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THE RISE OF INSURTECH
Technology and its place in the insurance industry has always been a controversial topic. One that draws enthusiastic support on one side, but fear and opposition on the other.
Unfortunately, fear of the unknown can lead businesses to remain stagnant. And in many ways, insurtech is “the unknown.” It challenges traditions, practices, and processes the insurance industry has comfortably used for decades.
There are a lot of definitions for insurtech. Basically, the term refers to tech companies, often startups, that enter the insurance sector with the goal of providing technology-driven solutions to a more digitally savvy customer base.
Consumers today want the most seamless solutions with the lowest touch and highest automation. Welcoming technology into the insurance world is the only logical way to provide this solution.
In short, insurtech has the power to provide consumers with better products and merchants with a competitive edge.
Insurtech isn’t something to fear. It’s something to strive for.
THE DIGITAL AGE
Our world is inarguably digital. Nearly every facet of our lives involves, or is influenced by, technology. In the case of insurance, nothing illustrates this claim better than how payments are handled today versus 20 or even 10 years ago.
Consumers today expect to do research, get a quote, buy a policy, and pay that policy each month without ever leaving their home. This is not an unrealistic expectation. Most everything can be done using our laptops or, more importantly, our mobile devices.
According to a 2017 article by Credit Union times, more than 50% of all bills paid in the U.S. are paid online. Another study by Pew Research reported an estimated 114 million U.S. consumers used a mobile device to make bill payments in 2016. That’s more than 13 times the population of New York City.
A mere decade ago, this choice didn’t exist. An insured’s only options to make a payment were
either via cash, wire, or paper check, all of which are in decline today. This is a stark contrast to
consumer preference today.
When it comes to payments, mobile is king.
But insurtech hasn’t just disrupted insurance payment processing. It’s also changing the way business owners create and market their products. Insurtech practitioners (or simply, “insurtechs”) use their digital expertise to create electronic processes and products from the ground up, allowing for a more personalized and end-to-end experience for customers.
“What are our customers’ pain points? How do we address these pain points?”
“How can we make our product better?”
“How do we simplify processes for ourselves and our customers?”
By narrowing their focus and answering a few key questions, insurtechs inevitably are primed to create industry-relevant products with high demand.
MORE BANG FOR YOUR BUCK
When it comes to insurtech, less is more. Did I say that mobile is king? So is simplicity. Finding a way to do more for your customers without actually creating more work yourself is an invaluable skill with several benefits. It cuts down on lag time, improves customer satisfaction, and theoretically means that it’s easier and quicker to go to market and start seeing results.
It also means potentially cutting costs. Instead of spending budget on hiring employees to do simple tasks, insurtechs can implement products (or customize one themselves) that automate or eliminate that job. Customer Relationship Management (CRM) software such as Pipedrive, Salesforce, and HubSpot are just a few examples of robust and cost-effective tools that help businesses streamline processes.
INNOVATION FOR TOMORROW
The goal of insurtech and its practitioners is not to throw the insurance industry into a state of upheaval, nor is it to run incumbent insurers out of business.
The goal is simply to innovate.
Innovation brings new and fresh ideas to an industry where new and fresh ideas aren’t exactly abundant. Let’s face it. Insurance is an old business. According to an article published by Forbes.com, the average age of insurance agents is 59 years old. Let’s say an agent got into the business when they were 39 — that was 20 years ago. I don’t need to tell you that things have changed quite a bit since 1998.
High-speed Internet, smartphones, laptops, social media, online banking, in-flight WiFi, and many other factors have emerged in the past two decades and changed the way lots of industries do business.
Insurance is one of those industries.
A lack of technological innovation could be the kiss of death, and in the insurance world, it’s survival of the fittest. It’s not enough to get on social media and write a few Tweets each year. It’s not enough to adhere to traditional practices because they’re “good enough.” You don’t want good enough. You need better. You need the best.
