It's the classic "Buy or Build" decision. Innovation tends to come from smaller companies and large enterprises find it difficult to apply the jerk manoeuvre of lateral thinking.
Partnering with insurtech innovators offers a good solution.
Insurers should be able to anticipate the optimal product portfolio, services and customer journeys that clients will delight in. Only then can they choose world-class technology to deliver the best customer experience and win above average profitability.
They can avoid being a Kodak basket case i.e. being the one to create the patents and new technology but keeping it in the labs for fear of undermining current products. See "Avoid the fatal Kodak mistake"
Chose the right partner who understands the market, has scalable and practical solutions and can prove today the solutions work on an industrial and global scale.
The Carrier, Re-insurer and Broker should focus resources on doing what they do best. And seeking strategic answers to often conflicting goals e.g.
- Deliver an Airbnb class digital experience to customers from inflexible, complex legacy core systems?
- Achieve the FAST settlement of claims like Insurtech rival Lemonade delivers and still have the time to detect & deter fraud?
- Improve customer satisfaction which implies more costs and strip out operating costs at the same time?
To measure effectively you can partner with insurtech read "Assess your Digital Transformation Maturity". In other words don't run before you can walk but also heed the warning that you must start running soon if you are to capture the lion's share of profitability.
What lies ahead from The Future of Insurance panel: Auto insurance will decline Digital distribution will rise (given demand, consumer behavior, and industry trends), but there is still a huge opportunity for face to face interaction Incumbent players are risk averse due to a fundamental misunderstanding of technology. Being risk averse is the biggest danger for incumbents in falling behind Regardless of what you think about Lemonade's potential future success or failure, Lemonade is setting an expectation for the claims and underwriting process The insurance industry will be an attractive industry for new hires given the scale of transformation that is coming The claims handler is at biggest risk of being replaced by AI Brokers will be charged with illustrating the specific value they can provide. Therefore, if brokers can't prove their value, their power will be eroded quickly.