This post is part of a series sponsored by AgentSync.
Technology evolution in every industry follows a similar pattern. Transformation doesn’t happen overnight. Rather, we are seeing a progression from nascent to maturity in the way the industry uses technology at its disposal. At the same time, the actual capabilities of technology continue to advance, so that what was “cutting edge” one day can quickly become the norm, leaving room for the next innovation to take the place of the latest and greatest.
According to AgentSync co-founder and CEO Niji Sabharwal, the insurance industry is at an inflection point. If industry leaders have reached a moderate baseline level of digitization (Driven by the need for more distributed remote workers, thanks to COVID-19), the next wave of insurance technology (InsurTech) could start to take hold. The hospitality industry is one example. So far, insurance technology is only scratching the surface of the possibilities.
There are several reasons why the insurance industry has lagged behind industries such as hospitality when it comes to technology adoption.
- The established nature of the insurance industry (it has a history going back thousands of years!).
- The fragmented nature of the industry and the way it is regulated primarily state by state.
- Lack of standardization of best practices across the industry: There are almost endless ways to “do things” as long as the end result is compliant with regulations.
- Skills and knowledge gaps that emerge as an entire generation of industry professionals retires, in addition to an aging (and shrinking) insurance industry workforce.
But they are “changing” times! At least from the perspective of insurance companies, agents and a burgeoning insurtech equally focused on ensuring easy compliance of his MGA. When Create modern digital experiences that meet the needs of the emerging insurance workforce.
We sat down with our co-founder and CEO, Niji Sabharwal, to discuss the wave of insurance technology, where the insurance industry is now and where it might be heading.
Wave No. 1: Digitizing existing processes
“The first wave of insurtech is primarily about digitizing existing processes. There are several reasons for this.
First, digital processes can incorporate redundancy and oversight, making it easier for new and inexperienced users to integrate into the process.
Second, basic efficiency gains mean that the same process can be done with less staff if needed.
Third, the digitized insurance process from underwriting to claims payment can be repeated across carriers, agents or even MGAs, reducing the need to leverage internal legacy knowledge bases. ”
– Niji Subharwal
With thousands of carriers, agents and MGAs, there is no single overarching process or system for everyone to do business. The insurance industry is incredibly regulated, but it is well known that these regulations are inconsistent from state to state. This means that each of these thousands of insurance organizations follow different rules and create their own processes to achieve the same goals.
As Niji points out, simply digitizing existing insurance industry processes has made a difference. For example, adopting digital processes inherently standardizes how an organization operates. Daily tasks move from “the way Martha has been doing it for her 25 years and no one knows why” to a standardized, repeatable process that everyone, even new hires, can follow and do can. this is, Average age of insurance agents is nearly 60and industry Facing millennial and Gen Z talent shortages.
“By digitizing our current processes and simply turning faxed documents into emailed PDFs for signatures and allowing contracts to be signed at the click of a button, we are already starting to see significant change in the industry. I’m here.
Imagine what the second wave of insurance technology might look like if we could bring existing processes into computers to achieve this effect. ”
– Niji Subharwal
Wave No. 2: New Use Cases for Digital Insurance Applications, Breakthrough Innovations
if 2022 InsureTech Connect (ITC) Conference As highlighted, insurance tech companies are all but ready to weather the first wave. But this is a new era, so understanding what it means is entering the realm of speculation that we are casting into the future.
“As the second wave of InsurTech, things are starting to get really interesting. Some insurtech companies are already doing this, using massive public or purchasable datasets to train AI models to automate things like underwriting and contract recommendations.”
– Niji Subharwal
Insurers using business intelligence as part of their algorithms can act like large insurers, but with a smaller and more efficient workforce. Again, this prediction may seem very far-sighted for insurers that still rely on manual processes, but early adopters are looking to advance AI, automation, and application programming interfaces. (API, which is like a coded gateway, an app).
“The second wave of insurtech involves discovering new use cases for existing technologies, experimenting with them, and realizing that what works for 10,000 policyholders will also work for 1 million policyholders. understanding will be included.
Developing scalable technology and “chaining” APIs together to connect tools can make all these solutions more effective and efficient. ”
– Niji Subharwal
In many cases, the business models within jurisdictions, at least within the same state or territory, are not far from each other. All life or property and casualty insurance companies operating in Ohio have the same requirements for solvency and reserves. Often they are using the same data to underwrite and build new products. These businesses may also have similar rates in some states. Insurers may be bound by the same caps on profit margins as they are in Connecticut health insurance companies.Under these traditional regulations and datasets, business models are necessarily very similar.
As a result, much of business marketing, at least in the insurance space today, is about differentiating a business through its branding, internal culture, or the non-insurance services it offers in addition to its core offerings. But at its core, many of the underlying possibilities of insurance remain the same. But, as Niji says, the second wave of insurtech is likely to start changing this, giving companies different advantages based on how they build contracts and use available data. give.
“The second wave of insurtech is likely to be a long process due to the fragmented nature of insurance. It’s hard to build, and building something lean and comprehensive may not be an easy proposition.”
– Niji Subharwal
Still, imagining the number of fields that could be impacted by emerging technologies is an interesting proposition. Onboarding, commissions, compliance…so many possibilities.
Wave No. 3: Mega Insurance?
Predicting the future of the third wave so far is really just a shot in the dark, as insurtech has barely entered what we consider the second phase of innovation. No one knows where insurance technology will take us.
One speculation is that if API chaining (multiple applications linked together and feeding information to each other in real time) becomes commonplace in different companies and different business units, it will have a long history of traditional Some big mergers and acquisitions are possible. Term insurers are sucking up small insurtechs. It seems likely that small pieces of technology will combine to form some monolithic industry giants.
Conversely, smaller, more aggressive companies may have the tools to stay tight and agile and compete at a high level.
Nonetheless, we believe that to some extent the tide lifts all ships. The insurance industry as a whole will continue to benefit from technological innovation and the digital transformation of its processes. Even if we are on the lookout for “big data” and vigilant about protecting vulnerable populations from damaging digital disruption, we believe that insurtech is transforming the industry for both those working in insurance and its consumers. We can stay excited about how we can improve.
Check it out if you’re excited to ride these waves with us How AgentSync Manage can help Turn obstacles into assets with our insurance license compliance system. If you’re just starting to automate your manual processes, or if you’re ready to envision the future of Wave 3 together, we’re here.