Insurance Companies’ Guide to InsurTech. Part I: The Overview

February 9, 2024

We’re approaching a pivotal moment in the insurance industry that’s going to mark a new era. With digital advancements reigning supreme, a lot of challenges and changes are in store for traditional insurance companies. To be able to stay in the game while still holding onto their principles of stability, reliability and decades of experience, there’s only one way to go – towards InsurTech. 

With this article, I unfold a series of guides for traditional insurance companies that are looking to embark on a journey to become an InsurTech entity. If you are one (and even if you aren’t), feel free to tag along and explore the dynamic insurance landscape where traditional values meet the need for adaptation.

Honouring Tradition – Strengths of Traditional Insurance Companies

Strengths of insurance

In this era of omnipresent and ever-evolving technological advancements, going from standard insurance to InsurTech is inevitable. But let’s not forget the solid foundations that traditional insurance companies have laid and nurtured throughout the years. 

They worked their way to be recognised as rock-steady, trustworthy, and packed with experience. Their standard business models made it through economic ups and downs, providing a reliable safety net.

What’s more, traditional insurance companies are great at assessing risks and fine-tuning their underwriting processes with data and science. Their longevity reflects solid risk management and policies. Plus, they’ve built long-lasting client relationships with trust at their core. They’ve established a strong position on the market thanks to their brand recognition, extensive networks, and knack for handling regulations – all supported by their organised setups.

The Need for Transformation – Why InsurTech Is Essential for Growth

Business growth

I can’t deny the strengths of traditional insurance companies. Yet, the rapid evolution of the digital age, coupled with customers’ ever-changing needs and expectations for personalised services, calls for a critical reevaluation. For some, it may be the doom. But for those determined enough, it’s actually an opportunity to rise and soar. How? By leveraging technology to address these changing demands, complementing traditional strengths with agility and efficiency. Or, in one word – InsurTech.

Embracing this transformation isn’t about abandoning the fundamentals cultivated and upheld for so long by traditional insurers; it’s about blending them with innovative approaches. Only then can you evolve towards a more dynamic, data-driven, and customer-oriented future. The world we live in is constantly evolving. You need to evolve along with it. In business, it’s the only way to survive and thrive.

Navigating Organisational and Technological Shifts from Insurance to InsurTech

I need to point out that the shift from a traditional insurance company to a dynamic InsurTech entity extends way beyond technological advancements. Sure, those innovations are the driving force behind this evolution, but they aren’t the only challenges insurers need to take into account and be prepared for. These hurdles also include organisational changes such as internal operations and methods, not to mention the whole mindset of the business.

Once those companies are ready to adapt to the new landscape they’ll be navigating, the entire transformation process will go much smoother. The synergy of tech innovation and organisational flexibility is key to InsurTech success.

Technological Milestones

The combined impact of numerous technologies is pivotal in reshaping the insurance arena. Here are the key technological advancements:

  • Artificial intelligence (AI) and machine learning (ML) improve risk assessment and personalise customer experiences,
  • Blockchain transforms record-keeping with its decentralised and transparent nature, ensuring secure transactions,
  • Internet of Things (IoT) enables dynamic risk assessment through real-time data, leading to customised coverage and streamlined risk management,

Additionally:

  • Chatbots and virtual assistants boost customer engagement with instant support and optimised claim processes,
  • Big data analytics equips insurers with valuable insights to adjust their products to dynamic market trends,
  • Augmented Reality (AR) and Virtual Reality (VR) revolutionise claim assessment accuracy,
  • Edge computing provides real-time analytics, reducing latency for an agile insurance ecosystem,
  • Drone technology speeds up property inspections, while biometrics and facial recognition boost security measures in customer interactions,
  • Satellite and Aerial Imagery enables climate trends analysis and real-time event monitoring, among other things.

And if that’s not enough, advanced analytics, regulatory technology (RegTech), natural language processing (NLP), and smart contracts also play vital roles in this transformation to InsurTech. Advanced analytics extracts big data insights, RegTech smooths compliance, NLP increases data understanding, and smart contracts on blockchain automate and secure agreements. And I’ve barely scratched the surface. You can only imagine the possibilities.

Organisational Transitions

I believe there’s something that’s most underestimated in the transition from insurance to InsurTech – and that’s the organisational shift.

As InsurTech evolves, it’s crucial to foster a culture of innovation – think trying new things and embracing change. Adopting agile methodologies drives flexibility and responsiveness, adding to quicker decision-making processes and iterative development. What emerges as a key organisational change is the product-led teams that empower cross-functional groups to amp up innovation and accountability.

Acquiring digital talent and training ensures that the workforce is equipped with the very skillset needed for the digital age. Cross-functional collaboration is essential, as it breaks down barriers, cultivating a holistic approach to problem-solving. And I didn’t even touch on putting customers first, data-driven decision-making, and strategic partnerships with InsurTech startups, technology providers, and industry players – those are vital too and can’t be overlooked.

Let’s also not forget that robust compliance and cybersecurity measures are a must to adhere to regulations and safeguard sensitive customer data. In addition, it’s important to keep learning and adapting, making sure your team stays sharp with the latest technologies.

Conclusion

In short, moving from traditional insurance to InsurTech is key for staying relevant in today’s digital world. It’s about blending tradition with agility and tech-savvy customer engagement.

And this transformation entails not just how you do tech but also how you do business. Yes, it calls for lots of investment and commitment, but the potential benefits in efficiency, performance, risk management, and customer relations make it worthwhile. But only those who successfully navigate this shift are set to thrive in the dynamic landscape of InsurTech.

In the upcoming articles in this series, I’m going to share practical steps and strategies for this transition, while addressing possible pitfalls and how to overcome them.

Embarking on the transformation to InsurTech? You might want to have a good, reliable technology partner to help you achieve that. You’re in luck! We live and breathe technology, so don’t hesitate to drop us a line if you need anything.

Scroll to Top