While most carriers have embarked on the digital innovation journey, the results have been mixed.
Executive SummaryExecutives from SSA & Company highlight a number of InsurTechs that carriers can learn from to accelerate their digital transformation strategies across various businesses and functional areas, but note that building certain capabilities can still be a lengthy process and prone to execution risk. The situation brings carriers to a key decision point: whether to partner with InsurTechs or acquire. The authors provide advice on how carriers should move forward.
Although personal insurance carriers have made more headway over the past several years, the commercial segment continues to be slower to transform. One key difference in the speed of innovation is that personal carriers have increasing access to new datasets (e.g., telematics for auto insurers) that they have been able to utilize to better assess risk and enhance loss prevention strategies. More on that later, but the key imperative, made increasingly urgent by COVID-19, is to accelerate the pace of transformation to fully digital enterprises.
To understand how innovation can transform the insurance industry, one only need look to insurance’s closest relative: the banking business. The velocity of disruption in the banking sector is a fitting example of how an industry can quickly change the way it operates and interacts with its customers. Over the last five to 10 years, the banking industry has undergone significant disruption from fintechs and from rapid changes in consumer buying behavior. No longer do consumers think of one financial institution as “their bank” where they conduct all their financial business. An increasing proportion of consumers, especially millennials, are comfortable, for example, having their checking account at Bank of America, credit card with American Express, personal loan with SoFi, mortgage with RocketMortgage and trading account with Fidelity.