We at Arun Bay like the principles behind insurtech and the potential it represents.
What we’ve implemented ourselves in the past has served us well and it undoubtedly has a crucial role, in all its forms, as part of the future of all sorts of insurance.
I say “in all its forms” because the role of insurtech in a product or proposition can be as present or, alternatively, as invisible as is appropriate. The more visible you make it, very often the more expensive its design and implementation becomes and the greater the prize of success or the cost of failure.
Shiny doesn’t mean appealing
Generally the most visible examples of insurtech occur at the interface with the end customer. Whether it’s a new front-end presentation, new platform capability or product proposition – new solutions in any of those areas represent some of the most “visible insurtech” out there.
However, like many new initiatives, just because it’s new doesn’t mean it will automatically overcome the problem insurance, particularly personal lines insurance, has faced since time immemorial – that insurance is a “grudge purchase”.
How do you change the customer’s general perception of insurance from being one of unwilling participation and deep-rooted cynicism, into one of a renewed engagement with and faith in a reliable, fair outcome? Changing those long-held perceptions is far more expensive and time-consuming than almost any amount of R&D and technology investment and yet, at the moment, investment is almost exclusively flooding in to the “science and technology” end of the process.
It is often said that the sustainable evolution of insurtech relies on scalability and distribution, and that is definitely the case. But within that, there are difficult questions that investors need to ask of innovators, and that the innovators need to ask of themselves.
What customers want vs the effort they’re prepared to make
In the quest to deliver a bold new customer-facing proposition, just how much do you expect customers’ perception of insurance to shift? What if it doesn’t shift at all? How do you even communicate your point-of-difference to a cynical audience? Why should they care?
The real-world answers to those questions will only become known once the product is out … in the real world. So how far do you go, how deep do your (or your investor’s) pockets need to be before you get those answers? Where do you go if they’re not what you expected?
As with any new idea, there is inevitably a leap of faith at launch. But any froth of excitement and anticipation that surrounds that bold leap has to be checked against an experienced, realistic evaluation of just how far along the scale you might be able to shift customer engagement.
Customer-facing insurtech is exciting, for sure, but it has to evolve from being almost the preserve of science and technology that it so often is at the moment, into the tool that clearly and directly serves the burning needs of customers, before it earns its crown as driving (r)evolution in insurance.