Moving from paper-based solutions to digital solutions has long been a goal of the insurance industry.

By Jonathan Stewart, co-founder of Root

It has been brought into greater focus by the post-pandemic reality that while more people are considering certain insurance products (such as life and medical cover), how insurance products are sold is changing dramatically.

New pace, new tech

Deloitte research indicates how the insurance world survives will depend on “how effectively insurers manage their investments in people and emerging technologies”.

In addition, Deloitte believes that insurance companies are “struggling to retain and recruit high-level talent” in a very competitive job market particularly for people “with advanced technology and data analytics skills”.

PWC says that, “It’s now evident that an incremental approach to technology adoption won’t be sufficient to help insurance firms thrive in an industry that’s rapidly moving toward virtual operations.”

Likewise, RGA, one of the largest global life and health reinsurance companies (which reinsures some of the products offered via Root’s technology platform and underwritten by Guardrisk), believes insurance market dynamics will continue to shift while technology increases the pace and breadth of change.

It should be simple and easy

One way insurers are looking to grow and reach modern consumers is by accessing mass digital channels. To do this successfully, Guardrisk urges a focus on insurance products that require limited underwriting, making for short and convenient onboarding journeys.

These include simpler forms of life insurance, critical illness, disability, funeral and device insurance cover. A simple, transparent journey that is ideally tightly coupled to the core transaction is the key to relevance and sales conversion.

Underwriting decisions for these insurance products must be based on a limited number of simple questions. What is the insured person’s age and gender? How much cover do they need? If necessary, a few yes/no questions, such as “Do you smoke?” can be included. Ideally, if you already have this data, then you shouldn’t have to ask the customer again, making for a shorter, simpler journey that is optimised for conversion.

How mass digital platforms can help insurance companies

This is where insurance companies can apply the well-used principle of partnering. Businesses like Airbnb, Facebook, MoyaApp, ImaliPay and others have large digital platforms that reach millions of consumers daily and have a good idea of the most relevant insurance needs, due to the data they have on their users.

In fact, they’re able to use this data to boost conversion by optimising the timing and relevance of offers to their users, and by removing the need for long onboarding journeys with multiple questions.

Consumers engage willingly with these apps multiple times a day and platforms are looking to increase time spent on the platform as well as expand the services they offer to their users.

There is a drive among super-apps to broaden their scope into more and more facets of their users’ lives, increasing loyalty by adding access and convenience. Financial services like lending and insurance are notable examples.

By partnering with such platforms, insurers can extend their reach without having to become experts on mass digital platforms. This makes sense for the platforms, as it gives them the opportunity to offer additional services to consumers without getting directly involved in the detail and regulation that characterise the insurance sector. The challenge is that this is often hard to get done, not least because insurers don’t speak tech and platforms don’t speak insurance.

All insurtech isn’t equal

For both insurers and digital platforms, getting the right insurtech partner is key. There is a vast gulf in perspective and understanding between the two sides, not to mention the challenges of legacy technology on the insurer side.

If this is not breached, then all the potential of such partnerships is wasted and ends up in the “tried-didn’t-work” bin, or with the highly unsatisfactory “please call me” lead-generation game that so many have been trying and failing at since the early days of e-commerce.

Insurers need someone to provide the necessary enabling technology – quality APIs, flexible product structures – as well as the ability to engage digital partners using a language they understand.

Likewise, insurance is non-core to digital platforms and they don’t have the capacity, nor the interest, to wade through all the legal and product complexity typical of insurance.
Given this, an insurtech partner that can work with insurers to offer turnkey insurance products to digital platforms in a form they can actually use (read: digital products over API) to improve their offering and customer journeys is worth its weight in gold.

At the end of the day, it’s way more than just flexible and modern technology. For an insurtech partner to make a real difference, there also needs to be a genuine ability to understand the perspective and ways of work of both the insurers and the digital platforms, so that we can get to a place where insurance is offered and consumed seamlessly in digital settings where more and more modern consumers spend an ever-increasing part of their lives.

Insurers wanting to grow and prosper need to grasp the nettle and figure out how to evolve their products and get them in front of modern consumers where they are – often on large, increasingly multi-faceted digital platforms.

Likewise, ambitious digital platforms that want to become the go-to relationship for modern consumers need to find a way to solve valuable insurance needs for their users as conveniently and cheaply as possible.

Hopefully, as these two powerful forces finally come together, we’ll have an insurance sector that at long last enters the internet age and provides the relevance and value for which consumers have been yearning for so long.