Embracing the Bogeyman

So much technology; so many possibilities.

Increasingly for the property and casualty insurance industry, however, it feels as though a greater ease is developing around technology and technological advances.

No longer is technology seen in p&c insurance as the stereotypical (and likely inaccurate) 20-something bogeyman intent on disrupting – destroying, if necessary – any trace of how things were once done. The bugaboo seems to have given way to a friendlier visitor of late.

An element of “what lurks under the bed” remains, of course, particularly among the steadfastly resistant. But that may be a good thing.

Technology is here and has been for some time; change is occurring and will continue.

Industry players are meeting that change with feelings ranging from trepidation to excitement; interest to relief – the last for those thankful that forces from beyond are providing the push necessary to vacate long-held approaches and try something new.

The next phase turns on response. Just because the p&c industry came late to the party does not mean it must leave without favours in hand.

The push for change seems to be happening in step with a few realizations: maybe – just maybe – not every search engine, every start-up, every disruptor wants to take over the insurance game.

Dealing with ever-rising customer demands, claims and the regulatory process may be something better left to those with experience and skin in the game.

Likely, the better play – something that is quickly morphing into a win-win for both those inside and outside the industry – is to partner on technology, ideas and new approaches and leave the insurance to those in the actual business of insurance.

That hardly means industry players can afford to be complacent. In fact, insurers, reinsurers, brokers, anyone in the business, really, should always think that someone is looking to eat their lunch.

Again, success will turn on response. Staying put is not the answer, but neither is sudden movement driven by panic.

Measured assertiveness – backed by a hard look at one’s business, customer demands, technology options and partners who can deliver and provide fresh perspectives – may be the best way to go.

With the explosion of fintech and insurtech efforts around the world, change represents an opportunity for the p&c industry right now. Failing to embrace the inevitable evolution in a timely manner will, no doubt, see that window close tight.

Seizing the opportunities demands that p&c players have a plan and accept that flexibility and agility are essential going forward.

In May, the Toronto Financial Services Alliance suggested governments must develop and articulate a clear fintech strategy, elements of which include identifying specific priority areas and aligning public sector support to incentivize innovation.

Looking at distribution of fintech start-ups by financial services offerings in the Toronto area, the alliance noted the largest percentage (26%) relates to banking (payments); insurance accounts for 6%.

Matteo Carbone, founder and director of the Milan-based Connected Insurance Observatory, said during a recent visit to Toronto that an insurer’s safest bet for survival as insurtech enters its second wave is to make customer choice a focal point.

Carbone sees an increased openness to partnering. “There are many start-ups that are starting to provide the kind of tools to improve the effectiveness of informational channels, not to disrupt them.”

Stephen Applebaum, senior advisor for StoneRidge Advisors, recently wrote that while some insurtech solutions are now being used, “many more of them are still conceptual and speculative and adoption may be anticipated in the future.” Their eventual adoption, Applebaum predicted, “will, ultimately, transform the ways in which insurance products are created, priced, packaged, marketed, sold, distributed and serviced.”

The p&c industry must change, employ technology and partner to be ready. Being prepared and informed will help transform that bogeyman into a friendly ghost.