10 Trends at Heart of Insurtech Revolution - Insurance Thought Leadership

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As the insurance industry enters a period of profound change, we at Eos use a concept called the 20/20 dynamic to illustrate the point:

On a conservative basis, we believe most insurers risk losing at least 20% of their business to disruption. On the flip side, for those that embrace innovation there is an opportunity to grow their business by 20%.

Our goal is to ensure our strategic investors are on the right side of this equation.

Insurtech represents a unique opportunity for insurers to evolve their business model. Insurtech is not necessarily about disruption, but more an opportunity to take advantage of technology and data to create innovative solutions, reduce costs and capture greater value for customers, brokers and intermediaries, underwriters and service providers.

At one level, active participation is required just to meet the basic requirements of playing in the new market. For those committed to a strategic approach, insurtech can help drive true competitive differentiation, while enabling measured bets for the future.

See also: Insurtech: Unstoppable Momentum  

Underpinning this transformation are 10 key trends that we have identified and believe will be at the heart of the insurtech evolution:

1. Insurance, as we have it known it historically, will be bought, sold, underwritten and serviced in a fundamentally different way within the next three years
2. External data and contextual information will become increasingly more important than historical internal data for predicting risk and pricing
3. A majority of the simple covers will be bought in standard units through a marketplace/ exchange, permitting just-in-time, need and exposure based protection through mobile access
4. Solutions will continue to evolve from protection to behavioral change then to prevention — even across complex commercial insurance
5. Although proliferation of data and increasing transparency on the buyer and seller will cause disintermediation for simple covers, it will also create opportunities for brokers and intermediaries to innovate solutions and channels for their B2C (non-standard risk pools, retirees/older generation, healthcare gaps) and B2B (emerging and unknown risks, cyber, global supply chains, cross-border liability, terrorism) customers
6. The ability to dynamically innovate (new risk pools, new segments, new channels) and deliver on the customer promise will become the most important competitive advantage (as known risks continue to get commoditized and move to the direct channels)
7. Internal innovation, incubation and maturing of capabilities will no longer be the optimal option; dynamic innovation will require aggressive external partnerships and acquisitions
8. Simple “Grow or Go” decisions of the last decade will be sub-optimal, as the dust settles in insurtech; building in future optionality and degrees of freedom will be the key
9. Consolidation just for economies of scale will provide increasingly less marginal value in non-life as well as life insurance; real value creation will come from “economies of skill” and digital capabilities
10. Deep learning (next generation of AI), blockchain and genomics technologies will improve financial inclusion and better meet the needs of the under-insured and uninsured

We have linked the above trends to analysis of how profit pools will change over time to build an investment strategy that al

via insurancethoughtleadership.com