Written By Russell Hutchinson | Original post: Why we need more insurtech, now
New Zealanders need more and better Insurtech now. Why? Because
life and health insurance is not just “growing”; it is becoming more complex. Customer expectations, product design, underwriting, compliance, claims and advice processes are all moving beyond what traditional operating models can comfortably support. Our market is competitive and dynamic. We have dozens of new products, product changes, and pricing changes each year. We have been absorbing significant legal and regulatory change in product design and distribution for the last six years and we can look forward to that continuing for at least the next two years. These exist in a complex economic and social environment – even if I only name affordability and household composition as two issues where we have seen considerably change recently.
In this business, Quotemonster sees the increasing complexity in the packages of cover selected. Across more than 115,000 comparisons every 28 days there is more coverage scope than ever before, more work done by advisers to find optimal solutions in product configuration and pricing, and more options to consider.
Complexity – along with affordability challenges – could mount – leading to reduced customer engagement. We must prevent that. Insurance offers a demonstrable consumer good. It allows us to undertake activities that would simply not be possible were we to be without this: whether that’s driving your car, which you can do with reduced concern because of your accident cover, or buying a home and starting a family, that you want to shield from the financial disaster of the sudden loss of a parent.
The complexity is accentuated by more regulation and more competitors offering more varied products, but also reflects the very nature of the product. Life and health insurance must consider three complex areas of life:
- Social: our social obligations are the foundational driver of need: providing for my family, or paying off my debts, or buying out my shares in a business should the worst come to the worst.
- Health: am I insurable? If so, on what basis – am I a typical risk, or a higher rate one? Do I need a tailored solution?
- Financial: what types and level of cover is required based on individual financial circumstances
Navigating that complexity is difficult. For insurers, for financial advisers, and for clients. Especially for clients.
Insurtech is the natural antidote to this.
One of the things tech does best is make the complex into something simpler. Retail share trading was revolutionised by online services providing tools, training, and packaging of services in easy bundles. Suddenly the opportunities once the preserve of only the wealthy and well-informed became available to many, many more.
With life and health insurance the benefits of insurtech are already emerging, even if they have some way to progress.
- For consumers, the essential, but confusing, world of insurance is slow and tedious by comparison to the slick world of online banking. But Insurtech is rapidly changing this world too. For those seeking direct offers insurtech offers solutions through financial insights, comparisons, applications, payments, claims, and processing.
- For advisers, to the benefit of their clients, recent developments include new targets use cases for AI systems. It is now common to see a financial adviser record, transcribe, extract summaries and key information, and compile their statements of advice using one of a wide range of AI tools.
- For insurers, seeking to extract more operational efficiencies and more personalised experiences.
The opportunity for insurtech is not “disruption for its own sake”; it is helping insurers and advisers deliver the proposition customers already think they are buying.
The opportunity is also about how to reach the large numbers of people who are either completely without insurance – we think that’s somewhere in the region of 1m people who are in work. Or its about reaching the people who have too little cover – which could be as many as half of the 1.8m people who are insured. Or it’s about helping people access cover that would be helpful but is out of reach due to complexity – such as good income, mortgage, or expenses insurance – which is held by only about one in six people in the eligible group.
That this year’s FSC Tech Showcase features a strong line up of insurtechs is a signal that the operating model of life and health insurance is changing, and we need that. The featured insurtechs will include: Sentro, Intellimin, Quashed, and Simfuni. Paul O’Leary Executive Director of Insurtech New Zealand will be there – and so will I. I do hope you join us. Here is a link to the FSC program – https://www.fsc.org.nz/fsc26-conference-programme-13-august