Insurers must fight tunnel vision to get the most out of digital efforts
Insurance companies have pushed past an initial reticence to engage with insurtech companies, but need to remain focused on the customer as they enter more partnerships and test more offerings.
That’s according to speakers on a panel, Investing in Insurtech 2.0, held at the Silicon Valley Insurance Accelerator’s Fusion event in San Francisco, on March 27.
Mikel Elizabeth Re, managing director of enterprise strategy for American Family, says that her company is “very different” than it was five years ago. No longer a “Midwestern sleepy mutual,” she explains, AmFam has invested in more than 50 insurtech companies through its venture arm, and recently bought two outright. But while there’s palpable excitement at AmFam and elsewhere for the future of insurance, it’s also important to be strategic and put yourself in the customer’s shoes, Re adds.
“As we’re investing, everything has to benefit the customer,” she says. “[The insurance industry] tends to get very focused internally – we spend all day thinking about insurance, but our customers don’t. That’s why AmFam has been doing a lot of work to seek out customer feedback. Sometimes you come up with a great idea, but the customer doesn’t really get it or want it.”
Scott Lindquist, CFO of Farmers Insurance, says that his company looks at insurtech with a “problem focus” – that is, thinking about what the business case for a partnership is and how it impacts the bottom line. With an agent-distributed product, he explains, part of the challenge is translating the value of an innovation to the field force making the sales.
“It’s been a massive journey for us. We have a chief data officer who is a SVP in the company, hundreds of people dedicated to [data and analytics], but you have to make agents want to use the processes and data,” he says.
Rajeev Jain, corporate VP for operations, strategy and insurtech at Gallagher, echoed that sentiment. He says that while carriers are good at identifying winning digital technology, operationalizing it across the company is a challenge.
“The options are more now – you have a wider spectrum to look at what you invest in,” he says. “But how do we bridge the gap between where insights take place and a person 2,000 miles away making a decision?”
Panelists agreed that a defining feature of “insurtech 2.0” is the granularity of the data that underpins a lot of the innovations. Comparing early solutions to a lake, Dan Peate, CEO and founder of the insurtech Driav, says that current solutions are more of a river, where data is guided toward a purpose.
“The future is that you’re able to have so much real-time data on the thing you’re insuring -- whether it’s a Fitit for health or an auto where you can track anything about it or a home where you can connect to see about leaks or freezes,” he says. “I don’t know that the next generation of consumers is going to believe a person more than they believe what’s on the Internet.”
For his part, panel moderate Frank Foster of the venture capital firm Vensure says that there are also more opportunities to change insurance from the core, as innovations develop and carriers and startups get more comfortable with each other.
“We’re looking for where these techs start to truly change the risk model,” he says “Other industries have seen it happen.”