The new report from Deloitte’s Center for Financial Services is titled “Accelerating insurance innovation in the age of InsurTech,” and it looks at the different types of innovation occurring with insurance firms.
By innovation, this is defined as upgrading and digitizing legacy operations; enhancing the experience of policyholders,
distributors, and employees; and creating more disruptive changes in products, platforms, and services. While these three elements are seen as important, it’s noticeable that many insurers are devoting most of their attention and resources to maintaining or enhancing the status quo rather than embarking on detailed digital transformation strategies.
This is borne out from some interesting figures presented in the report: no more than 10 percent of innovation resources are going toward fundamentally changing how insurers do business, compared with 90 percent to keep them running as they always have. While this helps many insurance firms to ‘tread water’ it is putting them at a competitive disadvantage to those firms that are more ahead with their digital strategy or when coming up against aggressive insurtech startups. And some firms are investing heavy in digital innovation, strategy and new technologies.
In addition to technologies, leading firms are working on new operating models, assessing talent needs, and alternative market approaches in order to become more customer-centric.
The report shows how 2019 insurtech investments are on pace to be the highest ever, despite fewer startup launches. The $2.2 billion raised in the first half of 2019 is already the fourth highest amount ever, trailing last year’s total by only $400 million.
There are signs that the digital products on offer are being taken more seriously. The report indicates that insurers are moving beyond the proof of concept stage with new products. However, and problematically, many insurance companies are still treating insurtechs like vendors rather than partners. This is borne out in the finding that insurers themselves only accounted for one out of four dollars invested in insurtechs this year, leaving most carriers on the outside looking in.