NetworkNewsWire
Editorial Coverage: The successful rise of fintech has inspired
a similar wave of technological innovation in the insurance sector,
as more companies are looking for ways to serve their
customers.
InsuraGuest Technologies Inc. (TSX.V: ISGI)
(ISGI
Profile) is one of the companies in
this arena, providing software that eases the provision of
insurance for specialist sectors. W.R. Berkley Corporation
(NYSE: WRB) is adapting through the reorganization of its
business, combining divisions and creating new ones as insurance
necessitates change. Berkshire Hathaway Inc. (NYSE:
BRK.A), like many other insurers, relies on data and
analytics to constantly improve its understanding of the market and
of insurance customers’ needs. Fairfax Financial Holdings
Ltd. (OTC: FRFHF) is invested in a range of insurance
companies around the world, providing the financial support for
insurtech innovations. And AON plc (NYSE: AON) is
experimenting with disruptive technology, such as blockchain in its
insurance products, and has gained industry recognition for its
work on cyber insurance.
- Insurance technology (insurtech) is on the rise, providing
innovative, integrated systems.
- The technology has attracted $16.5 billion of investment over a
decade; the rate of investment is increasing.
- To make the most of this, companies need to adapt approaches to
insurance and the way that they work with providers.
To view an infographic of this editorial, click here.
The Rise of Insurtech
Recent years have seen fintech — financial technology — become
one of the biggest buzzwords in investment. Technology is
revolutionizing the way that money works, from huge successes such
as contactless payments to intriguing experiments like
cryptocurrency. This has made finance easier to manage for
consumers and businesses, and provided countless opportunities for
investors along the way.
That heightened pace of change has taken hold in the insurance
market. In one survey,
74% of insurance companies said that they saw fintech innovations
as a challenge for their industry, while 43% were putting it at the
heart of their corporate strategies. Insurtech — insurance
technology — is the new game in town, applying the lessons learned
from fintech and the potential of modern technology to create
innovation and opportunity within the insurance sector.
Where Technology and Insurance Meet
Insurtech is currently being driven not by the big providers but
by the innovations of start-ups. Companies such as InsuraGuest Technologies Inc. (TSX.V:
ISGI) are targeting particular niches with their
insurance systems, using this approach as an opportunity to
innovate and capture a specific market before expanding their
offerings to a wider audience. The different insurance needs of
different markets allow insurtech companies to provide added value
by tailoring to specific needs of clients while building systems
that can be adapted elsewhere.
The example of InsuraGuest shows how this can work. InsuraGuest
is an insurtech company that has initiated its distribution by
catering to hospitality sector before it expands its product
offerings into revenue streams. ISGI combines insurance provision
with software as a service (SaaS) to provide hotels and vacation
rentals easy access to the insurance coverages they need to protect
their properties, both covering gaps in existing insurance packages
and making it easier to arrange and deliver new insurance
products.
Hospitality sectors are already a relatively tech-savvy. In
Europe, 59% of property
managers use a specialist property management system (PMS) and 67%
use a channel manager. But typically insurance hasn’t been
integrated into these systems, meaning that it has to be managed
separately. InsuraGuest recognized an opportunity and solved this
issue by integrating its insurance with 71 different PMSs around
the world, giving them software access to potentially deliver their
insurance coverages to millions of rooms, thus the ability to
obtain insurance melds seamlessly with other parts of the
process.
InsuraGuest integrates with the property-management system to
distribute insurance coverages that add a layer of protection for
the property on a primary basis, should a guest experience an
accident or theft while staying at an InsuraGuest member property.
Technology takes away much of the burden of arranging insurance,
and because the technology is provided in a SaaS format, member
properties are able to buy into all the support systems they need,
rather than just buying a standalone product and then being left to
make it work.
This sort of innovation is drawing serious money into insurtech.
Over the past decade, approximately $16.5 billion
has been invested in the sector, and the pace of investment is
only accelerating. The first half of 2019 alone saw $2.2 billion raised. This increase isn’t just driven
by a desire for change from the inside; there’s also outside
pressure. Ratings companies are looking at how insurers use
technology, and their assessments could seriously impact the future
of these companies.
One of the reasons why smaller, newer companies are so important
to this trend is their combination of skills and flexibility. Like
many other start-ups, InsuraGuest has created its own insurtech
software platform, one that can be adapted to deliver specialized
insurance coverage for a range of industries. By growing the skills
and technology in-house, ISGI is able to shift the design of the
platform to meet a wide variety of customers’ needs.
