The rise of advanced technology alongside a need throughout the insurance and reinsurance value chain to improve efficiency has created a bourgeoning InsurTech start-up trend, but it’s important to find the right InsurTech fit, according to Claude Yoder, Guy Carpenter.
Traditionally, the insurance industry has been slow to adapt and modernise. But the transformational advances that have had an influence on nearly everything we do are starting to catch up with the insurance sector, notes Yoder, Global Head of Innovation and Product Development at Guy Carpenter, the global reinsurance arm of brokerage Marsh.
As a result of the growing influence of technology on the risk transfer space, Yoder explains that the urgency to further automate and integrate technology into the insurance and reinsurance business is rapidly rising.
“Insurers’ deployment of the forces of data, analytics and technology to power InsurTech tools is a critical element in optimizing operational efficiency and improving services across the insurance value chain,” says Yoder.
From discussions with market participants, Yoder notes that Guy Carpenter is aware of a growing number of players examining and developing their InsurTech services, highlighting that companies of all shapes and sizes are making tech investments and exploring the opportunity.
According to Yoder, the InsurTech sector is expanding by up to 200 companies a year, and with a range of new products and tools constantly being developed and made available, it can be a challenge to find the “right fit”.
“The industry’s recognition of the advancing capabilities of InsurTech is evidenced by a bourgeoning InsurTech startup trend. The plethora of new products and tools poses a challenge: Finding the ‘right fit’ becomes more difficult as options continue to grow and potential users find that many are not insurance-driven or insurance-centric.
“Fundamentally, InsurTech is not one size fits all; the capabilities, utilities and delivery of each technology must match a host of criteria for each company,” explains Yoder.
He continued to explain that the process of developing or identifying the correct InsurTech match is capital-intensive and requires dedication as well as significant resources. The costs can be a challenge, and particularly for small and medium-sized companies.
“In some cases, the investment to develop suitable technology and the financial burden of examining the plethora of offerings can fail to deliver a return on investment and even become an opportunity cost,” says Yoder.
Big or small, the answer to this issue according to Yoder is Guy Carpenter’s InsurTech Alliance, which was launched in August 2018 in collaboration with Numerati® Partners and its affiliated ecosystem, which includes scientists, engineers, academic institutions, public and private sector entities, and non-governmental organisations.
“InsurTech Alliance enables carriers to identify the right fit in a methodical approach. It is distinctly expert-driven and insurance-centric, not a technology-driven enterprise. It combines Guy Carpenter’s insurance industry insights with the technical capabilities and science and engineering expertise of Numerati® Partners and its ecosystem,” says Yoder.
Yoder says clients are already responding, recounting a conversation with Chuck Chamness, President and CEO of the National Association of Mutual Insurance Companies (NAMIC), who told him small and mid-size insurers are looking for options to learn and to evaluate technology applications, and the InsurTech Alliance could be an efficient way for those companies to explore new technologies without adding a new investment class or focus.
“In addition to the InsurTech Alliance, Guy Carpenter recently unveiled GC Genesis. GC Genesis is an expanded InsurTech advisory offering that serves to maximize the utilities and benefits of InsurTech tools. The two complementary services are focused on improving the core business functions of insurance carriers: distribution, underwriting, pricing, claims and operations.
“InsurTech’s continued expansion offers increasingly stronger capabilities to carriers to leverage technology and the power of data insights to achieve and sustain profitable growth,” says Yoder.