“(Platformification) Is a plug and play business model that allows multiple participants to connect to it, interact with each other and exchange value.” – Ron Shevlin, managing director of FinTech Research.
Fintechs have been quick to grab this platformification and have used this as a core technology to disrupt bankers and impress customers. Insurtech firms are not far behind but so are traditional insurers who may have seen what ignoring the elephant in the room can do to an industry.
In an interview on ITIJ, Brad Rutta, former chief digital transformation officer with Generali Global Assistance in the US, said insurtech’s emergence is inextricably linked to fintech and emerged to meet consumer demand.
“As banking institutions began changing the customer experience through fintech innovations, particularly by leveraging mobile devices to provide self-service functionality, it set forth expectations for all financial services, including insurance, to create user-centric platforms,” he told ITIJ. “So, ultimately, insurtech came about primarily from customers demanding (and rightfully so) simpler and more efficient products and services through digitalisation.”
Impact of COVID-19 on insurance
John Brisco, chief executive officer of Coherent, says COVID-19 was a positive catalyst in terms of how insurers moved to become more digital-ready. He acknowledged that traditional insurers are famously known for being the laggards in digital adoption.
COVID-19 exposed this by way of inability of insurers to flexibly adapt to new business requirements, needs and customer preferences. He does concede have stepped up during the pandemic addressing three areas of the business: distribution, product development and modernising legacy infrastructure.
Partnership as a way forward
Brisco said that in the process of modernisation, traditional insurers realised the value of working with insurtechs to address the need to be more responsive.
“Working with partners who have product and platform which is ready and can be injected into your internal ecosystem of solutions is something which is obviously an accelerator towards the overall digital transformation,” he continued.
He pointed that that internal IT teams are still rolling out solutions. “And every companies are going to differ in what they build versus what they partner on. I think, people are much more embracing the more maturity of how insurtech companies are bringing platforms which can be consumed quicker than previously it could be,” he clarified.
Competitors are partners
Brisco acknowledged that some insurtechs compete for the same customers that traditional insurers are already serving. But he also pointed out that there are insurtechs that “play in the middle space” by creating a niche between the traditional insurer and the distribution element as a he called it.
He referred to these as connectors – insurtechs that build capabilities that complement the ecosystem.
Finally, there are those that provide platforms, expertise and experience to augment traditional insurers’ transformation journey.
According to Brisco, traditional insurers are willing to partner and collaborate with these B2B platforms as long as that company has a relevant enterprise capability and standards in their solutions.
Best practice for engaging insurtechs
Brisco believed that trust is important in defining the value the insurtech brings to the table. “There needs to be clarity on both sides as to what insurtechs are solving for the partnership to succeed,” he commented.
He also pointed that insurtechs bring a modern perspective on how things are done – whether it is in the use of data or the way a process is performed. For the partnership to work, therefore, requires being open-minded and willing to listen to the feedback.
“You don’t have to do it (what is being proposed) but recognise there may be other ways of doing the same thing. I think if there’s willingness to collaborate, listen and understand or why certain solutions and insurtechs have been designed. Then I think you can get that win-win harmony,” he opined.
Onboarding insurtechs
Drawing from his own personal experience as a former CIO of two traditional insurance companies, Brisco said its important for an insurance company to recognise the capabilities of the internal IT team, the limitations of its existing infrastructure, and what an insurtech can bring to the table.
Without these three things, he believed that figuring out how an insurtech fits will be akin to “trying to find a problem” as opposed to trying to support the core vision of the modernisation initiative.
“At the end of the day, it is about how the insurtech can make you better as an organisation,” concluded Brisco.
Click on the PodChat player and listen as Brisco discuss the evolving landscape for the insurance sector and the role platforms are taking to reshape the sector.
- A year on after COVID-19 entered our lives, what has changed within Asia’s insurance industry?
- Have you seen more traditional insurers modernise their onboarding and claims management systems?
- Are these modernisation projects in partnership with insurtech companies or in-house?
- What are the concerns for partnering with an insurtech? Are these concerns valid? How do you mitigate against such risks?
- Can you cite some best practices for engaging with Insurtechs?
- With some governments and regulators endorsing OpenAPI and Open Data, do you see the use of APIs as mature (aka secure) enough to facilitate the integration of legacy systems and databases with 3rd-party platforms and applications?
- What is your advice for incumbent users looking at the potential to partner with insurtechs?
- What questions should they ask insurtech startups?
- The protection of insurer’s IP
- You are the former CIO of two insurance companies. From your experience, what pre-occupies the CIO of an insurer in Asia before COVID-19 and during COVID-19?
- With sales and marketing at the forefront of customer engagements, how do you reign in the potential for shadow IT to grow outside of the CIO’s oversight?
- How does a CIO mitigate the risks of integrating a core application to a third-party platform?
