Guy Carpenter: InsurTech is advancing at an ever-increasing pace
While the new disruptive InsurTech companies were initially written off by carriers, citing woefully unprofitable combined ratios, they are trending positively and could soon see underwriting profits.
Steven JONES, Global InsurTech Client Services Lead, Guy Carpenter, explains the latest InsurTech trends in the industry:
"While the new disruptive InsurTech companies were initially written off by carriers, citing woefully unprofitable combined ratios, they are trending positively and could soon see underwriting profits. "Most recently, given the thousands of companies who have entered the market in the last five years, the focus is on partnerships in various forms. Incumbents are utilizing advanced data, analytics and technology capabilities in software and platform-as-a-service models to accelerate their own business and technology roadmaps. Insurance carriers are deploying their own insurance-as-a-service platforms in novel distribution models, such as AXA's offering of 'end-to-end transactional application programming interfaces' (APIs).
Carriers and brokers are increasing their interest in working in industry alliances, pooling resources to advance their own internal innovation programs, such as The Institutes RiskStream Collaborative, which is focused on assessing blockchain use cases. (...) Each of these is a healthy development and should continue to assist traditional carriers in enhancing their policyholder offerings. We should not, however, get 'lulled into inaction' in the belief that modest enhancements and a couple more external and vendor relationships will keep 'disruption' at bay.
Many factors have come together in the last few years to pave the way for this recently observed pace of innovation, starting with shifts in consumer needs and expectations ranging from changes in lifestyles and asset accumulation, to the digital experiences necessary in nearly any business to customer interaction. Digital and information technology (IT) teams are building better technology solutions, such as real-time processing enabled by cheap computation and even cheaper storage, cloud hosted environments, improved modular architecture concepts of APIs and service-oriented architectures, advanced data and analytics architectures, and the use of open source platforms in ways we thought were unthinkable even just 15 years ago. And maybe most importantly, with a wide adoption of agile software development methodologies, small and efficient cross-functional business and IT teams are building new capabilities at speeds we are not accustomed to seeing in the insurance industry.
In the new 'digital' insurance industry, a successful path forward may be equal parts collaborating with the advancing InsurTech ecosystem and getting substantially better at your own ability to execute on internal business and technology transformation agendas.
With the goal of providing education, knowledge transfer and to encourage the creation of commercial relationships in the InsurTech space, Guy Carpenter has launched GC Genesis, which currently supports two client capabilities: Fitting and the InsurTech Alliance, both of which are dedicated to helping (re)insurers understand, evaluate, utilize, partner with and underwrite new technologies. Fitting supports insurers in their evaluation of the thousands of InsurTech companies and their potential operational applications to accelerate business and technology initiatives. The InsurTech Alliance sponsors in-depth research of these digital technologies and structured review of targeted InsurTech companies."