Insurtech: Where It Currently Stands And What It Needs To Move Forward

It is undeniable that the insurance industry is in the midst of a once-in-a-lifetime transformation.

Much of it has funneled to companies premised on reinventing insurance from the ground up for a specific market. These businesses have played a huge role in pushing the entire field forward and bringing attention to a once purposefully inconspicuous industry. As new full-stack insurance startups and traditional insurance companies now compete for head-on, however, there is a new, much larger opportunity for insurtechs to drive transformation while having the most potential of all: powering and digitizing functionality through infrastructure.

The insurtech community hasn’t focused enough on improving the critical infrastructure and tooling that insurance carriers and distributors, incumbent or startup, need to be successful in today’s competitive, digital world. Much of the innovation in the insurance space driven by startups has been heavily focused on the external-facing, largely ignoring the backend operations that make business possible. But now the industry is coming to realize that front-end focus is not enough to optimize business and drive transformational change.

These past few years, we’ve merely scratched the surface of what insurtech can do. But after years of this industry finding its footing, we’re starting to see more breakthroughs. For every company and business involved, the goal is to increase distribution and drive efficiency. So why isn’t there more focus on reworking infrastructure, which is arguably the best way to ensure these results?

From restructuring payments to the rise of embedded insurance, the industry is seeing a shift from full-on reimagining to improving and building upon what’s already in place.

Where we’ve been

To understand where we’re going, we first have to understand where we’ve been, and where we currently stand. The past few years have been driven by the need to make small improvements to insurance as we know it. And this has proven to be exponentially successful. If there’s one thing insurtechs are good at, it’s recognizing efficiency gaps that can be solved with technology, specifically around the outdated characteristics and pain points of the industry.

Where we are

Today they call to fill gaps and iterate the insurance industry has reached new levels and possibilities with the shift to online distribution and the adoption of API-based services, which has sparked a reinvention of core business processes. As insurance is experiencing technological innovation, both incumbents and insurtechs share a collective ambition to meet the needs and expectations of today and tomorrow’s insurance consumers and to run profitable businesses with happy customers. And as all players innovate and digitize, the distinction we draw today between startups and incumbents will blur and likely fade — leveling the playing field via widely available technology.

Where we’re going

The digitization of insurance is not going to slow down. If anything, it’ll continue to pick up. Insurance innovation was catalyzed with COVID-19, as the pandemic was an inflection point for forcing our industry to come to terms with the increasingly online nature of our work.

Specifically, there will be continued upkeep in improving and digitizing core parts of the insurance system, which will allow insurance companies to focus on what they do best — helping customers protect what matters to them. By partnering with best-in-class insurance-specific infrastructure companies, insurance carriers and brokers will be able to provide better service as well as reduce their operational costs, which will further benefit the customer.

Many companies are also beginning to understand the undeniable importance of customer experience in the insurance space — and the challenge of balancing customers’ online and real-life experiences. Insurtech carriers have done a great job elevating the customer experience. Full-stack digital carriers and incumbents are moving toward offering an online customer experience. Customer experience, however, is just one part of the entire insurance ecosystem and there is still a huge amount of work to do to modernize the entire stack.

The most forward-thinking insurance companies will double down on their core competencies and work with top-tier providers to handle the infrastructure. Insurance companies will compile best-in-class infrastructure building blocks to power their businesses, leveraging technology to remove friction and simplify processes instead of trying to build everything in-house.

The building blocks for insurance will be commoditized API-driven services for producer compliance, distribution management, digital payments, and financing.

Much of the infrastructure layer of insurance is or can be standardized, so it makes sense to pick the best partner with the best product or service so that an insurance company can invest in its unique core competencies (underwriting, investing, claims handling). As in any industry, outsourcing certain elements of the legwork and seamlessly integrating them into business operations make it possible to focus on running your business.

Ultimately the goal of this industry is to increase distribution, drive efficiency, and consistently delight their customers. For insurance companies new and old to continue to grow and best serve their community, they need to work on improving the tools and back-end operations that keep them going. The development and advancement of insurance infrastructure is a key element in the continued progression of the insurance industry.

By working together, we have so much to look forward to. In many ways, we are just getting started.

Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.




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