Views: Rivals or Catalysts? Assessing the position of Insurtech within the insurance business – Enterprise Insurance

The insurance industry has been an obvious target of digital transformation with outdated information technology stacks that still require paper, phone, and fax processes. That feels like a relic for those exposed to industries that have been in digital transformation for several decades. Seeing this opportunity, some early insurtechs followed the Uber and Facebook model – "move fast and break things" – but over time that wasn't the main thing.

Over the past decade, insurtechs have changed the long standing status quo of traditional insurance companies that dominate the industry's market share. The most successful Insurtechs eliminate the operational friction that has shaped the industry for decades by using intuitive technology to solve complex business challenges with solutions that keep the policyholder on the front lines.

Insurtechs are sometimes misinterpreted as competitors trying to steal market share from old commercial insurers and brokers. This overlooks how insurtechs act as a catalyst for the insurance industry and try to close gaps in the entire value chain. The technology introduced by the companies and the efficiency they create ultimately bring new benefits for every insurance participant and enrich the industry as a whole.

User experience innovation

Insurtechs are evolving traditional processes for policyholders and brokers by leveraging technologies and solutions previously reserved for the big tech giants, such as artificial intelligence, custom applications and native digital platforms.

The insurtechs using AI have an advantage in developing technologies because of their expertise in collecting and applying actionable data that traditional organizations often lack. The incumbent insurers instead have to rely on their own historical claims data and are unable to take advantage of newer data sets coming from social media, government agencies or other data created with proprietary software, which puts them at a disadvantage.

Many Insurtechs also employ digital platforms and applications based on innovation in user experience or UX. Digital experiences in the insurance sector are only effective when the designs reflect the needs of brokers, policyholders and other stakeholders, which is difficult to measure without sophisticated product management techniques. Early attempts to digitize insurance processes had gotten stuck in poor UX design, with portals being developed under the mistaken assumption that any digital experience was superior to old school practices. Taking full advantage of the modern product management practices of leading technology companies, Insurtechs can analyze the digital habits of brokers and policyholders in order to develop bespoke solutions that support their regular tasks very effectively instead of replacing one cumbersome process with another.

Balance between digital efficiency and the human element

Many insurtechs serve as marketplaces for consumers to compare offers more transparently and to understand how insurers set tariffs. You create efficiency through tailor-made experiences, reduce costs and create savings.

While digitization enables this efficiency, it is not the same as automating people from the underwriting process. In fact, the success of these technologies depends on finding the right balance to enable human judgment. For example, a human underwriter equipped with enhanced data insights can make a better policy decision than today's AI alone or with just traditional historical actuarial spreadsheets.

Insurtech provides the tools to make the overall human experience easier and more satisfying. Prioritizing the human element within these technological advances should be at the heart of the innovations that take place in these traditional entities. It not only shows the importance of technical improvements, but also shows how the employees within the organization are the real decision-makers.

Maximizing the benefits to the stakeholders

Each area of ​​Insurtech innovation opens up new opportunities for expansion and value creation for stakeholders: reinsurers, insurers, brokers, underwriters and policyholders.

Insurtech has made access to insurance wider than ever and created a technology-driven consumer marketplace. Through access to the web, brokers and providers can open up completely new markets and at the same time use the efficiency and the associated larger group of interested parties. With these advances, brokers can be positioned as the resource teaching clients and executives how to use these new technologies effectively with minimal risk.

Underwriters are often viewed as insurtechs' biggest casualties when automation hits – but that's not the full picture. Data-driven underwriting requires the human hand to provide more accurate and effective coverage. Rather than replacing underwriters, Insurtechs help them do their jobs more effectively and efficiently by using AI to work in sync to improve their skills. In fact, great data insights can and will improve the work experience of underwriters, too.

Commercial policyholders have benefited from Insurtechs by taking full advantage of the data-driven risk assessment capabilities they provide. The industry was built on the basis of actuarial judgments; However, the introduction of dynamic risk assessment data makes coverage much more accurate and transparent for policyholders.

Today more than ever, it is imperative for reinsurers and other venture capital owners to maximize the tools and expertise that has brought Insurtech to the fore. The same technologies that enable data collection and improved underwriting can provide insight into overall risk. When properly packaged and displayed – using the types of UX practices previously discussed in connection with policyholders and brokers – new forms of data can also help make venture capital “smarter”.

After all, as a classic expression of the “innovator's dilemma”, traditional insurers in the past have not been geared towards investing in new technologies, so they are most likely to end up on the losing end of the trend. While insurtechs are able to devote the majority of their resources to digital platforms, big data, machine learning, and other emerging technologies, traditional insurers must decide what resources can be allocated to their standard business and go-to-market strategies. However, traditional insurers still have the ability to learn from insurtechs. By gradually building on the many technological advances in insurance, established companies can capitalize on the innovations that insurtechs have become the catalyst for and, over time, experience the kind of advancement that will drive the entire industry for the better.

Phil Edmundson is the founder and CEO of Boston-based Corvus Insurance Holdings Inc. He can be reached at

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