As anyone who’s watched the TV show ‘Silicon Valley’ will attest, the explosion of technology innovation of the past decade has seen every programmer, entrepreneur, and app developer from Palto Alto to Plymouth seeking out the new digital breakthrough that will transform the way we live, or revolutionise the way a particular industry operates.
The search for the technological Holy Grail: Disruption.
In the finance sector, we’ve had Fintech, followed quickly by its insurance-centric variant: Insurtech.
The new way for the insurance industry. Smashing down the barriers of tradition and unleashing its disruptive force across the global span of insurance companies, brokers, and their clients alike.
Utilising new online technology: mobile apps, instant messaging, the cloud. Or those really sexy new breakthroughs such as the Internet of Things. Technology that offers new possibilities in the way companies can:
- Interact with clients
- Automate and speed up the claims processes
- Personalise risk analyses through granular-level data extraction
- Make real-time adjustments to policies and cover
It’s exciting stuff, ground-breaking in many ways.
But is it really disruptive?
And, furthermore, is disruption really in the best interests of Insurtech and the insurance industry itself?
What is Disruption?
As we’ve examined in a previous article, the definition of true disruption is to bring a new technology to an industry that’s so revolutionary that it completely changes the way that everyone works within it. Altering business-models, making old methods almost instantly redundant.
The kind of global adoption of a technology that made Netflix thrive, while Blockbuster Video went the way of the Betamax.
On the face of it, Insurtech appears to tick this kind of box.
After all, there’s a vibrancy to Insurtech start-ups, an entrepreneurial zeal and progressive attitude towards technological potential, that seems quite at odds with the traditional cultures of the insurance industry as a whole.
An industry where processes have been in place for eons, where the pace is measured, methodical. Every ‘i’ dotted with care, every ‘t’ crossed with a sharp pencil and a spirit-level.
However, unlike Netflix, which blew into the Home Entertainment market and swept away former giants with their new digitally-driven model, the same is not really true of Insurtech start-ups.
There may be proclamations of disruption from some of the louder voices, but while the impact is a forceful one, it’s not necessarily a disruptive one. In the true sense of the word.
Bringing technological innovation to an industry does not automatically make it disruptive.
The industry doesn’t need disrupting; it simply needs a shot in the arm. A technological turbo-boost that allows it to do the things that it has done for centuries, in a way that meets the expectations of today’s world. With the kind of speed, precision, automation, and agility that modern technology makes possible.
Mining social media for big data analytics, or using in-car devices to gauge driving performance, for example, may sound like the type of innovation that’s changed the insurance world beyond all recognition. But insurers have always relied on data to assess risk, to drive their decision-making and underwriting processes. This is not disruptive; it’s progression. A common-sense application of modern technology to bring accuracy and efficiency to an age-old process.
The same may be said for managing coverage and policy life-cycles through cloud-based SaaS, communication via mobile tech, or automation in reporting, admin, and underwriting.
Make no mistake, for insurers and brokers to survive and thrive in the modern commercial landscape, then an open-mindedness to technology is essential. But the underlying processes and principles remain the same – undisrupted.