The transformational advances that have impacted nearly everything we do are quickly catching up with the insurance industry and the urgency to further automate and integrate technology into the business is rapidly rising.
Insurers’ deployment of the forces of data, analytics and technology to power InsurTech tools is a critical element in optimizing operational efficiency and improving services across the insurance value chain. From our conversations with participants across the industry, Guy Carpenter has learned that they are increasingly examining and deploying InsurTech services. Chuck Chamness, President and Chief Executive Officer of the National Association of Mutual Insurance Companies (NAMIC), which represents nearly 1,400 members of various sizes, says interest in InsurTech technology is on the rise across all companies, from small mutuals to large insurers. “NAMIC members are very closely following what is happening in InsurTech. In many cases they have started investing in InsurTech and are looking at how it can benefit companies and policyholders,” he says.
The industry’s recognition of the advancing capabilities of InsurTech is evidenced by a bourgeoning InsurTech startup trend. It is a sector that is expanding by 150 to 200 companies yearly. The plethora of new products and tools poses a challenge: Finding the ‘right fit’ becomes more difficult as options continue to grow and potential users find that many are not insurance-driven or insurance-centric.
Fundamentally, InsurTech is not one size fits all; the capabilities, utilities and delivery of each technology must match a host of criteria for each company. The process of developing or identifying the right fit is capital-intensive and requires dedication of significant resources, which can be particularly challenging for small- and medium-size insurers. In some cases, the investment to develop suitable technology and the financial burden of examining the plethora of offerings can fail to deliver a return on investment and even become an opportunity cost. The solution to this problem is Guy Carpenter’s InsurTech Alliance, launched in August in collaboration with Numerati® Partners and its affiliated ecosystem comprised of scientists, engineers, academic institutions, public and private sector entities and non-governmental organizations. InsurTech Alliance enables carriers to identify the right fit in a methodical approach. It is distinctly expert-driven and insurance-centric, not a technology-driven enterprise. It combines Guy Carpenter’s insurance industry insights with the technical capabilities and science and engineering expertise of Numerati® Partners and its ecosystem.
“The InsurTech Alliance could be an efficient way for those companies interested in this burgeoning space to explore new technologies without adding a new investment class or focus,” Mr. Chamness noted. “While large insurers have devoted substantial resources to technology research and development as well as investment, small and mid-size insurers are looking for options to learn and to evaluate technology applications.”
In addition to the InsurTech Alliance, Guy Carpenter recently unveiled GC Genesis. GC Genesis is an expanded InsurTech advisory offering that serves to maximize the utilities and benefits of InsurTech tools. The two complementary services are focused on improving the core business functions of insurance carriers: distribution, underwriting, pricing, claims and operations.
InsurTech’s continued expansion offers increasingly stronger capabilities to carriers to leverage technology and the power of data insights to achieve and sustain profitable growth. Its complexity and the sheer magnitude of its capabilities require deep know-how, and as Chuck Chamness notes, provides the economies of scale to implement a strategy that maximizes return on investment.