By Stephen Mulhern, Sr. Vice President, Fintech & Financial Services, Enterprise Ireland
The insurance industry is changing. The pandemic brought a host of new types of coverage needs to the forefront; today’s web-based consumers are demanding online/mobile tools and services; and the industry itself is calling for more efficient claims processing, underwriting, and data collaboration between organizations. Much of this was in progress before 2020, but the demands of the pandemic — and the work-from-home experience — significantly accelerated these industry developments.
To begin, we must note that the very nature of employee benefits is evolving. Today we’re seeing new products to address critical illness, accident, and pre-need treatments; products designed to cover employees for things that their medical policy wouldn’t cover. We’re also seeing very specific new products such as pet insurance and programs to help save for a child’s college education and other life expenses. Much of this is driven by employers competing for talent by providing more options and value-added benefits that address employees’ personal needs, as well as professional. Additionally, and perhaps exacerbated by the COVID experience, employers are focused on employee health and proactive, preventative care now more than ever.
New Rules of Engagement
There’s an expectation today that every customer experience should be as convenient and seamless as engaging with Amazon or Apple. We now so often hear the “Uberization of . . .” as a reference to the idea of an immediate and integrated user experience, and we are seeing that consumers feel the insurance industry should be no different. End customers and industry employees alike are tech-savvy, and they demand robust online services and tools to improve make their home and work experiences. As such, insurance companies need to better leverage the power of data, to be more personal and real-time, in order to meet customer expectations. This is where we have seen new disruptive insurance providers that are technology-forward and customer-centric gaining traction and winning market share.
Faced with rapidly-changing consumer and industry expectations, the insurance industry realizes that it has some catching up to do. If we compare the insurance industry with finance and banking, insurtech can be considered still several years behind in digital tools and connectivity.
Steve Hartman, Chairman & CEO for Synchrono Group Inc. said, “The legacy approaches still used within insurance companies around the globe are expensive, headcount intensive, outdated, time-consuming, lead to inconsistent decision making, and fail to leverage additional information to improve decision making, response times, and ultimately service capabilities to support the needs of policyholders. As an industry, we are 7 to 10 years behind the fintech evolution. With the proper vision and investment, the industry can position itself to better leverage a digital frontier that will both reduce costs and improve outcomes. Firms that are slow to adapt or simply fail to change will be increasingly challenged for customers and results”.
While insurance companies are now undoubtedly willing to embrace structural change, it isn’t easy when you consider the regulatory obligations and transformational change required to what has been a very entrenched business model. However, there is currently a lot of energy to the innovation ecosystem and we are seeing insurance companies allowing their policyholders to engage digitally, manage their own data, and streamline processes – certainly byproducts of the pandemic to some extent, but also ones that policyholders expect remain, and will ultimately improve the bottom line for providers.
Transition to cloud infrastructure is certainly a big topic in insurance and one that is growing quickly. While it can be met with debate, it’s becoming more accepted in the industry with the changing needs of customers and cloud transformation resulting in higher performance. According to Chief Technology Officer at FINEOS Jonathan Boylan, “Insurers are now enthusiastic about cloud, even for mission-critical workloads that replace legacy, but suppliers must get the compliance and security controls right. Carriers are actively leveraging cloud infrastructure in-house as well as looking for SaaS solutions to reduce the burden of managing thousands of systems themselves”.
As cloud solutions and tools like artificial intelligence become more available and accepted in the industry, insurtech organizations will become more responsive to industry and customer needs, better connected with critical data within the industry, and more able to respond to the risks of a changing world.
How do Irish companies fit in?
Built upon the considerable strengths of Irish innovation in IoT, digital health, financial technology and cybersecurity, there is a rich ecosystem in Ireland for insurance innovation and technology. Ireland is a thriving global hub for insurance, reinsurance, and insurtech. Ireland’s insurance market is the sixth-largest in the EU, and its reinsurance market is the second largest.
Insurance Ireland is the representative organization for the insurance sector in Ireland, and its members represent nearly 95% of the companies operating in the Irish market. The Irish insurtech industry is progressive, innovative, and inclusive, providing competitive and sustainable products and services to customers and businesses across the Life and Pensions, General, Health, and Reinsurance sectors in Ireland and across the globe.
Enterprise Ireland-supported company, FINEOS, is a leading global provider of core systems for life, accident, and health insurers. FINEOS counts seven of the ten largest group life and health carriers in the United States and six of the largest life insurers in Australia as customers. The FINEOS Platform provides core administration capabilities, including integrated disability and absence management (IDAM), billing, claims, payments, policy administration, provider management, and new business and underwriting; all of which are configurable to operate independently or as FINEOS AdminSuite the leading Employee Benefits end-to-end core administration suite. FINEOS provides these core systems in a SaaS environment, so they are available on the cloud powered by AWS. Last year FINEOS acquired Limelight Health and Spraoi, so even more innovation is on the horizon.
Dublin-based insurtech start-up Describe Data helps insurance underwriters develop a better understanding of risk, enabling them to price it correctly and avoid bad deals. The company uses data analytics to provide insights into financial lines risks such as directors and officers, employers practice liability, intellectual property, and mergers and acquisitions. The company recently launched Kompreno, a data risk engine that produces insights across multiple levels that includes an analysis of financial information on a company, its sector, and the likelihood of lawsuits against the company or within the sector, and a range of other vital data for managing risk.
Describe Data CEO Michael Crawford said, “Insurance is one of the few industries that has yet to be disrupted and our approach of using new data sources and AI to better understand complex risks means insurance companies can write better deals faster, understand how their risk portfolios behave, and ultimately save and make money”.
CodeEast is another Ireland-based company helping shape the look of the insurance industry. The company’s ONEview Digital Insurance Platform provides intelligent automation systems for insurance companies, MGAs, and broker networks. The platform automates the sales, distribution, and processing of insurance products and services. The CodeEast ONEview Digital Insurance Platform helps companies maximize profits by allowing customers, brokers, agents, and internal staff ‘Digitally Self-Service’ as much as possible. CodeEast systems are based on a hyper-flexible, digital, cloud-native, API-first, modular design to support most any business model and integrate with existing systems and thus create automation across system boundaries and customer locations.
As we increasingly see IoT technologies, telematics, digital health solutions, and other disruptions intersect with the insurtech sector, I have no doubt that Irish firms will be at the forefront of developing and providing the tools for enhanced customer engagement, more efficient industry processes, and collaboration, and a safe, secure and profitable global insurance industry.
Chief Commercial Officer of CodeEast Aidan Brogan said, “The digital transformation of the global insurance industry is only starting. Insurance is complex and highly regulated. However many factors are driving the transformation, customer expectations, drive for lower costs and greater operational efficiencies, new business models, new market entrants, and new competitors. At CodeEast with the help of Enterprise Ireland, we have entered the US market presenting us with many opportunities for us to grow and scale our business”