Why insurtech partnerships pave the way for next-gen insurers
The insurance industry has steadily shifted from stable, incumbent carriers and a few innovative insurtechs to the amalgamation of the two. Recent headlines alone show the frequency of partnerships today. Despite a host of challenges facing the sector, new capabilities like big data and artificial intelligence continue to help insurers manage risk and protect their customers, while optimizing costs and processes. However, not all insurance companies have adapted their internal processes as swiftly. Many carriers are using legacy IT systems that make innovation difficult and costly.
Insurers rely increasingly on the tools and capabilities of an expanding insurtech ecosystem. These collaborations help insurers stay relevant in the face of a rising recession, changing client expectations, and growing competition. Global investment in insurtechs passed the $10 billion barrier by the end of 2021 alone. Insurtechs bring much-needed technological innovations to the traditionally slower-moving insurance industry with innovations like no-code platforms and API-enabled data and services. Through partnership, insurers can optimize their business models and create better customer experiences.
There are several avenues for insurers and insurtechs to collaborate, including acquisition, investment, software collaborations, and more. As technology disrupts the industry, insurtechs and carriers need to negotiate the organizational, operational, and cultural gaps between the two.
The benefits
By collaborating with insurtechs, insurance companies can more easily iterate and modernize, adapting to changing customer demands. Companies must innovate or risk falling behind technically-savvy competitors in the current unstable economic climate.
Insurtechs can provide expertise and experience solving insurance problems with the latest technology. Too frequently, insurers accrue technical debt from legacy IT systems. Insurers require expensive teams of software developers to keep their systems up-and-running. By contrast, the right insurtech partnership can provide specialized technical expertise to support insurer ambitions. A recent survey by Capgemini revealed that more than 75% of insurers are considering collaborating with insurtechs to create fresh and cutting-edge products. These alliances can also improve operational processes, customer experience, and data usage.
Insurers falling behind in the digital game risk losing customers, as 41% of consumers report that they are likely to drop providers who lack digital capabilities. Insurers are looking for ways to digitalize without losing their personal touch or risk assessment accuracy. An example can be seen in insurance company Spixii. They incorporate cognitive process automation (CPA) to enhance their user experience. CPA uses bots to scan documents and collect data; no more manually reading documents and double-entering data. Underwriters and adjusters can spend less time skimming and double-entering property documents, titles, and receipts and more time using their expertise to quickly process applications and claims. These steps toward automation start the avalanche towards enterprise-level digital transformation.
A PwC study announced that 75% of insurers reported more operational efficiency has been achieved with workflow automation, compared to manual operations because of seamless document and data processing capabilities. Imagine how much insurers can accomplish with 75% more operational efficiency.
No-code technology is another game changer in the insurance industry. With no-code platforms, product owners can quickly update rate tables, forms, or rating steps, iterating in real-time. Not only does no-code technology enable operation efficiency at a lower cost of ownership, it also creates capacity for innovation. No-code technology enables self-sufficient teams, empowering insurers to control their own destiny rather than waiting on vendors or development teams to build on their behalf. By making room for innovation, insurers can not only survive industry changes, but thrive amidst them. According to Gartner, no-code technology will be used to create 65% of all apps by 2024.
No-code, configurable automation rules, quoting journeys, and email templates help carriers and MGAs enhance customer experiences without creating technical debt or long project time frames. Designing, developing, and launching an insurance product in weeks or months allows businesses to take advantage of opportunities as they present themselves and accelerate time to value.
Insurers can work with ecosystem partners to automate time-consuming processes. Emerging technology can help with everything from opening new distribution channels that expand brand presence to the end of the insurance cycle with speeding up claims payouts to grow customer loyalty. We anticipate that insurers will expand existing collaborations and investigate new partnerships as insurtech businesses mature and develop more inventive solutions.
