The potential disruption of the insurance industry by the growing cohort of insurtech companies depends on incumbent carriers’ abilities to recognize the fundamental changes going on around them.
That’s according to a new brief from Accenture, “Fearless Innovation: Insurtech as the Catalyst for Change Within Insurance.” Insurance struggles with a poor reputiation for customer experience. Because insurtech companies represent a small percentage of the overall size of the insurance industry, expecting them to deliver all of the needed change isn’t going to work, say UK-based authors Roy Jubraj, Steven Watson and Simon Tottman.
“The way some of the insurance industry currently views and leverages insurtech makes it a far less effective force for real change and innovation than it could be,” Accenture writes. “Some traditional insurers are becoming so distracted by engaging with startups through isolated initiatives that they are failing to promote innovative behaviours across their broader businesses. Those insurers are hoping that the insurtech movement will deliver 100 percent of the change that’s required, whereas they should instead be looking to insurtech to set a good example and indicate the way ahead.”
Accenture identifies some “brilliant basics” that insurers need to embrace internally in order to fully leverage technology’s potential:
- Having a single view of the customer
- Being able to launch rates and change pricing in real time
- Offering customers a multichannel experience without requiring them to fill in information multiple times
- Paying claims quickly without the need for multiple touchpoints
This isn’t a surprise, the authors note: Insurance is by its nature a risk-averse industry that can be “quietly fearful of change,” especially due to regulatory concerns. But these risks can be mitigated, and the potential for positive transformation can be unlocked. One of the key things insurers can learn from startups is how to unlock hidden or underused value that already is within their organization.
“Insurers could (and indeed many do) learn a lot from startups – not just in terms of technology, but also when it comes to strategy, organizational culture, and operational agility,” Accenture says. “There’s actually no good reason why those incumbents shouldn’t release the trapped value and create the disruption themselves.”
There are some examples of this in the industry already – see recent initiatives from MassMutual and Allstate’s Arity unit. But for many carriers, legacy technology and processes get in the way. As insurers attempt to “rotate to the new,” it will require them to think outside their comfort zone in how they approach innovation.
“Insurers need to carefully nurture innovation and new ideas throughout their full lifecycle – from ideation right through to industrialization,” the report says. “But what really matters is that insurers create a properly defined innovation agenda, and that they have the right structure in place to support the process end-to-end.”
Accenture says there are five key things insurers should keep in mind as they go on this journey:
- Focus on delivering the “brilliant basics” mentioned above
- Work to understand the root of customers’ expectations
- Be fearless and willing to “fail fast,” like the startups they engage
- Create a comprehensive innovation structure
- Combine multiple startups, from inside and outside insurtech, into an ecosystem around innovation
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