Issues in the Insurance Industry according to Caribou Honig, Chairman & Cofounder of InsureTech Connect
At its core, insurance is a fundamentally good thing that touches individuals around the globe. Insurance industry insiders and innovators mustn't lose sight of the true purpose of insurance when making decisions based on business models and hard data. Insurance professionals would do well to keep in mind how immensely their actions can affect consumers.
The Future of Insurance
Bearing in mind the extent to which insurance permeates people's lives, the advent of the smartphone has had some interesting implications. This powerful technology, when combined with the internet, is a catalyst for change in the insurance industry.
However, many analysts are overestimating the amount of change that will occur in the next two years while at the same time underestimating the amount of change that will occur over the next ten years. Hundreds more start-ups are ready to enter the industry, and capital is plentiful. For example, one can compare the future of insurance to what has happened in the lending industry. New channels developed and banks moved from traditional infrastructures to an API focus. Banks partnered with start-up businesses, shifting their focus from scalability to sustainability. Specialists emerged to perform different roles, leading to a splintering of the value chain.
Where is Innovation Actually Happening?
A similar change is occurring in the insurance value chain, where startups are taking advantage of every component from underwriting to distribution and branding. Innovation is also occurring within each component of the chain, leading to even more evolution.
This tech-driven transformation of the insurance industry is expected to accomplish three main things: reduced friction, increased transparency, and deflation. In light of these changes, organizations must evaluate what they bring to the table and embrace collaboration.
Predictions for InsureTech
Going into 2017, insurance insiders expect the explosive evolution to continue. A second wave of corporate venture capital firms will enter the market, and international companies will begin to focus on cross-border opportunities. Risk-bearing innovations will go beyond the peer-to-peer conversation and parametric insurance will gain some momentum (though limited.)
InsureTech is all about how you solve problems within the insurance industry, whether you operate a start-up or a well-established company. In many cases, it is problems that are not technology-based, such as compliance issues, which are solved with technology.
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