As the COVID-19 pandemic has pushed many insurers to embrace more technology, there has been some talk of how insurtechs can step in and help insurers navigate the ever changing digital space.
“I think [the pandemic] has brought a lot of the market to the insurtech space,” says John Swigart, co-founder and CEO of insurtech startup Pie Insurance, on this episode of The Insuring Cyber Podcast. “Frankly, it’s hastened the digital transformation that was already happening.”
Pie Insurance is a small business focused insurtech that sells commercial insurance. Swigart says the digital transformation in insurance, hastened by the pandemic, is leading to changes in the insurtech space as well.
“I would say that the biggest evolutions [in insurtech] have been the move beyond just simply taking insurance online, directly to customers, into all aspects of the entire insurance value chain,” he says. “So even in a time of incredible turmoil and challenge, we were able to, I think, improve the service that we provide to our customers.”
While it seems that new insurtechs are popping up all the time, Swigart says he doesn’t have concerns about overcrowding in the market.
“I think there’s a tremendous amount of room and space in the markets overall,” he says. “Yes, there are a lot of startups and a lot of businesses that are coming in to try to take advantage of the space but I think that’s usually indicative of a pretty significant opportunity.”
He does, however, see a different challenge for insurtechs as they begin to grow and mature.
“I think one of the biggest challenges is insurtechs have to prove that we actually can be good insurance businesses, as well as technology businesses,” he says.
Niall Williams, intelligence analyst at technology insights platform CB Insights, says later in this episode that one solution to this challenge could be increased partnerships between insurers and insurtechs.
In fact, CB Insights reported in a recent brief that in 2020, business relationships involving insurtech companies rose substantially, coming in at more than 650 partnerships for the year.
The brief said that insurers are increasingly bringing on insurtech companies as strategic partners, as they can play a role in digitizing the insurance industry by helping insurers improve their underwriting, claims, distribution and product development efforts.
“At this point, there are a number of insurtech companies that have been around for 10+ years and insurers have 10+ years of experience working with them, so it’s kind of just a natural fit where both groups are kind of in position to partner with each other and create more successful partnerships,” he says.
Williams sees insurtech companies as being able to help insurers digitize every aspect of the insurance value chain from improving back office operational efficiency to increasing the accuracy of risk models, or even creating new products.
“These are partnerships that can all drive growth or increased insurance premiums,” he says.
One challenge, however, is that insurers with legacy systems will need to take the time to understand how insurtechs operate in order to build successful partnerships, he says.
“Insurers are going to have a hard time realizing the value of AI, for instance, if their data is locked away in legacy silos,” he says. “I think an important factor in navigating these challenges is really just through experience. So as insurers and insurtech companies continue to work together, increasingly work together, the partnerships have a chance of becoming more successful as these two groups kind of understand each other better.”
Despite any challenges, Swigart and Williams both painted a positive picture of what’s ahead for insurtechs and how they can assist in continuing to transform the insurance industry.
“I’m excited for the future,” Williams says.
Check out the rest of this episode to see what else John and Niall have to say, and be sure to check back for new episodes publishing every other Wednesday along with the Insuring Cyber newsletter. Thanks for listening.
The post EP. 16: How Insurtechs Are Helping Insurers Bridge the Digital Divide appeared first on Insurance Journal TV.