EXCLUSIVE: ‘The Flash, The Hulk and Elastigirl…Insurance Superheroes Assemble!’ – James Tall in ‘The Insurtech Magazine’

In the ever-growing insurance universe, insurtechs and insurers are sizing each other up and seeking the relationships that will help them to future-proof their organisations. In this shifting landscape, James Tall asks: who are the heroes, who are the underdogs and who can bring them together? 

The insurance industry has typically been served by fragmented processes, driven by its legacy systems. But in the last few years, like many other sectors, it’s become more motivated to make use of the latest technology to improve operations and enhance underwriting, pricing and loss control capabilities.

Whether it’s machine learning, robotic process automation (RPA) or data aggregation and analytics, the bold rise of insurtech has heralded technological innovations designed to squeeze out cost efficiencies from the incumbent model. The world’s investors are paying increasingly close attention to a sector that’s reshaping itself. Global venture capital investment in insurtech grew from $1.8billion in 2016 to $10.5billion in the first three quarters of 2021 alone.

But in this new world order, what are the respective roles of insurtech and legacy providers? In an ever-expanding insurance universe, what does each protagonist really offer? There are a lot of heavy hitters on display, but whose team is everyone really on?

One organisation that’s well-placed to offer the answers is EIS, a digital platform provider for insurers. The company positions its proposition as ‘coretech’, which essentially means it works with insurers to help them to rebuild their business around the latest Cloud technology. EIS has more than 11,000 APIs in play and integrates with a number of insurtechs in its quest to future-proof the insurance industry.

“At the moment, insurtechs are fairly point-focussed,” says its head of strategy for EMEA, Rory Yates. “This means that they can solve a particular problem particularly well. But things now need to go much deeper in our industry.

“We passionately believe that insurers have got to shift their platform into a new place to be able to get the most out of the growing range of insurtechs. We see this as enabling insurers to act like insurtechs, through their core technology.

“This involves the enterprise design of insurers fundamentally changing. And in terms of where insurtechs are going, I think they’ll increasingly want to integrate and build new ecosystems, because they’re then solving more of the problems that insurers face.”

In a recent episode of the podcast EIS Coretalk, recorded live at Insurtech Insights Europe 2022, panellists considered whether insurtechs are the superheroes or victims of the insurance industry. Host Edward Halsey of challenger insurance broker hubb, suggested that insurtechs could be seen as Thanos, ultimately a

wrecker of worlds, albeit with good intentions. It’s certainly a volatile time for insurtechs as they reveal their true identities and face a world filled with both opportunity and threat.

While one could argue that insurtech has moved past the peak of the hype cycle, with success stories like ManyPets (formerly Bought By Many), which now has more than 500,000 risks on its books across three countries, challenges remain in the aftermath of the pandemic and continued economic disruption.

“It’s healthy, but at the same time it’s really hard for some of the smaller players, because it’s hard getting that visibility and conversation,” explains Charlotte Halkett, its chief commercial officer. “If insurtechs are the speedboats out there in the oceans of the industry, then, when the waters are really choppy, it’s hard to get the attention and stabilise themselves. They normally don’t have a very long runway. But I’m excited by what the speedboats can do, because we need new ideas, and in a really uncertain world, this is our superpower.”

“The insurtechs are fantastic,” adds Tony Grosso, chief marketing officer at EIS. “They’re often point solutions that are solving a real problem in the market that the traditional insurers weren’t able to solve. They’re built with the most modern technologies, with the right business architectures. They’re customer-centred, not product-centred, and they’re open and therefore able to provide the best digital experience.

“But”, he says, “many of them lack scalability; they lack the breadth to support the enterprise of an incumbent insurer.”

While they may see a need for tweaks under the hood, the good news is that the traditional carriers do also see the value of working with insurtechs. The incumbents are reminiscent of Captain America – trustworthy and dependable, but relying on some Avengers-style partners to help them catch up fast in a world where everything has moved on.

“Over the last decade, when it comes to working with insurtechs, we’ve seen this evolution from ‘yeah, OK – we need it. It’s adapting to what we’re doing – like Lego brick’ to ‘yeah, that’s not really relevant – or it’s not going to be big enough’,” says Lisa Wardlaw, Global Head of Insurance with Geosite, which helps large insurance companies modernise their workflows and leverage data.

