The world of Insurtech continues to develop and evolve. At Celent, we’ve been tracking disruptive innovation through technology across Insurance since 2011. I was a fresh “Celent-er” at the time, and the industry’s awareness of “fintech for insurance” (as it was called originally) was far from widespread.
Today, I’m pleased that insurance innovation and the term “insurtech” is now firmly embedded into everyday parlance across the industry. Although some great progress has been made, there are still open questions around the pace of change (i.e., are we moving fast enough?) and the time-to-value for some insurtech concepts (i.e., which ideas are gaining the greatest business traction?).
To help tease out the answer to these, last year at InsureTechConnect Asia, we shared the results of our “Innovators Survey” as part of our preconference session into the bets being placed by innovation leaders across the industry. The goal of this survey was to better understand from insurance innovation teams which concepts they felt were most likely to deliver business value soonest. The exercise repeated a similar study first undertaken in 2016. Interestingly, over the five years between 2016 and 2021, the pattern over where the bets were being placed turned out to be remarkably similar.
From this exercise, our conversations across the industry and observations made from studying the individual case studies over many years, the winning formula (at least from a ‘safe bets’ perspective) seems to consist of a combination of the following characteristics:
- A clear focus on distribution – with an emphasis on digital enablement and the ease-of-doing-business
- A strong end-to-end customer-centric design – where empathy and value are entwined within a culture customer obsession
- A highly digital automated business model – where data-rich event-driven design and ‘behavioural science’ are deployed to simplify engagement, add value and root out fraud at source
- Address a new risk (e.g. Cyber) and/or new patterns of consumption (e.g., usage based insurance coverage)
With another year under our belt, this recipe for value still feels relevant. Furthermore, as the industry switches to Insurtech 2.0, where data, partnerships and interconnectivity become more central to the model, it feels like we’re on the cusp of a further acceleration on the back of AI (including LLMs such as ChatGPT) and greater compute power (thanks to cloud infrastructure and the emergence of more accessible Quantum capability) with new ways of doing business (and new risks for the industry to navigate) being presented.
So, how will the industry further evolve from here?
Well, it’s probably too early to tell. However, conferences such as InsureTechConnect Asia remain great places to debate the future. Why not join the Celent team in Singapore between 30th May and 1st June 2023?
Click here to register and use the code CELENT20 for a discount.
PSIf you’re curious and like academic frameworks that can be used to help you think through the direction of an innovative business model or technology, check out the concept of “dominant design” thinking. It’s a well understood framework and I’ve found it particular helpful to explain where an innovation lies on its way to securing value and scaling – and the decisions for build, buy and partner.