Like many legacies markets ready for change, the insurance sector has already seen its first wave of innovation.
Similar in many ways to the first novelty of opening a bank account online, insurtech 1.0 brought an age-old product into the digital age by providing customers with a way to apply for insurance online. The excitement of the customer translated into the excitement of the investors, and everyone drove off into the sunset.
Well, not quite. It seems that some have instead flown a little too close to the sun: Focusing on customer experience at the front does indeed lead to rapid growth, but not focusing on adoption at the back can lead to a very large number of claims , very fast.
That’s because insurance is essentially about risk. It follows that digital insurance innovation should primarily focus on digital insurance innovation – essentially using technology to properly assess and price risks in real time.
The truly magical (and most misunderstood) fact is that everything else can simply flow from that innovative adoption foundation: an instant, digital customer experience, sustainable growth without too many claims, and the ability to embed insurance into other digital journeys, enabling better experiences. are created for consumers, partners and insurtechs.
By focusing first on growth and then adoption, the insurtech 1.0 wave essentially flowed in the wrong direction. But there’s plenty of time to turn the tide – consumers’ huge appetite for convenient, modern insurance products has only been fueled.
Insurtech companies must keep up with the demand they have created through sustainable unit economics and sensible risk management.
So what does focusing on next-generation adoption really look like, and how should you build on that? This is our five-step plan to win in the insurtech 2.0 era.
Align your business for insurance excellence
Refocusing on underwriting innovation starts with refocusing your business.
Ask yourself the following questions:
- Do your primary KPIs include ways to measure underwriting performance alongside traditional growth metrics?
- Do most of your employees work directly or indirectly on acceptance?
- Do your business goals include explicit adoption targets?
- Can all your employees explain how/why acceptance is a distinguishing feature in your company?
If you answered no to one or more questions, it may be worth reviewing your goals, metrics, and organizational structure.
Prove your models
Nobody likes to qualify growth, but in insurtech, smart growth is the name of the game. Resist the urge to quickly scale acquisitions before you build trust in your underwriting engine. But how do you do that?