into new systems or formats. Compounded by the volume,
velocity, and variety of Big Data, it bears noting that new data
in new siloes is no better than old data in old siloes.
3 Have an even bigger problem with talent. The industry
has passed the point where talent retention is going to cut it,
and acquisition is now required, but insurance isn’t sexy and
largely viewed as populated by technology luddites, so attraction of prime candidates is going to be problematic.
4 Love a good buzzword. That’s right, in the absence of a good
strategy, the shiny object syndrome wins every time, and in
the interest of getting a “quick fix,” the insurance industry is
absolutely guilty of jumping on some buzzword bandwagons,
which are not ultimately going in the right direction.
5 Bust budgets for a living. With the possible exception of
the solutions managing airline operations, insurance core
administration system replacement projects demand more
insight into and oversight of untold numbers of moving parts,
incremental milestones, and effects on downstream systems
than other large scale IT initiatives. Scope creep, anyone?
6 Knows vaporware when they (can’t) see it. Insurance is
a tough business that demands a high degree of domain
expertise and recognizes successful shortcuts are few and
far between. Industry insiders have long been able to spot
companies with slick websites, a lot of marketing hype, and
secret hopes of signing up co-development partners disguised
as fully-implemented, paying customers.
7 Adore strategy. Over the years, insurance organizations have
been charged with development of an internet strategy, an
e-business strategy, a legacy replacement strategy, a mobile
strategy, an Io T strategy, and most recently an innovation
strategy. Unfortunately, since insurers spend the most time
and budget on maintenance of existing strategies and systems,
insurance IT executives often lack the expertise to do it right,
or the budget to implement it fully once a strategy is approved.
The problems above have been begging for a solution for years
and each new trade-show season produces a whole new crop of
trends, technologies, and ideas vying for the industry’s attention. Until recently, few of these silver bullets have proven to
have true staying power. Enter insurtech.
One could argue that insurtech, as a literal combination of
insurance and technology, has been around forever, but, there is
another element that goes into defining this movement, and that
is innovation. In better defining insurtech, it seems worth mentioning that in some circles it is popular to attempt to limit this
definition to companies offering technology products or services
to and for the insurance industry. Unfortunately, this definition
excludes startup or greenfield insurers, new distribution channel
disruptors, and more traditional insurance organizations using
technology in new, innovative ways to achieve a true competitive
Matteo Carbone, principal for Bain and Company and
founder of the Connected Insurance Observatory, said in a recent
interview with Business Reporter in the UK that an insurtech firm
is “…a player that uses technology to achieve a strategic goal.”
In the interest of being inclusive instead of exclusive, it seems
fair to say insurtech also includes any insurance-focused busi-
ness driving a majority of revenue from the sale of technology
products and services or that actively engages in research and
development (R&D) efforts to find technology that can have a
transformative effect on the industry, or which has used or is us-
ing technology to drive a change in business model, distribution
channel, and the industry at-large.
This broad definition creates an insurtech universe currently
experiencing its very own Big Bang, expanding almost exponentially each day. The sheer size of the movement, let alone the
level of complexity involved, makes it challenging for insurers to
A Jumping Off Point
As previously noted, challenges present opportunities, and
the insurtech challenge is no different. Since the launch of
the Insurance Technology Association, ITA Pro has provided
coverage and analysis of insurance and technology, and now,
through Launchpad, provides a starting place for insurance organizations, industry executives, and interested parties in need
of a tool for better interpreting, evaluating, internalizing, and
Make no mistake, this is a danger point for the industry
where it has yet to be determined whether insurtech will have a
real, positive impact, or whether innovation budgets, venture capital (VC), and private equity (PE) money will end up in a black
hole without ever creating measurable change in any area or line
of business. In fact, many insurers today have actual innovation
budgets in addition to technology or IT budgets, which anecdotal
evidence says remain, with as much as 70 percent of spending,
focused on keeping the lights on (KTLO).
Few, unfortunately, have a solid approach to allocating
innovation budget money. Must innovation spending naturally
includes emerging technologies provided by startups, or can incumbent technology providers and insurtech firms benefit from
this trend as well?
Once, the industry worried about technology being implemented for the sake of technology, for the sake of being one of the
proverbial cool kids. Today, innovation is being demanded not only
by insurance customers, but also by board members and C-level executives throughout the industry. Insurance organizations must now
determine how to invest in innovation responsibly and quickly.
Change is coming to the insurance industry. It cannot be
avoided and mechanisms for engaging in the insurtech revolution
are needed now more than ever before. ITA
Jennifer Overhulse is the principal owner of St. Nick Media Services. She can be reached for further information
or comment via email at email@example.com.