better customer interaction and data harvesting.

Building a platform business requires state-of-the-art technology and very fast and flexible time to market. This is not achievable on legacy systems alone. Insurers will have to invest in customer-facing digital platforms, intelligent automation to streamline processes, and develop smart contracts for claims and predictive underwriting.

How to start?

The first step is to define a process, determine the problems that need to be solved and decide what opportunities can be harnessed. Then they must ask what can be eliminated, what can be automated, what can be outsourced, and avoid insurtech that offers proof of concept in favor of proof of potential return on investment. This process requires engagement from the board level down, or it will fail.

Though barriers to entry remain high in terms of cost and regulatory oversight, platform providers will be disruptors in mature markets.

The Chinese market has opened up, but technology is required by any new entrant seeking to compete with BAT (Baidu, Alibaba and Tencent).

It may be too little, too late, for some market players, but only time will tell.


Incumbent insurers must fundamentally change their business models, moving from siloed operations to fully connected enterprises. This requires a cultural change, to focus away from product and to organize themselves entirely around the customer, their experience and outcomes. Customer satisfaction and retention will be more important key performance indicators (KPIs) than operational efficiency.

Players in this space:

Atidot - predictive analytics platform using artificial intelligence, machine learning and big data to provide insurers greater insight into their data.

Cover Genius - product XCover allows carriers to transport products across borders by undertaking the product customization across 20 languages and more than 70 countries.

eBaoTech - works with more than 100 carriers, agents and ecosystem players in more than 30 countries developing connected insurance models.

Flamingo - uses AI to improve customer experiences to improve efficiency and drive growth.

Pega - US-based company  that develops software for customer relationship management, digital process automation and business process management.

Zhong An - founded in 2013, it is China's online-only insurance company. Since inception, it has acquired 460 million users and written more than 5.8 billion policies.



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