The insurance industry is changing. The COVID pandemic has brought employee wellness as well as a host of new types of coverage into sharp focus; and today’s very connected, mobile, and web-based consumer is demanding that the insurance industry offer a level of online tools and services that they expect in all their interactions.
While much of this industry growth and advancement were in progress before 2020, the pandemic with its demands for work-from-home and remote solutions for consumers, employees and organizations alike has greatly accelerated development within the insurance industry.
An impact on structural change
“The insurance world has changed because of the pandemic, and I don’t think it’s temporary; some of these changes we’re seeing are more structurally-oriented,” says Steve Hartman, CEO, Synchrono Group. “The whole idea of remote work is a structural change…. there has been an impact with a change in revenue streams; there’s been an impact with a change relative to business exposures; there’s an impact that is yet to be seen in the claim’s environment, for both worker’s compensation and liability. The marketplace as a whole is in a state of flux.”
For example, while wellness benefits originally started in the U.S. as a way to attract and keep a talented workforce, the lens of the pandemic has helped employers see that it’s not enough just to offer employees sick leave. Companies need to help employees be healthy. With this awareness, the industry is seeing an increased demand for pre-need benefits like mental health.
The nature and intent of employee benefits are changing and growing, and voluntary products are coming out with critical illness, accident, and hospital covers designed to cover employees for the things that their medical policy wouldn’t cover. The industry also sees very specific new offerings such as pet insurance and programs to help save for a child’s college education. The goal is to give employees more reasons to stay with a company and provide more options to take care of their families.
“One of the issues you run into with disability and life is that a COVID exclusion is not realistic at this point, and we’re always watching what the regulators are doing; we work with a lot of large players around absence management, tied into disability, and that’s market that’s going crazy for us,” said Chuck Johnson, CMO, Fineos. “We’re very busy because all the major carriers are trying to figure out how to deal with the regulatory side of this, and it’s very interesting because the regulations are changing faster than they ever have because lawmakers are trying to get ahead of this for lots of temporary and permanent legislation.”
Catching up to the State-of-the-Art
“We’ve seen an acceleration of certain changes that were already happening, and if we compare fintech and insurtech, I think insurtech is at least five years behind in terms of digital tools and connecting insurance companies,” said Lucas Timberlake, Partner, Fintech Ventures Fund. “So a lot of what happened with fintech in terms of banking and every company becoming a fintech company, I think we’re just starting to see with insurtech. “I don’t know if any of these changes weren’t already happening, but last year has definitely accelerated changes.”
In the 1970s, insurers were early adopters of technology, but unfortunately some of that early technology is still in use; and because of the critical nature of the product, there’s often a tendency to go for stability over innovation.
“Companies have suddenly recognized that they are woefully behind when it comes to their digital platforms, and they’re more prepared to partner and embrace others’ ideas because they look at us as an aggregator of best practices,” said James Swayze, Executive, Corelogic. “But the attitude is that they want to see somebody else doing it first. And now that they’re opening their minds up, there’s a trust forming for us as vendors, but there’s also a trust forming for their own policyholders. They’re allowing their policyholders to engage, and collect data, and streamline processes, and the policyholders actually want to do it, and it’s improving the bottom line.”
All this has brought about more and more interest in connectivity. How can companies within an industry that is behind the curve on connectivity interoperate? Insurers are still struggling with this, and there’s a lot of conversation around the ecosystem.
“I think ‘uncertainty’ was the word of 2020. Aflac, at the company level had thousands of people on campus, but our team at [Aflac Global] Ventures, was designed to be on the road, so we are fortunate enough that it’s easy for us to be remote,” said Gerald Gallagher, Investment Associate, Alfac Global Ventures. “But we’ve seen a huge shift, basically by force, to digital… and I think people are finding out that there’s a lot of tools out there that maybe they weren’t comfortable using. It’s been very interesting to see a huge population of insurance move on-line and accept those tools.”
There’s an expectation today that every organization should be as easy to deal with as Amazon or Apple or any tech-based sales/service organization — the insurance industry should be no different. End customers and industry employees alike are very tech-savvy, and they demand robust, on-line services and tools to make their home and work experiences better. And as organizations, insurtech companies need to be able to connect data points with other organizations, in real-time, for the integrity of many critical processes.
“The biggest differentiator in the U.S. market is truly how litigious it is. I think quite frankly so much innovation has been driven to avoid the lawsuit that it actually placed the U.S. at the front, from an insurtech perspective,” said Jamie Yoder, President, Snapsheet Inc. “So my advice to anybody looking to break into the U.S. is to focus on how your platforms can reduce fraud and validate results to help avoid the lawsuit because it’s of paramount importance.”
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.
“On the enterprise business, the biggest development we see is the realization that the future of insurance distribution, in general, will look different.” Ed Axon, SVP Business Development, Trov Inc. “Insurance customers — like all consumers today — want to buy it easily, quickly and competitively; they want the claims experience to be as good as the onboarding experience. Insurtech companies are beginning to partner with others in the industry to build the ecosystems that make this a reality.”
“The idea of a white-glove experience being the only level of service is no longer the case. We’ve seen huge impacts on our business this year in giving the policyholder the opportunity to submit a claim in their own time and using new technologies to do that,” said Denis Connolly, VP Sales, and Business Development, PLNAR. “We’ve had 85-year-old customers submit estimates through our platform this year. It just shows you how things are changing.”
The preceding information was condensed from a pair of Enterprise Ireland hosted, 60-minute webinar panel discussions titled, The Future of Insurance.
To learn more about Irish Fintech innovators contact Claire.Verville@enterprise-ireland.com