Success in the increasingly digitalised re/insurance industry will require companies to focus equally on collaboration with insurtech firms and on improving internal transformation agendas, according to Steven Jones, Global InsurTech Client Services Lead at Guy Carpenter.
Jones argued that technology in the re/insurance industry is advancing at an ever-increasing pace, with new insurtech entrants creating pressing challenges to incumbency.
New and disruptive insurtech companies were initially written off by some carriers due to unprofitable combined ratios, he noted, but many are now trending positively and could soon see underwriting profits.
“Most recently, given the thousands of companies who have entered the market in the last five years, the focus is on partnerships in various forms,” Jones said.
“Carriers and brokers are increasing their interest in working in industry alliances, pooling resources to advance their own internal innovation programs, such as The Institutes RiskStream Collaborative, which is focused on assessing blockchain use cases,” he explained.
“Each of these is a healthy development and should continue to assist traditional carriers in enhancing their policyholder offerings.”
However, Jones also warned that re/insurers should not get “lulled into inaction” in the belief that modest enhancements and a small number of external and vendor relationships will keep disruption at bay.
“In the new ‘digital’ insurance industry, a successful path forward may be equal parts collaborating with the advancing InsurTech ecosystem and getting substantially better at your own ability to execute on internal business and technology transformation agendas,” he said.
Guy Carpenter believes that many factors have come together in the last few years to pave the way for the recent change of pace in insurtech innovations.
It began with shifts and consumer needs and expectations ranging from changes in lifestyle and asset accumulation, Jones reasoned, to the digital experience necessary in nearly any business to customer interaction.
“Digital and information technology (IT) teams are building better technology solutions, such as real-time processing enabled by cheap computation and even cheaper storage, cloud hosted environments, improved modular architecture concepts of APIs and service-oriented architectures, advanced data and analytics architectures, and the use of open source platforms in ways we thought were unthinkable even just 15 years ago,” Jones explained.
“And maybe most importantly, with a wide adoption of agile software development methodologies, small and efficient cross-functional business and IT teams are building new capabilities at speeds we are not accustomed to seeing in the insurance industry.”
Jones’ commentary follows on from the launch of Guy Carpenter’s GC Genesis advisory offering last year, which aims to help create commercial relationships in the insurtech space.