InsurTech is the Opportunity Insurers have been looking for...(and the Threat the software vendors and SIs didn’t see coming!)

InsurTech has redefined the insurance innovation agenda

It used to be the case that the corporate CIO turned to technology providers for innovation and the art of the possible. This was largely because they didn’t have the internal resources to explore and experiment from within. This gave huge advantage to the core systems’ vendors and the systems integrators, allowing them to shape the innovation agenda of their clients.

However, the flaw in this approach is the approach itself. You see, the vendors are themselves limited by their customers and what they would buy from them. In this case, the insurers are the customers. You only have to look back at the last decade (since the launch of the iPhone and the emergence of the mobile economy) and compare it to the last 2 years (since the emergence of InsurTech). 

Pre-InsurTech innovation largely amounted to being able to access the legacy policy admin system on an iPad.

Post-InsurTech, it’s a totally different game, as I defined a year ago in The 7 Colours of the InsurTech Spectrum. The depth and breadth of innovation that is coming from start-ups and entrepreneurs under the broad banner of InsurTech is simply staggering. One reason for this is that they are not constrained in the same way that insurers are.

The consequences will be InsurTech profound

The focus for innovation has changed. The insurer’s that will survive the next 10 years realise that innovation must be about the customer much more than operational efficiency. The role model is Jeff Bezos. He didn’t make Amazon the biggest threat to many established industries by focusing on operational efficiency. He made Amazon great by focussing totally on the customer. Which is why I can buy a toothbrush at 6pm and have it personally brought to my house for free the next day.

Time to market has gone from years to months. This is possible because the InsurTech platforms are simply built for it to be this way. No longer does the product development team have to be frustrated waiting for resources and budget on the IT change programme. InsurTech platforms have bypassed the internal systems and taken IT off the critical path for new product launch.

The industry is growing with new talent. The InsurTech’s are exciting and creative places to work and play. Which is attracting new talent to look at making insurance better. If you want to see this in action, just look at Lemonade or Trov (…and the list goes on!). Just think about the awesome pool of talent that Lemonade have put together. Career insurance experts mixed with technical brilliance, empowered by entrepreneurial spirit, unencumbered by legacy and committee.

InsurTech has made many of the technology providers irrelevant. Insurance execs are not turning to the established technology industry for innovation anymore. Instead, they are finding ways to engage with the InsurTech ecosystems of accelerators and incubators. They’re setting capital aside to invest in start-ups and new ventures. And they’re partnering with InsurTechs to fast track speed-to-market and side step their internal legacy IT.

InsurTech is the digital implementation strategy that Insurers have been looking for

In this month’s InsurTech Insights for The Digital Insurer, alongside contributions from KPMG's insurance practice and Hugh Terry, I explore the subject of InsurTech as a digital implementation strategy for Insurers.

The article goes on a journey that starts with the demise of core systems and the rise of the (InsurTech) platform, to a digital strategy for insurers based on partnering with InsurTech platforms and why we will see them ditching the legacy.

To enhance the validity of the article, it includes great insight and commentary from Martin Pluschke, someone very well qualified to understand the challenges of marrying the old world with the new.

Martin and I first met during Startupbootcamp’s original InsurTech cohort in 2015. I was mentoring and he was the Exec in Residence as part of the Munich Re/Ergo support for the programme. Martin has 25 years in the insurance industry and several years working with InsurTech start-ups at SBC and Axel Springer Plug & Play Accelerator.

InsurTech is no longer about concepts, its 'Proof of the Pudding' time!

I recently caught up with Nick Sühr, the co-founder and CEO of KASKO. I’ve known Nick for a couple of years and wrote this article about KASKO in the summer of 2015.

KASKO is an InsurTech platform that allows insurers to set up new products outside the legacy IT. The platform is self-contained and provides an end-to-end environment for product development, through customer engagement and digital distribution through to policy admin.

Nick explained it to me this way; “At KASKO, we built a platform to give insurers what they where asking us for. A platform that allows them to flexibly and very quickly build new insurance products.

"For example, if an insurer has thought of a new product and they want to get on with it, at the moment they will be frustrated by their internal systems. Time frames get longer, windows of opportunity are missed and soon the momentum has gone. So, speed and ease of use are key features of KASKO.

"Next, when the product goes to market, the UX (user experience) should look at least as good as the best in InsurTech, such as Lemonade or Trov. And the platform needs to be flexible too so that if the insurer wants to add in a Chatbot or integrate it into a distribution site, it’s easy to do.

"Basically, we’ve created a platform that allows insurers to build a product in a month and not a year and half!”

KASKO turning concept into reality

This is impressive stuff, but is it real? And have they actually done it (or are they another InsurTech that talks a good story but havn’t actually delivered anything yet?

Well, as it happens, yes they have.

Nick explained they have already launched 15 insurance products in the market. One example is for Watch insurance with Baloise in Switzerland.

Launched in a month to be ready for product launch at a major conference, the insurance product is integrated with Snapsure’s automated photo recognition platform. The customer simply takes a photo of their watch on their phone, uploads it where it is identified and KASKO provides a quote and a policy.

• Other examples include;
• Retail cyber insurance with Baloise.
• Test drive insurance with activation functionality together with AutoScout24 (a leading European car marketplace) and Barmenia.
• Insured used car purchase contract together with Autoscout24 and ARAG.
• Rental deposit insurance together with landlord SAAS provider Immomio and R+V. 

Finally, there’s a tech solution for Time to Market

For as long as there has been an IT department inside an insurance company, IT has defined the critical path for product development. But the rise of the InsurTech platform is changing that (read InsurTech Insights for more on this).

For KASKO, Nick puts it down to 3 things;

1)  Omission – KASKO only does what is necessary, what the customer needs to see. By simply not doing a load of things that a traditional all-things-to-all-men-&-women core system would try to do, they take a lot of the effort out the process.

2)  Re-use – as they continue to build and launch new products, their library of repeatable functionality has grown.

3)  Flexibility – KASKO don’t know everything that they might be asked to do, so they built a platform with a flexible architecture that means it can accommodate new customer requirements easily and speedily.

The author, Rick Huckstep, is an InsurTech thought leader, public speaker and advisor to InsurTech start-ups. Rick is Chairman, The Digital Insurer