Insurtech is on the rise: according to a new report from Startupbootcamp InsurTech and PwC there are more than 1,300 start-ups from across the world focusing on the insurance industry. For major insurance companies the benefits are obvious – the chance to make their processes slicker and more efficient and potentially to boost customer relationships. However, what does Insurtech mean for insurance brokers?
On one side of the coin, they may present the same opportunities – but on the flipside, few brokers can afford to invest in so many new technologies and heightened technological platforms for direct insurers could be seen as a threat. That’s why
Insurance Business UK reached out to Jonathan Howe, UK insurance leader at PwC, to find out if Insurtech can work for brokers too.
So does Insurtech threaten brokers?
“Quite a few of the insurance start-ups are actually looking at that broker space,” said Howe. “They are saying we can work with the customer and we can help them get what they want. That doesn’t mean that they’re always app-based – sometimes they can be telephone based. Some could help customers do risk assessments and help them find the right policy behind that.
“So I think it really depends on what hat you’re wearing. You could sit there and say this is a real threat because they’re trying to do what we do and do it better. Or you could say this is a real opportunity because if I take some of these ideas on-board and start working with these technologies then I can do better than my competitors.”
However, while the sentiment sounds good, is that truly feasible? Is it realistic to expect brokers to make huge investments to keep ahead of the rest? According to Howe, they may not have to – because opportunities are there to actually work with the Insurtech start-ups.
“What we are seeing is that a lot of these start-ups are very small and aren’t even live with lots of customers,” he said. “So they are looking for companies to work with to launch their products. So there are start-ups out there who would be very happy to work white label at the front end with some of the smaller brokers. So I think there are solutions for all companies – large and small – if you experiment in working in partnership with these start-ups.”
So in what ways can Insurtech companies help?
“We’re seeing two main areas of focus,” said Howe. “The first is around customer interaction. We know that generally customers don’t have a great interaction with insurers. Generally insurers are trusted less than banks and often it’s a compulsory purchase and a purchase where if everything goes well you don’t see any return; and if you do see a return it’s normally because you’ve had a bad experience. So even if you’re happy with your insurer you can still feel negative about the whole situation because you’ve just had some personal loss.
“Added to that, people struggle with poor call centres, maybe too much paperwork, websites that aren’t user friendly or products that don’t match their needs.
“Insurtech companies are looking at whether it’s possible to be more user friendly; whether the experience of buying online can match that of buying from major online retailers; and whether they can get a much more personalised service. Can insurers understand people better?
“On the other side we have more back office focus where insurers are often very large, and have been around for many years, and they have complicated governance and regulatory technology with legacy systems that make processes quite slow and expensive. Now we have technology that can speed these processes up and the cost is much cheaper than it was three or four years ago.
“Insurtech focuses on two main issues – one is that it helps to boost customer engagement and satisfaction as a whole. The other is that insurance has a very high cost base – and Insurtech can help to solve that. So Insurtech companies are really trying to address problems that the industry has known that it has had for many years but they have been too expensive to address. Now might be the time that this changes.”
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