Why Insurers Hesitate Adopting InsurTech Solutions?

InsurTech offers many useful innovations to the insurance industry. However, there are barriers prevent the technology from being more widely adopted.

It is a known fact that InsurTech can change the insurance industry and make it better and more customer oriented. Insurers across the globe acknowledge the value of InsurTech. Unfortunately, very few actually adopt it. This was confirmed by a survey of FRISS, insurance fraud detection technology provider.

The results of this survey show that only 19% of insurers have already invested in InsurTech. Even though 88% of insurance companies’ owners were convinced that InsurTech adoption offers great opportunities and half of them were found working on InsurTech apps or conducting experiments with the apps, lots of companies still hesitate.

Moreover, the study found the adoption of online channels by insurers more difficult than anticipated. In addition, 69% of insurers currently have some form of online distribution. However, the figure marks a rise of only 4 percentage points since 2016.

What Challenges Impede Adoption of the InsurTech?

The use of Digital transformation technologies, such as the artificial intelligence (AI) has been a game changer in the whole industry. It’s a new way of working with a broker to ensure the best possible policy written for a the company. Some companies also implement apps, which could effectively create on-demand insurance for situations like borrowing a friend’s car. The adoption of a peer-to-peer model can also be used to create customized group coverage and incentivize positive choices through group rebates.
Investing in the InsurTech related projects can be an opportunity for insurers to expand their products and services, increase their customer base, and leverage their analytical capabilities.

Nevertheless, while many of these innovations have been desperately needed, they’ve also come with their own sets of challenges. This industry is stable and isn’t looking for novelty; companies play on caution, which means many of them turn away from all opportunities offered by InsurTech. According to PwC research, just 43% of insurance businesses state that Fintech (and Insurtech as well) is at the heart of their business.

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Another challenge: many startups still require the assistance of a traditional broker to take over the task of underwriting and to manage catastrophic risk. The experts predict the startups will eventually warm to the hearts of big players in the insurance industry. However, it’ll take a little more time than expected. ” Startups with little or no prior knowledge of the insurance industry struggle to quickly demonstrate their value proposition”, claims Renaud Million, co-founder & CEO of SPIXII. This is where insurance companies and InsurTech startups usually realize they need each other. Despite their fundamental differences.

One more inevitable challenge: regulations. Insurers are faced with two big regulatory challenges. First, new capital regulations that were designed for banks but have been applied to insurance (such as the need to have more capital in reserve to survive a financial crisis). Second, the strong push for global standards. Insurers are often reluctant to embrace new products and services out of concern of navigating these complex compliance and licensing requirements.

The lack of urgency is another challenge meet by InsurTech. “New technologies are reducing losses and costs while saving lives and increasing customer satisfaction, increasing risks and driving new business models and consolidation within the industry. New advances such as driverless cars, machine learning, home sensors and ‘robo-agents’ empowered with artificial intelligence offer a world of opportunity for insurers,” said Gary Reader, Global Head of Insurance, KPMG International. Insurers are slow to move because they, “Lack the hallmarks of an innovative organization, such as dedicated budgets for innovation, formal strategies, executive-level support, and performance metrics.” The challenge, as pointed out by Clay Christiansen in his book “The Innovator’s Dilemma” is that those who resist change, or rest on past approaches are on a slippery slope to mediocrity and a slow decline.

New technologies, and those that adopt them rapidly, are shown to maintain the highest profit margins.

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We provide a wide range of digital business optimisation and transformation services. Our experts analyse the current state of clients’ business, develop a digital transformation strategy, implement innovative solutions and future monitor and maintenance them. Clients are able to increase the efficiency of business processes, reduce costs, improve their client’s interactions and accelerate company growth through the use of advanced digital solutions.

Platforms & Products Engineering for Business

We engineer structured platforms and products that are aligned to business requirements. To do this, we analyse future product’s needs, design and develop, test, implement and provide post-implementation maintenance. Clients get increased business competitiveness through innovative digital products optimised for market or internal requirements.

Software Development Services for Startups

We provide startups high quality software development services, speed up hypotheses testing to find market fit faster, shortening time to market and helping their products grow. We do this through collaborative ideation, MVP development, testing and scaling. By working together, clients get to market sooner and minimise risks through an iterative development approach.

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We provide clients with expert advice on using advanced technologies, helping them make informed strategic decisions for business growth and development. Our experts analyse current technology trends, provide recommendations, and develop customised strategies. Clients increase their innovation activity, optimise their IT strategies, reduce risks and increase their competitiveness with expert knowledge and advice.

Dedicated Delivery Teams

Our team of experts ensures reliable and timely completion of tasks, providing clients with ongoing support and service. We allocate teams, task them, and they plan, develop and test. The teams also provide regular updates and support. Clients get flexible and adaptive solutions to their business challenges, take minimal time to set up a team, and get a long-term and effective partnership.

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