Claude Yoder, Global Chief Innovation and Product Development Officer
- As insurtech offerings proliferate, to gain the advantages promised, companies need to know the opportunities afforded; know their own strengths and capabilities for engagement; and know their clients’ needs and expectations
- Insurtech is the evolutionary next step for insurance through the combination of data, analytics and technology in new and innovative ways
- Capturing information in real time through sensors or mobile devices is the newest process for the collection of data for analytics
Insurtech’s impact on the insurance industry is surging, reminding us of the influence that technological change and growth bring to the modern consumer and business landscapes and individual industries. To gain the advantages promised, as insurtech offerings proliferate, companies need to know the opportunities afforded; know their own strengths and capabilities for engagement; and know their clients’ needs and expectations, relates Claude Yoder, Global Chief Innovation and Product Development Officer, Guy Carpenter.
“The right insurtech investment decisions can bring potential value-add opportunities to many areas including the Internet of Things (IoT), infrastructure, artificial intelligence, robotics, machine learning and data ingestion. The insurtech marketplace is expanding through new startups and existing companies that are gaining a deeper understanding of the incremental and the transformational potential of insurtech,” Yoder says. “Its reach is increasingly broad and is the evolutionary next step for insurance through the combination of data, analytics and technology (DAT) in new and innovative ways. DAT supports services and capabilities that allow the industry to more efficiently and effectively drive down costs and increase client value.”
The most valuable insurtech capabilities incorporate all three components of DAT in order to:
- more effectively use available data;
- create new insights through advanced analytics; and
- serve output to users through mobile-enabled technology.
Yoder raises the question, “With the proliferation of data, is ‘having’ the data a key consideration for insurtech markets and the larger insurance ecosystem?” Some data sources are publically available and easily accessible, while others are clearly proprietary. Capturing information in real time through sensors or mobile devices is the newest process for the collection of data for analytics.
“While startups do not have a long history of data, their nimbleness and creativity allow them to collect rich data quickly. With sophisticated analytics, they can also mine the data more effectively to find nuggets of insight that drive solutions.”
Yoder believes 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.
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,” adds Yoder, “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.”
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1. CB Insights “Insurance Tech Startups Raise $1.7B across 173 Deals in 2016”, January 5, 2017