Innovating Alongside Partners
Though technology allows radically new ways of working, many
insurance companies aren’t using it to its full capacity. An
estimated 90% of the resources insurance companies are putting into
technology are currently going into maintaining existing approaches
instead of exploring real innovation. Insurers are trying to do old
things better rather than doing new, better things.
Companies such as InsuraGuest offer the opposite approach. By
integrating insurance and SaaS in a single flexible package, the
company is providing a new process, one that removes the friction
for the final customers of the insurance product. This could be a
critical step in selling better insurance.
Part of the more traditional thinking that may be holding
insurance companies back is that they’re treating
insurtech providers as vendors rather than partners. This
approach can lead to outdated standards and processes being applied
to both contracting and onboarding, despite the fact that this
technology is meant to push companies forward. Doing so counteracts
the disruption that is a critical benefit of insurtech. The real
successes will likely come from companies that can overcome this
habit and effectively partner with the insurtech innovators.
Sometimes these insurtech companies themselves are built around
a more modern, partnership-based model. ISGI appears to have
ventured out into new territory. InsuraGuest’s platform is set up
to deliver insurance packages directly to partners on a
business-to-business basis. The company has also created a fully
automatized agency/broker software program, allowing agents and
brokers the ability to sign up instantly online. This speeds up the
process of distributing ISGI’s platform and products, as these
agents and brokers then become channels to take InsuraGuest’s
insurance out to their own customers.
Insurtech provides numerous opportunities for companies to
improve their insurance offerings. From better-tailored insurance
packages to seamlessly integrating insurance, software and other
systems, ISGI may provide a chance to make real change in the
insurance industry. By using technology to change the way that
insurance is delivered, companies such as InsuraGuest are pulling
the industry into the future.
Transforming the Insurance Industry
As the insurance industry faces the challenge of the modern
world and seizes the opportunities that insurtech offers, many
companies are looking for ways to improve how they work in the
sector.
For some, this means organizational change to reflect shifting
markets, products and processes. W.R. Berkley Corporation
(NYSE: WRB), a large American insurance holding company,
has accomplished this through a long-term strategy of decentralized
operations, providing the company with the flexibility to respond
to ongoing change. Recent shifts in the company’s structure include
the combination of its
two healthcare-related units into one, creating a single source
for the wide range of insurance products that the healthcare market
needs. Another of its
recently formed divisions, Berkley Prime Transportation, will
be focusing on the use of technology and analytics to provide
high-quality, responsive services to the commercial transport
sector.
Holding company Berkshire Hathaway Inc. (NYSE:
BRK.A) includes insurance among its wide range of
interests, through Berkshire Hathaway Specialty Insurance and
Berkshire Hathaway Travel Protection. Between them, these companies
provide insurance covering a wide range of sectors, including
travel, professional liability, and homeowners insurance. The
company places an emphasis on the importance of
data in understanding insurance needs, and it’s this type of
careful analytic work that allows insurers to provide suitable
products at the right rate for their customers.
A specialist insurance investment company, Fairfax
Financial Holdings Ltd (OTC: FRFHF) is engaged in property
and casualty insurance through a range of subsidiaries. These
insurance and reinsurance companies work on a decentralized basis,
each with its own management team providing a focused underwriting
strategy suited to its market, giving the company valuable
flexibility. Late last year, Fairfax announced a
substantial investment from OMERS, the pension plan for
Ontario’s municipal employees, in Fairfax’s UK run-off group,
RiverStone UK.
A global professional services firm, AON plc (NYSE:
AON) provides insurance along with data services and
retirement support. Aon has been using the latest technology to
develop new insurance products, including blockchain-based agricultural insurance policies for
smallholder farmers in Sri Lanka. This use of innovative
technology to serve a specific community shows the value of
combining innovation and flexibility to reach an underserved niche.
In 2019 the company won awards from
Business Insurance magazine for its cyber-risk solutions.
While much is happening in the world of insurance, and big
companies are expanding their insurtech offerings, real innovation
still looks to depend on the flexibility of start-ups and small
firms.
For more information on InsuraGuest Technologies, visit InsuraGuest
Technologies Inc. (TSX.V: ISGI)
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