Insurtech: Winning The Battle But Losing The War?

Author: Monique Hesseling

It was exciting to visit InsurTech Connect last week; there was a great energy and optimism on what we collectively can innovate for our insurance industry and customers,  and it was wonderful to see insurers, technology providers of all sizes and maturity levels and capital providers from all around the world coming together and try to move our industry forward.  As somebody eloquently pointed out: it was insuretech meeting maturetech.

Having attended many insurance and technology conference over the years, I really saw progress around innovation this time: we have all spoken a lot about innovation for a long time, and built plans and strategies around it, but this time I saw actual workable and implementable technical applications, and many  carriers ready and able to implement, or at least  run a pilot.

All of this is wonderful, of course. The one thing however that struck me as a possible short term gain but a longer term disadvantage is the current focus on individual use cases and related point solutions.  Now, I do understand that it is easier to “sell” innovation in a large insurance company if it comes with a clear use case and tight business plan including an acceptable ROI, supported by a specific technology solution for this use case. I saw a lot of those last week, and the market seems to be ready to adopt and implement function specific analytics and operational solutions around claims, underwriting, customer service, customer engagement and risk management. Each one of these comes with a clear business case and often a great technical solution, specifically created to address this business case. Which short term leads to a lot of enthusiasm for insuretech and carrier innovation.

However, to truly innovate and benefit from everything new technologies bring to the table, innovation will have to start taking place at a more foundational level; to access and use all available data sources, structured and unstructured, and benefit fully from insights, carriers will have to create an enterprise wide big data infrastructure. Quickly accessing and analyzing all these new and different data types (think unstructured text, pictures or IoT) just cannot  be done in a classical data environment.  Now, creating a new data infrastructure is obviously a big undertaking. So I appreciate that carriers (and therefore tech firms) tend to focus first on smaller, specific use case driven, projects.  I fear however, that some insurance companies will end up with a portfolio of disconnected projects and new technologies, which will quickly lead to data integration and business analytics issues and heated discussions between the business and IT. I start seeing that happening already with some carriers I work with.  So I would suggest to focus on the “data plumbing” first: get buy-in for a new brave data world. Get support and funding for a relevant big data infrastructure, in incremental steps. Start with a small lake, for innovation. Run some of these use cases on this, and quickly scale up to an enterprise level. It is harder to get support and funding for “plumbing” than for a sexy use case around claims or underwriting, but it seems to be even harder to get the plumbing done when the focus is on individual business use cases. Please do not give up on the “plumbing”:  we might win the innovation battle, possibly lots of battles,  but lose the war.