Most of us are so familiar with the concept of insurance that it’s hard to imagine living without it. However, the industry has an interesting and sometimes colorful history.
England’s insurer Lloyd’s of London was established back in 1688. The origins of insurance in the U.S. date back to 1752, when Benjamin Franklin co-founded the Philadelphia Contributionship. The move was designed to protect homeowners concerned about the proliferation of residential fires (something not altogether surprising given that most houses at the time were made of wood and built close together.)
A few years later, Franklin played a role in establishing the first life insurance company in the U.S. ― a move met with outrage by some religious authorities who questioned the ethics of putting a monetary value on human life.
While the industry and associated regulations have undergone significant shifts since those days, some of the established incumbents in the insurance industry have been in the market for around 100 years.
However, given the rampant acceleration of digital innovation over the last decade, it’s no surprise that a tidal wave of disruption has hit this sector.
Insurtech: A Formidable Opponent
Increasingly, asset-light startups are encroaching on the territory of established players. Some prominent brands leading this charge include Lemonade, Hippo, and Metromile. Overall investment in insurtech startups reached $7 billion in 2020.
So how exactly are insurtechs changing the game?
Many incumbent insurers are burdened with legacy, siloed, and fragmented ICT systems. It’s not uncommon for a large insurance company to have a dozen or more systems for policy management, claims management, and other processes spanning multiple lines of business. All this leads to data discrepancies, inefficient operations, and lackluster customer experiences.
At the most basic level, insurtech players provide the same service, but they have the advantage of more advanced technology solutions. This means they can do business faster and more cost-effectively across all parts of the insurance value chain.
They can offer direct-to-consumer products and AI-powered tools that revolutionize how customers interact with them. Their digital tools give consumers what they want: products that are smart and customized and services that are more personalized and responsive than ever before.
They use technology to ensure that digitally savvy customers can move effortlessly between multiple digital and in-person channels. Insurtechs are also inherently data-driven. They use the large volumes of data they gather and analyze to better understand customer behavior and identify relevant touchpoints so they can create personalized experiences. They also use customer data to identify gaps in the market and develop new products and services that help them tap into new or underserved markets.
What’s Getting in the Way of Their Game Plan?
While insurtechs are certainly making a profound impact on the industry, they’re not immune to some of the key challenges faced by all players in this sector. One of these is a shortage of skills. Traditionally, insurance isn’t perceived as the most attractive sector for aspiring technologists (especially new graduates).
Moreover, with a recession looming, it’s likely that insurtechs will find it harder to raise capital over the next 24 months, which means joining one is a riskier proposition for prospective candidates than it was a year or so ago. Back then, many insurance professionals might have viewed well-funded insurtechs as a welcome break from life in the mundane corporate world. Now, the prospect is no longer as safe and appealing.
Incumbent Strategies for Leveling the Playing Field
To effectively compete in the face of fierce insurtech competition and retain their hard-earned market share, many incumbent insurers are looking to “fight fire with fire” by investing in next-generation digital platforms that help them close the technological gaps between themselves and their insurtech competition.
Today, a range of third-party platforms can position incumbent insurers to inject greater agility into their operations.
One of the most popular platforms is the Insuresoft Diamond Platform.
Manage, Differentiate, and Build Your Team with Insuresoft
Diamond is an all-in-one enterprise software solution for personal and commercial lines. It combines core policy processing, digital engagement, and intelligent data to advance each insurer’s mission.
When you partner with Insuresoft, you also benefit from the latest insurance innovations. We’re part of the Kaboodle Team – an insurance collaborative that delivers innovative products and services to insurers. Insuresoft pre-integrates the partners our clients and prospects choose to use. As we release product updates every alternate month, our clients benefit from technology or product enhancements without disrupting their operations.
What Our Clients Have to Say
“We’ve been working with Insuresoft for more than 20 years. The team is great to work with, very responsive, and continually looking for ways to improve their operation and product offering. The product suite functionality, integrations, and platform flexibility are steadily improving.”
- IT Manager – Applications
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