November 14th, 2017

Just Say “Know” to Insurtech; Part II

Posted at 1:22 AM ET

claude-yoder-cropClaude Yoder, Global Chief Innovation and Product Development Officer

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Continuing the discussion of insurtech’s surging impact on the insurance industry.  Part II focuses on what carriers should be doing and compelling trends for growth.

What should carriers be doing?

One success factor for companies is the ability to identify partnerships and make investments that leverage a firm’s key capabilities and recognize shortcomings that could threaten strategies and growth. To do that, it is critical for companies to understand their own DAT footprint and capabilities and how company-specific DAT capabilities relate to broader insurtech trends. This understanding highlights capability gaps and allows strategic direction to be set for a company to move toward desired products and services.

The challenge is that the broader trends are increasingly dynamic - the targets for “best in class” and even for customers’ minimum expectations are being redefined constantly. Companies must find ways to monitor constantly and accelerate their responses to market shifts.

Compelling trends for growth

Insurtech funding has increased by 65 percent per year in terms of investment dollars and has risen 44 percent per year based on the number of deals between 2011 and 2016.(1)

Given the exponential rise in interest in this space, participating companies would benefit by focusing on areas with the most potential for success and value-add within the insurance ecosystem. Providers and startups have proliferated, each with a unique capability for leveraging DAT.  Several that received the most funding and attention leveraged all three pillars to create a compelling business case for investment.

The space is naturally dynamic and influenced by many factors outside its control. For example, there is a natural interest in cyber-related risks and how to identify, quantify and control them. Several new startups profess strong capabilities in distilling this complex risk area into digestible pieces for insurers and their insureds. With cyber perils and exposure still an emerging risk, it is difficult to determine which vendors will be the “winners and losers.” Deciding which capabilities will meaningfully impact business and which vendors can deliver them requires careful consideration and will be a necessity for keeping pace with or staying ahead of the competition.

Expanding the cyber scenario into potentially all other risk areas and “saying know” to insurtech is critical to avoiding missteps and making the right investment decisions for companies seeking profitable growth.

(1) CB Insights “Insurance Tech Startups Raise $1.7B across 173 Deals in 2016,” January 5, 2017.

Link to Part I >>

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