2020 saw a record level of investment in InsurTech. Despite the world being in lockdown, there was an astonishing £5.16b billion invested in the industry.
Last year was also the busiest year for mergers and acquisitions with a record number of IPOs, too.
The sector is clearly in the midst of a digitisation drive, with new technology and innovative ideas beginning to shape both the here and now, and set the stage for a fascinating future.
To explore this intriguing development in insurance, we ran a panel discussion on digitisation in insurance.
We invited one of the entrepreneurial insurtech founders sparking investment in the industry, David King (Artificial Labs), and the Head of Direct Commercial for an insurance industry leader, Steve McGerr (Hiscox), to a debate moderated by DueDil Chairman, Alan Millard.
You can watch the full hour-long, insights packed debate in our resources section, but detailed below are a few key highlights.
1. Efficiencies still to be made through digitisation
DueDil data shows that right now 75,000 new businesses are created every month as entrepreneurs venture out on their own, confident they can build a viable company.
Conversely, 25,000 SMEs are going out of business each month while a further 40% aren’t sure of their immediate future, demonstrating significant risk to be navigated.
There is a great opportunity for insurance firms to find and support new business, the challenge is in identifying which to support, making sense of data and implementing the digital systems needed to move at the speed of customer demand.
“There have been tremendous efficiencies achieved over the last couple of years,” said David King. “The real challenge that the industry still has, however, is that data isn’t all digitised and it’s slowing everything down.”
Insurance firms need to explore how to drive efficiencies in underwriting and risk selection. The industry must get faster at identifying who to work with and what risk to write by digitising data and processes.
“There are some great data sources available in the market and some amazing startups revolutionising how stuff gets done in the industry. We are on the pathway to the future but still a couple of years away from not having to rely on outdated technology.”
2. Customer demand spearheading innovation
Much of the demand for digitisation is coming from customers who want to simply assess quotes and cover from multiple sources in readily digestible format.
“There is a huge demand from customers for choice,” said Steve McGerr. “They now expect online and digital platforms to seek out quotes and purchase cover. It is up to us to respond to that.”
Steve shared how around 80% of the commercial insurance quotes Hiscox provides are delivered online now and that in his view, the number is only expected to increase.
It is therefore up to insurers to work hard and build integrated infrastructure and implement ways to meet customers where they are to enhance the customer experience.
“We are working with partners and our distribution channel to help customers get cover where and when it makes sense,” explained Steve.
“For example, we are working with an accountancy software provider, integrating our platforms to provide a quote at a time where customers may be interested in looking for cover.
“This integration also ensures if things change in the business we are able to respond with updated policy or with an amended price.”
3. Use data to enhance processes and personalise
When data is harnessed correctly, it can power significant improvements for insurers and customers alike.
From automating underwriting and pricing, to streamlining the application process, when data is leveraged via APIs, great things happen.
“At the moment we are underwriting 50% of applications automatically,” said Steve.
“Leveraging data we are able to better understand a business, the risks associated, and automate the whole process of providing cover.”
According to Steve, Hiscox are currently providing an astonishing 50% of their commercial insurance via automated service.
A figure David felt was most likely market-leading.
“If Hiscox are currently at 50% then the rest of the industry has to keep aiming higher,” said David.
“There is no reason why in the future you couldn’t aim for as high as 80-90% of applications being automatically underwritten. The data exists to do it, it’s now about getting the right tools and infrastructure in place.”
Steve added, “The commercial insurance team at Hiscox are now experimenting with personalisation in the application process with our core industries.
“We continue to iterate and enhance, using data to ensure we remain relevant to that sector.”
Find out more: Download our whitepaper exploring how the insurance industry is leveraging data and technology to build a more customer-centric future.
4. Build an ecosystem and use partners to enhance your offering
While the panelists agreed that large strides have been made, they also felt there is still a long way to go to get to where customer expectations reside currently.
With so much investment in the Insurtech industry, however, and a broad range of new ideas and technology available, it’s important to remain open-minded about the possibilities and collaborate where possible.
“It’s easy to get caught up in the here and now, but as leaders we have to envision what the future will look like,” said Steve.
“To that end, I’ve pulled together a 2025 strategy so I know where I’m trying to get the business to.”
Inherent within that strategy was a commitment to be curious around how partners, vendors and suppliers could help Hiscox meet its ambitious targets.
As well as being curious, however, you must also remain pragmatic in your approach to driving change since culture will always represent the biggest hurdle to overcome.
“My advice would be to get new technology in the hands of those going to use it and demonstrate the value immediately,” said David.
“Insurance has suffered many false dawns on innovation and people are wary of new technology, so get it to them quickly and let them use it.
“It’s a great way to overcome the culture barriers to transformation and forge new collaborations that push you and the industry forward.”
Watch the whole debate whenever you want via our on-demand recording available now.