Having worked in the insurance industry for almost 20 years, I am one of many who track insurers’ technology-fueled business successes, and who remain a bit skeptical about the industry’s ability to innovate for the sake of innovation. As a collective force that offers life/health and property/casualty commodity products and services, the insurance industry is faring well. In the United States alone the industry’s net written premiums are approaching $1.2 trillion (they totaled $1.1 trillion in 2014, according to SNL Financial). Globally, IT spending is expected to grow to $189.2 billion in 2017 — a CAGR of four percent.
This plays out to figures released by Statista: In 2016, approximately 3.5% of insurers’ direct written premium will be devoted to IT. But what remains largely unclear is just how much of IT is devoted to innovation.
And yet the impact of the sheer volume of new technologies impacting everyday life cannot be ignored. So it’s a relief to see that funds and attention are flowing into the insurance technology innovation space—from the 2016 ACORD Insurance Innovation Challenge, to the Global Insurance Accelerator Project in Iowa and the Silicon Valley Insurance Accelerator, to London’s InsurTech Start-up Bootcamp and to events such INN’s own Dig|In conference.
I’d like to think that insurers have awakened to the fact that our culture of conservative risk mitigation doesn’t have to overshadow the technology that can help successfully deal with it. Yet the self-fulfilling prophesy seems to continue. Consider the title and subtitle of this white paper published by Deloitte. “Insurance Industry Outlook: Insurers on the Brink. The insurance industry is facing significant disruption. Traditional business models may be in jeopardy. Are insurers ready to rise to the occasion?”
The assumption is that insurers are not ready. To challenge that assumption, I routinely scan the news looking for the exception: insurers that are using technology to innovate in new and courageous ways. And a few of the leaders are, of course. So today when I saw an interview of FitSense CEO Jan-Philipp Kruip, which was originally conducted by Munich Re and cited today by Insurance Entertainment, I eagerly scanned the story looking for a great new recipe for innovation.
FitSense is a data analytics start-up from Singapore that focuses on collecting and aggregating data from a variety of smart devices such as watches, and wristbands and smart phones in order to provide insurers with an activity score based on scientific analysis that will indicate healthy behavior—in other words a risk model.
The FitSense platform is currently able to retrieve data from approximately 50% of the smartphones in use worldwide – a mass of data that is being created by millions of users every minute, notes Munich Re.
Kruip admits that our industry has fairly long development cycles. “But what we have noticed is that – even compared to last year – the level of interest from life insurance companies has increased a lot. It is becoming more dynamic,” he says. “Our initial thought was to use the new data directly for underwriting purposes, but most of the companies we talked to are not yet ready for this, and therefore see our proposition as more suitable for increasing client engagement in a first step. The willingness to be the first-mover is rather low.”
Client engagement? With all the attention and funds now being poured into insurance industry innovation, I challenge technology solution providers to help insurers “get ready.” To do otherwise will result in missed opportunities for all stakeholders involved.
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