InsurTechs are creating innovative solutions designed with the customer in mind. They understand that emotions and experiences drive decision making and focus product and service development around creating positive experiences for their customers.
Established insurers are losing some traction as InsurTechs win over customers by offering convenient, simple, seamless experiences. But incumbents are beginning to recognize that InsurTechs actually represents an opportunity, not a threat. As the InsurTech space hits its stride with diverse tech-driven insurance platforms and solutions that address policyholder pain points, insurers are seeking opportunities for collaboration.
Let’s explore the value of partnerships with Enabler InsurTech firms – specialists that offer unique tech expertise to incumbent insurers as well as to other new-age firms and have generated significant interest from insurers.
More than 70% of executives interviewed as part of the World InsurTech Report (WITR) 2018 said enablers could help them tackle the critical needs of policyholders or the market.
Types of enabling InsurTech firms
The WITR 2018 identified a variety of Enabler types based on their relevance to specific insurance businesses, the value they offered, and their business and operating models.
- Front-office solution providers – InsurTechs that provide process-improvement solutions specifically for the front office.
- Policy/plan management solution providers – InsurTechs that offer process-improvement solutions specifically for policy or plan management.
- Claims management solution providers – InsurTechs that deliver process-improvement solutions specifically for claims management.
- Data specialists – InsurTechs that specialize in data capture or analytics solutions for specific use cases or across the value chain.
- Technology specialists – InsurTechs that supply solutions based on a specific technology such as drones or blockchain.
Best enabler InsurTechs for short-term partnerships
For short-to-medium term (~three to five years) collaboration, established insurers are mainly turning to claims management and front-office solution providers.
Why? These InsurTech firms target the most critical phases of the insurance value chain – policy purchase and claims processing, which means they can directly impact the policyholder experience.
In fact, claims management is one of the easiest and most significant areas where collaboration can make an impact. For customers, receiving claim payment is one of the most critical moment-of-truth in the insurance value chain. Struggling after a car accident or injury, customers can be negatively impacted by a slow, inefficient claims process.
Partnering with InsurTech claims-management solution providers can help improve this process, thereby making life easier for customers when they are in trouble. These providers can reduce claims settlement time and improve customer satisfaction. They also can improve firms’ loss ratios with efficient fraud-detection techniques and loss-reduction analytics, which can significantly enhance cost savings.
While large technology vendors can provide digital front-office solutions, claims-management InsurTech firms often deliver difficult-to-replicate data/network aggregation benefits. Therefore, the opportunity costs of not partnering with them are high.
Insurers are also interested in data specialists who can provide unique insights based on data aggregation or advanced tools, allowing insurers to anticipate customers’ needs and offer them more personalized services. Additionally, data solutions that enable risk mitigation or prevention can have a long-term impact on insurers’ costs.
Best enabler InsurTechs for long-term partnerships
Front-office and claims management solution providers also have excellent long-term (more than five years) potential. Front-office solution provider offerings are highly sustainable, with a quantifiable impact on end users. Highly scalable claims management InsurTechs provide data/network aggregation benefits, and their offerings are difficult to replicate, which makes them also attractive for partnership in the long term.
Although both customers and insurers can benefit from more streamlined, digitized policy management solutions offered by policy/plan management InsurTech firms, these solution providers are less sought after than other Enabler types because they have no significant direct impact on revenues.
Technology specialists’ potential is also limited due to regulatory approvals and the lack of broad acceptance of any given solution. While some new models, such as IoT-based risk mitigation, have high benefits, customer adoption may take time. Moreover, technology is evolving so rapidly that offerings may quickly become outdated.
Through the innovative use of technology and emphasis on customer centricity, Enabler InsurTechs have the potential to transform the design and delivery of insurance coverage. They are poised to become critical partners for incumbent insurers, enabling them to shift their strategies to attract and retain customers.
Consumers buy experiences. By partnering with Enabler InsurTechs, established insurers can start selling them.
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