For the first time, investors, executives and experts gathered virtually to give insights on the future of insurtech in 2020 and beyond in Carrier Management’s Insurtech Summit 2020.
It’s safe to say 2020 so far has been unique. Predictions as to the future of the industry made as little as three months ago look very different now. All the speakers, while recognising the challenges of the current financial and operational landscape, were optimistic for insurtech’s potential to capitalise both on the immediate impacts of COVID-19 and on the “new normal”.
There is little doubt that, at least in the short-term, it will be a difficult environment and competition will be stiff for insurtechs going forward. (According to data from Willis Towers Watson, overall funding for insurtechs in Q1 2020 was down by 54 per cent compared to last quarter.)
But our key takeaway from the summit was that those insurtechs who offer profitable and tested solutions to core issues arising in the “new normal” (and grab the opportunities the new remote working environment offers) have the opportunity to put their name on the map.
Below, we explore these ideas further.
1. Embrace the “new normal”
The COVID-19 outbreak has given rise to a multitude of immediate problems, but as the lockdown begins to ease companies are starting to look forward to the “new normal”, whatever this may be.
It is becoming apparent that some form of social distancing will remain in place for some time and so the demand for remote and virtual services will continue, and potentially grow as the benefits for both the insurer and the customer are better understood and developed.
Insurtechs should view this “new normal” as an opportunity to support both the more remote and virtual world, and the knock-on consequences these changes will have to the way in which insurance is distributed and used by consumers.
For example, the remote health arena is ripe for innovation: consumers are less likely to want to visit medical centres for fear of the risk of infection and want quick answers to their medical queries. They may also be more willing to share their medical data for the sake of such solutions, opening up greater potential (and more calling) for a more “open insurance” environment.
Insurtechs who recognise and embrace these societal shifts will be well placed to capitalise on the “new normal” – and may even be the next big tech company – as COVID-19 has no doubt accelerated the pace of change. The wake of the 2008 financial crisis saw the birth of some of the most successful start-ups (eg Airbnb, Slack, Uber) and there is no reason why the same cannot be true of this crisis.
2. Create more personal relationships
As part of embracing the “new normal” and operating during lockdown times, insurtechs have a great opportunity to develop relationships with key business contacts on a more personal level – as video conversations happen between parties in their own homes, barking dogs and interrupting children and all, rather than across a meeting room table in suits.
This provides the opportunity to create strong personal bonds and have frank and authentic conversations in a manner, arguably, not possible before.
3. No more toys
The financial shockwaves of the outbreak are likely to continue long after the health risk has been mitigated.
As incumbent insurers focus on cash conservation and scrutinise existing investments, the insurtech “toys” that graced the market at the beginning of the insurtech wave, namely those offerings that were inexpensive and pretty, allowing insurers to claim to be innovative without necessarily solving a problem, will likely be discarded.
Insurtechs should now focus on solving essential and immediate problems that can contribute to the insurers’ bottom line or provide true “value-add” for a customer.