5 insurtech questions for 2017

1) What are the main trends impacting the insurance industry in 2017?

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Mike Quindazzi

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Business Development Leader and Management Consultant at PwC

For nearly 100 years, the insurance industry had stayed relatively the same, but over the past decade new digital initiatives and new business models began to emerge. In 2017, I see two main drivers of disruption continuing to emerge:

2) About connected insurance, what are the opportunities for startups? Do they need a proprietary underwriting algorithm?

The customer is increasingly treated like a king across all industries, upping expectations. This, combined with other factors, is putting pressure on the Insurance industry to improve consumer experiences by creating easier interactions that find the best coverage and service available.

Emerging technologies (coupled with an increasingly connected world) are driving new opportunities for the industry. These include the shared economy, usage-based models, IoT, autonomous cars, wearables, digital health including genomics, drones, blockchain, and variations of artificial intelligence.

Traditionally legacy insurers had the advantage over newcomers as they are able to leverage existing data and analytics to generate risk insights.

3) What are the advantages that #Insurtech startups have over incumbents?

Today, new types data are available and growing exponentially each year. Much of this data is available from external sources and can be captured in real-time, therefore available to startups and incumbents alike.

As a result, new market entrants have the ability to generate meaningful risk insights, in very specific areas, with new algorithms leveraging machine learning in the cloud.

Although capital markets experienced ups and downs in 2016, record amounts of venture capital flowed into insurtech startups. Additionally, it’s a new world for startups, much different than just 20 years ago.

4) What are the main challenges for #InsurTech startups in order to gain traction in the market?

Today. startups have access to open source software, growing amounts of data, new APIs, scalable cloud computing options and the ability to source development on-demand… meaning technology barriers-to-entry have dropped. Startups have the ability to innovate quickly without the incumbrance legacy costs, infrastructure and risk adverse cultures.

It’s a very competitive world. New ventures are being started everyday looking to attract the best people and the smartest money. Venture capital is generally looking for unique companies with new/differentiated products and services that previously did not exist. If multiple companies are working in parallel on similar ideas, it’s a race to relevance.

5) How do you evaluate an #InsurTech initiative?

Startups must be able to evolve from early stage to later stage companies. Often this take years (sometimes a decade or more) of work from a group of very talented people and backers.

Strong leadership must be able to guide an organization of idea generators/developers to a team great business managers… moving from controlled chaos to structured process, all while continuing the entrepreneurial sprint.

Industry incumbents and venture investors are actively monitoring new trends and innovations. Organizations should have a team of analyst to keep management up-to-date on the latest developments and new market entrants.

Once potential use cases are identified, make sure they address specific business challenges/opportunities. Incumbent insurers may want to evaluate whether to partner with startups or build pilots themselves to test in the market.

One strategy might be to focus startups on specific sets of problems, especially those that otherwise might not be addressed in the short term. In this scenario, incumbents might consider startup programs such as incubators, mechanisms to fund companies, and strategic acquisitions.

Republished from my interview with Insurtech News. Join me on Twitter of more trends.

Business Development Leader and Management Consultant at PwC
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