“But ultimately, what’s facing all of us – carrier and insurtech alike – is that the expectation of customers is outpacing all sides. We need to become firm allies, but we need to extend it beyond something that’s basic automation. We need to actually create a new space in the market. In a world where crypto and non-fungible tokens (NFTs) and all these things are coming to light, we may not be ‘cool’ anymore, but we are the industry that actually made the intangible tangible. Let’s remember that and push our ambitions. We need to play bigger in the digital economy.”

This is where a Tony Stark-like concept like coretech comes in – the architecture of the future that supports greater depth of product and service. Coretech can perhaps be viewed as a great equaliser that can better fuse insurtech and insurer: the enabler of the future of insurance.

An often-wondered-about scenario in the emotive world of superhero lore and the plethora of online chatrooms is who would win in a battle between The Flash and The Hulk – or indeed, would their respective strengths make them the perfect team?

This provocative scenario mirrors the relationship between insurtechs and incumbents in many ways.

“There are incredible, important characteristics on both sides,” says Halkett. “Insurtechs represent The Flash with their speed and agility, and the ability to quickly go to the heart of where the problem is. But it really is all about teamwork and communication – recognising why the incumbents have been around for 100, 150 years. They have an incredible depth of understanding and the ability to weather the market and its associated risks. They’re a solid proposition.”

It’s fair to say that the shiny new insurtechs have the edge when it comes to getting close to customers and looking for new solutions. They’re usually less weighed down by company politics and have the freedom to be more disruptive. At the same time, an incumbent really has the depth of data, the expertise, understands regulatory parameters and can influence the direction the market goes in. When the two come together, it can be very powerful.

“I definitely agree that insurers are like The Hulk, especially with those chunky legacy systems,” adds Wardlaw. “I would also add another superhero to the team – think ‘Plastic Man’, or ‘Elastigirl’. I think we need to be much more fluid and elastic in our ability to serve customers and to bring technology to its rightful destination.

“I think what happens so many times is that, as carriers, we stop that fluidity. It can take three months to get a proof of concept approved by the board, but what we miss is that none of us will change our industry if we don’t get the new solution to the market, to the end customers.

Being elastic, in my mind, would be one of the biggest strengths needed, and would also complement what the insurtechs need, in terms of pace, timing and decisions.”

If insurtechs are The Flash, insurers The Hulk, then it follows that the likes of EIS, as a coretech provider, can fulfil the desired role of an Elastigirl. This is the mash-up the industry needs, and it could help to overcome ‘the villains’ of the piece. “Fear of change is a problem,”adds Halkett. “I hear that from across the industry, particularly a fear of companies from adjacent industries moving in – whether it’s retailers that can offer amazing customer experiences, or entrants from the banking industry and so on.”

“What I’d put out there is that there’s nobody in a better position than the people in this room [Geosite, EIS, ManyPets and the assembled industry delegates] to serve the needs of customers looking to take the fear of risks away from their lives. We understand those risks and what it takes to navigate them. We can help people to mitigate them, change them and let people live the life they want to live.”

Another villain lurking in the shadows is the historically rigid nature of the insurance industry.

“I’m an accountant by trade, so I’ve got an inherently linear nature,” explained Wardlaw. “But one of the problems I recognise we face is an over-indexing of our linear nature, which may have brought us up to previous great heights but is now becoming a bit like our kryptonite.

“We need to overcome this quickly. We need to become better at introducing non-linear strategies that help us to evolve, adapt and problem solve. It’s like we’re all on the same hamster wheel, and we all think that if we just take the speed up a notch, we’re winning. We do need to run at a fast pace, but we may also need to throw ourselves off the wheel once in a while and run in unchartered terrain.”

The future of the insurance industry will be shaped by the new dynamics between insurtech and insurer. Like the longed-for DC and Marvel crossover, protagonists will come together to explore new dimensions and fight existential threats. They will need the right weapons.

They need technology that acts like the bite of a spider, not kyptonite; a catalyst to supercharge their powers.

“If we believe that the future of insurance is going to be different to its past, why would we think that technologies built to support the insurance of yesteryear are going to take us forward,” says Grosso. “We’re going to need to treat customers as a channel; offer them the products and services they want and need, when they want and need them. We therefore need to build customer-centred systems, not product-centred ones, to become the insurers we want to be, not the insurers that our legacy systems allow us to be. That’s the real superpower for the insurers of the future.”

This article was published in The Insurtech Magazine #07, Page 16-17