The insurance industry has been around for a long time. So long, in fact, that it would be difficult to pinpoint a specific date of origin. Not long after the Great Fire of London in 1666, the first insurance company, the ‘Fire Office’, was established, but the concept of insurance itself is older still. The industry can be seen as a steady ship, with many decades of solid experience, encompassing best practices developed and expert knowledge amassed. The industry has proven resilience and adaptability and, in recent times, is harnessing technological advancements such as AI and machine learning to automate tasks. This is just one example of innovation in the industry and yet corporates continue to be perceived as traditional compared to their digitally driven insurtech startup counterparts, and there are important considerations on both sides when considering new partnerships.
Reflecting on how traditional insurers perceive insurtech startups, Chris Carnicelli, CEO, Generali Global Assistance, told ITIJ that despite some initial uncertainty, a shared goal to propel the industry forward is bringing more traditional insurers and insurtech startups together. “Experienced insurance companies know what kinds of standards we have to adhere to and why those standards are in place. We also know that keeping up with those regulations and making sure we’re staying compliant in every aspect of our business isn’t a quick and easy task. So, when you see these start-ups moving so quickly, it’s hard not to raise an eyebrow, but I think that perception has shifted a little bit in favour of moving the industry forward,” he said. “While we manage and develop the technical aspects of our programmes in house, there’s an opportunity to learn and gain inspiration from some of these start-ups, and maybe even collaborate,” he told ITIJ.
Steady ships and speed boats
Hanbing Ma, Head of Innovation & Digital Transformation, ERGO Group AG, agrees that more traditional insurers can learn a lot from insurtechs and, if insurers are a steady ship, Ma says insurtechs are speed boats. “Insurtechs or startups in general are comparable to speed boats. They innovate quickly, which gives them a competitive advantage. They are absolute experts in their field, use cutting-edge technologies and solutions, have a high level of commitment, experience with several B2B customers and their fingers are always on the pulse of current affairs. Corporates can benefit from this in many ways,” she told ITIJ.
Antony Elliott, Head of Digital R&D, Zurich Insurance Group, agrees that there are great opportunities for mutual learning: “Back in the early days of insurtech, it often felt like insurers and insurtechs were automatically pit against each other, David versus Goliath. That’s never how we at Zurich saw insurtech startups. For us, we believed that collaborating would bring together the best of both worlds.”
Collaborating for sustainable growth
The longstanding expertise of traditional insurance companies can be paired with the agile and tech-savvy nature of insurtechs to great effect and, importantly, this is a two-way street. Ma told ITIJ that ERGO has a specific route for fostering collaborations with startups: “Our recipe is ‘Think big, start small, scale fast’. As an established company, we bring extensive industry knowhow, established processes, a huge customer base and a large amount of data to the table, which are fundamental for insurtechs. Startups can also benefit from our strong networks and the level of awareness that we as an established corporation have among our customers, in the industry and in society. Such corporations can take the startup’s development to the next level of its lifecycle.” Indeed, ERGO has over 60 collaborations across the entire value chain, including an important partnership with Air Doctor.
There’s an opportunity to learn and gain inspiration from some of these start-ups, and maybe even collaborate
Zurich is also actively collaborating with insurtechs, as Elliott highlighted: “We launched our global startup programme, the Zurich Innovation Championship, back in 2018. I’m proud to say that it’s grown to become the largest open innovation contest for startups in insurance. As research by McKinsey shows, nine out of 10 startups actually see themselves as enablers rather than challengers. Collaboration can make a huge difference, as we’re seeing for ourselves. We have recently started to put an extra focus on identifying and working with ‘zebras’ rather than the next unicorn. Zebra companies approach growth in a sustainable way: being both ‘black’ and ‘white’, they are for-profit and for a cause at the same time. We align with zebra companies’ approach to innovating with a purpose.”
Key pillars for insurer-insurtech partnerships
As well as an aligned approach, the insurance landscape is rife with regulations and processes that must be adhered to, and prospective partners must be able to navigate this. “As an insurer, we have to keep up with fast-moving developments and constantly adapt to the needs of our customers,” Ma said. “At the same time, we must adhere to important regulations and processes. The insurance sector is one of the most strictly regulated sectors of all. Therefore, we need to collaborate with agile partners that can easily adapt their course and are able to quickly develop and commercialise innovations to create a strong ecosystem. On the other hand we need to make sure that everyone is on the same page regarding compliance and regulation.”
ITIJ also spoke with James Page, Chief Administration Officer and Head of Assistance and Claims, AIG Travel, who highlighted the importance of detailed information and data. “What we would need from a prospective tech partner is as much policy information or customer data (that they have available) as they can provide to us, so that if we are the claims provider or assistance provider, we can limit the amount of information that we need to request from the customer. If we were working with an insurtech – where they were providing the sales function and we were the claims office and/or the customer service or assistance provider – then we would want an API engaging with them, to be able to request information based on certain policy or customer identifiers to make the service for the customer that much easier.”
