Interesting insights in Daily Fintech about insurtech and insurance innovation in the GCC countries. 

"A look at Oasis Insurance and its operations in the UAE provides some clarity in how the firm sees innovation taking hold in the region:

• Develop and be part of an insurance supply chain ecosystem
• Enable real time digital distribution
• Leverage experience to create a digital platform with direct connection to a panel of participating insurers (of which the firm has nine collaborating carriers)
• Complete the development in a financially sustainable form without significant debt or losses (profitable bootstrapping?)
• Use of open APIs (application programming interface) allowing ease of connections with legacy systems"

Pat Kelahan

Aug 29th 2019

This leads me to a critical challenge facing insurtechs and insurers globally.

Only a small number of Insurtechs have achieved the early adopter stage of the Technology Adoption Life Cycle. Most have incomplete products that insurers have been willing to experiment with in digital hubs, skunk works and digital transformation teams. They have put effort into building out the missing bits of a solution to test the potential.

Those readers of Geoffrey Moore's "Crossing the Chasm" will know that most insurtechs will not survive that brutal early phase. Too many are solutions looking for a problem.  Some will create a bridgehead in one or two insurers but not have the management team, resources and complete product that is vital to gain a critical mass of early adopters. Most will fall into the chasm. 

That is a challenge for many insurtechs and insurers. The speed of change has been gradual but is about to be sudden; some say brutally sudden.

It is no longer sufficient to show success in the US and a couple of European countries. Insuretchs need to be able to scale across  North America, Europe the Middle East, as in the GCC countries on Kelahan's article, Asia Pac.

Global insurers need technology partners that can scale in  volume and geographic countries across all insurance products and perils.

If insurtechs and insurers do not rise to that challenge there are threats galore from reinsurers. From OEMs that have eyes on the developing ecosystems that presage a move to prevention rather than cure.

Just consider the technology and commercial tsunami of change that will hit auto insurance. Autonomous vehicles, ride sharing and change from private to fleet ownership. Will insurance move to product liability from driver insurance? 

The new connected world of digital transformation moves core competencies away from those that have protected carriers over the decades. They move to integration and technology. Will insurers be the commodity suppliers of insurance or leaders of the ecosystem value chains?

There really is not much time to think about strategy and plan & resource accordingly. The speed of change is about to change abruptly as early adopters multiply and become part of the early majority. In Geoffrey Moore's model we are about to hit the bowling alley phase and few insurtechs and insurers will lead hat charge.

McKinsey predicts that only around four to five insurers will lead this race and corner the majority of premiums and profits. The rest will have to share a thin gruel of diminishing premiums and profits.

To ride the wave of early adoption into the bowling alley insurers will demand that insuretch partners have proof of scalability. Not just volumes, but all products and perils and all geographic areas. Not in three years time but now- today.

I wonder how many insuretch leaders ever read Geoffrey Moore's book and applied the principles.  written long ago and the lessons possibly forgotten. It has been updated and the lessons must be applied. 

Not convinced? Read "Change: ‘Gradually, Then Suddenly’ so watch out!"