By John Cusano, Maria Gotsch and David Treat
The insurance industry is in the midst of a technological transformation. According to Accenture’s 2017 Technology Vision for Insurance, 87% of insurers believe that technology is advancing at an exponential rate and 86% say they must accelerate innovation just to maintain a competitive edge. At the same time, insurers clearly recognize they won’t succeed with in-house resources alone: 76% in the Accenture study agree they will need the strength of external digital partners and ecosystems to stay ahead of the curve.
In this environment, this year the FinTech Innovation Lab is adding an insurtech track to help entrepreneurs gain the business understanding to develop focused tools for the complex, global insurance industry. Many factors have led to increased insurtech demand:
- Newly maturing technologies are prompting insurance companies to adopt innovation faster. AI, the internet of things, devices, digital distribution and blockchain are among the technologies opening the door for insurers to rethink ways to streamline traditional industry functions. Consider a typical insurance product that features interaction between digitized financial and actuarial data, the physical asset being insured, whether a car, a home or a life, as well as an additional layer of regulation in 50 U.S. states. Technologies are making it easier to customize and even change coverage over the life of a policy—for instance, as a car or a shipment journeys from a safe route to a more dangerous one. Technologies can also automate layers of processing and data collection, and smoothly manage differences in local regulation.
- Transformation is already underway with easy, fast and friendly products like Trov and Lemonade insuring possessions, apartments and homes with tools designed for a highly pleasing customer experience. And that’s just one apparent part of the disruption. From risk management and underwriting, to product innovation, customer service, claims management and operations, the complex nature of insurance offers many areas where technologies will help modernize the business.
- The changing nature of external threats—including cybersecurity, extreme weather and flooding—demands new, technology-powered solutions to assess and underwrite risks.
- Funds are flowing to entrepreneurs as venture capitalists and big insurance companies respond to the immediate potential and invest in or partner with insurtechs.
For an entrepreneur, the Lab’s insurtech track offers an extraordinary opportunity of openness and collaboration at just the right time to seize opportunity.
- Insurtechs can expect in-depth, expert feedback on their products from a blue-ribbon group of mentors as well as guidance on broader industry issues like regulation, security and distribution. With insurers like AIG, Guardian Life, MetLife, New York Life, the Hartford, and Zurich Insurance among the 38 mentoring companies, along with eight venture capital sponsors, insurtechs selected for the program will receive unparalleled access to senior executives dedicated to help them shape technologies that address real business demands and accelerate the insurtechs’ process of finding customers. Insurance mentors are highly motivated to help entrepreneurs because until now the industry has not needed to build large in-house data departments similar to digitally dependent financial companies. Today insurers are reaching out for innovation.
- By combining fintech and insurtech, cross-fertilization can lead to new innovations. Mentors from financial services and insurance discuss the issue that are prevalent in both sectors. For instance, the need for AI-assisted advice applies to both wealth management and insurance; the cross-industry dialogue reveals unique insight.
- Building a startup in the finance and insurance capital is good for business. New York City embeds insurtechs in an environment with a deep concentration of corporate partners and potential customers, extensive expertise in digital and computational skills, and a collateral richness in the digital media tools and talent to heighten the insurance consumer experience.
The FinTech Innovation Lab fast-tracks business development for insurtechs. The application process to select the next class of entrepreneurs starts October 19. Then, beginning in April, the three-month program pairs participating entrepreneurs with financial services and insurance mentors that provide priceless feedback to scale their businesses. Technology, industry and investment forces are all lining up to make participation in the first insurtech track of the FinTech Innovation Lab a great opportunity for entrepreneurs.
Maria Gotsch, president and CEO of the Partnership Fund for New York City, and David Treat, managing director in Accenture’s financial services practice and global head of the DLT/Blockchain practice, are co-directors of the Fintech Innovation Lab New York. John Cusano is Accenture’s global insurance industry lead.