Consistently customer centric
For Generali Global Assistance, compliance and a customer-centric focus are two key pillars. “We have historically kept our operations in house, including development, in part because our insurance products have to meet specific and nuanced standards,” said Carnicelli. “We have a responsibility to make sure our products are accurately represented and that our customers are treated fairly when their claims are processed. Having ownership over our processes and databases also drives innovation and fosters a deeper understanding of our customers and what they want and need. Any tech partner of ours would need to maintain the same standards that we hold ourselves to and, in terms of transparency, would need to give us the necessary oversight to ensure those standards are met.”
Back in the early days of insurtech, it often felt like insurers and insurtechs were automatically pit against each other, David versus Goliath
A customer-centric focus is also important to Zurich and this will be at the heart of any new partnership, along with transparency and flexibility. “We deploy new technologies where we believe it aligns with our customers’ evolving needs. However, it is also crystal clear to us that we need to be mindful of any ethical challenges by ensuring fairness and privacy, with transparency and clear accountability,” articulated Elliott. “This is why transparency and flexibility are absolutely crucial when it comes to working with startups. They need to share our values and their technology needs to be in line with our own principles. To be better set up for success, we leverage rapid prototyping and follow a scaled approach to adoption, starting with a local implementation and scaling it globally where we see potential.”
The power of new technologies
There is no denying that there is huge potential for technologies to continue to assist the insurance industries, but what are the key areas in which tech stands to have a real impact? Elliott believes that its real power is in its prediction prowess. “At Zurich, we have a deep understanding of the ins and outs of insurance, the kind of knowledge you build up over many decades. However, insurance has been undergoing a shift away from ‘detect and repair’ towards ‘predict and prevent’. Here is where technology can have an incredible impact: can we predict a disastrous event before it occurs and keep its impact as minimal as possible?”
Ma said that ERGO has benefited from startups’ unique ability to broaden horizons on the potential of technologies. “Those creative minds and experts put our focus and attention on things we haven’t looked at so far. They give us the ‘Eureka’ moment regarding new technologies and how we could use them. Startups are outstanding at this. And they have much shorter innovation cycles. Therefore, we as ERGO cooperate with startups wherever it makes sense and has an impact.”
Electronification and customisation
Page said that the most prominent area of technological innovation is the ability to provide claims servicing and response to customers 100 per cent electronically. “As an insurer, as one might imagine, we used to have filing cabinets full of claims files, but not any more. The nature of the service and communication that we provide to our customers is rooted in the same principles we founded, but all the documentation that we send to the customers, and everything they come back to us with, is now transmitted electronically,” he stated.
Carnicelli explained that an exciting area of development for Generali is in customisation. “We know that, oftentimes, customers are interested in a few specific aspects of our products and we also know that today’s consumer is very price conscious. Developing products that can be custom-tailored on an individual basis is an opportunity to give travellers a better solution for a better price and increase take-rates at the same time. We’ve been investing in this type of product development for a little while now and are really enthusiastic about the potential it has to shape the future of our industry.”
A changing reputation?
In considering how insurtechs have, or are, changing the reputation of the insurance industry, Elliott said that insurtechs have inspired insurance to truly grasp the power of technology by offering fresh and innovative new products and services. “Insurtechs are part of the next wave of change within insurance – and as a 150-year-old company, we have seen many changing times and understand that adaptability is key to succeeding in the long run,” he stated. “Insurance has definitely been catching up but there’s still more that can be done to further improve how insurance is perceived by the outside world and maybe even make it exciting for the everyday person.”
We bring extensive industry knowhow, established processes, a huge customer base and a large amount of data to the table, which are fundamental for insurtechs
Carnicelli acknowledges the industry’s risk-adverse nature and said that insurtechs are opening up exciting new avenues. But, in all the excitement, it’s important that the customer always remains at the centre of it all. “You don’t typically think of insurance as a very forward-thinking or cutting-edge industry. It’s risk-adverse by nature. Insurtech has the ability to change that perception a little bit. For those of us who work in the industry, insurtech is kind of giving it a face-lift and making everything feel a little more exciting. In a data-based business, having access to more data and more ways to work with it opens up so much potential. However, we have to remember that we’re also impacting real people on the other side of that data. So, I think the real point of inspiration here is figuring out how to leverage insurtech advancements to improve the customer experience, and to do so without cutting any corners,” he stated.
Ultimately, insurtechs can provide insurers with access to, and new perspectives on, state-of-the-art technologies and solutions, and their knowhow and agility make them impactful partners in the right contexts. The primary consideration for insurers is the customer and ensuring their experience is top notch and their changing requirements are met, and there are ways in which insurtechs can help enhance the customer journey. It’s a mutually beneficial relationship and insurtechs can benefit from insurers’ proven expertise, extensive customer bases and data to elevate their operations. Perhaps the most important consideration of insurer-insurtech partnerships is that it is an equal meeting of minds. “It is a co-creation approach. We are equal partners on equal terms,” concluded Ma. The right partnership at the right time, with a common goal and a shared commitment to sustainable growth, has the potential to enrich the sector but the insurance industry’s longstanding values must be respected and carried forward.