Insurtech: via technology partnership or mergers and acquisitions?

Insurtech dominated media headlines in 2016 and became a recurring theme in research reports. This year we can expect more of the same as digital technology continues to reshape traditional practices and attract startups and challenger brands.

According to survey results released in January by Willis Towers Watson and Mergermarket*, insurers believe the immediate priority is to digitise their businesses as quickly as possible. Almost three-quarters (74 per cent) say they lag well behind fintech leaders and must catch up.  

Fergal O'Shea, EMEA life insurance M&A leader at Willis Towers Watson, said: "Insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through internally driven innovation, joint ventures and M&A activity. For those that hesitate, there remains the commercial risk that they will get left behind and fail to capture future generations and younger policyholders who are more likely to engage via digital distribution.”

Almost half the survey respondents (49 per cent) expected to make an acquisition to acquire digital technologies in the next three years, and nearly all respondents (94 per cent) thought distribution is where digital technologies will make the greatest impact in the next five years.

More than three quarters (77 per cent) said web and mobile will be a key focus for the next two years, with big data, automation, robo-advice and sensors also identified as being significant in the next five years. Insurers also recognised the huge role that digital technology can play in increasing operational efficiency and enhancing customer experience.

Analytics is another growth area highlighted by the survey. Nine out of 10 respondents said they have investigated ways to gather more information from their customers and 79 per cent use social network data.

Even though technology startups can now steal market share, the survey revealed that insurers believe they will prevent this by adopting new technologies themselves and by adapting to a changing marketplace. Just 8 per cent saw new entrants from the technology sector as a major threat to their business. 

If insurers are to bridge the technology gap, they need to work closely with specialists such as RDT. A technology partnership is another way of describing the joint ventures mentioned by Fergal O’Shea, and it can be a quicker and more effective route than mergers and acquisition or internal innovation.

As a technology partner and industry expert, RDT enables insurers to implement digital products and services across all parts of the insurance chain. Distribution, underwriting, claims and settlement are supported by versatile cloud-based technologies that create a powerful new platform.

In this sense, joining forces with RDT is a soft merger – a blend of two insurance businesses and the creation of a new infrastructure, but without the administrative or operational hurdles associated with a conventional merger or acquisition.

* Willis Towers Watson and Mergermarket surveyed 200 senior-level insurance executives in 2016. The aim was to map the changing attitude of insurers to digital technologies and to examine the extent to which companies are using M&A strategies to realise their ambitions.

Digital distribution and the rise of the ‘Nomad’

Accenture has highlighted the rise of a distinct group of insurance customers whose focus is resolutely digital and mobile.

In a report released this month titled The Voice of the Customer: Identifying Disruptive Opportunities in Insurance Distribution, the consultancy firm identify a growing number of people – particularly so-called millennials – who want to purchase insurance in the same way they buy consumer products.

Accenture surveyed more than 30,000 people and divided them into groups according to digital experiences and preferences. The term ‘Nomad’ was used for the most digitally active group, who wanted speedy access to insurance through smartphones and other mobile technology.

Nomads are drawn to pay-per-use insurance, especially for cars, and want the convenience and immediacy of buying online. As Accenture points out, the future of distribution will increasingly be shaped by this group. The report states: “To remain relevant and become an everyday insurer, carriers need to change their business model from one that is product- and process-driven to one in which the customer is central, data and analytics drive most decisions and experiences, and the key enablers are advanced technologies”.

RDT builds the technologies that are redefining user experience and giving providers greater focus and accuracy. We’ve done it with Equator, which centralises rates and enriches data, and now we've created technology that directly addresses the needs of Nomads. A good example is Trice, RDT’s groundbreaking app, developed for Trice Insurance and unveiled at the InsurTech Rising conference last November.

Old habits needn't die hard

Did you resolve to embrace insurtech this year, to reap the benefits of improved customer experience, get your products to market more quickly or simply resolve to be more efficient?

With January fast coming to a close, have you forgotten or are you ignoring those resolutions that you made at New Year? You’re not alone, research shows that 63% of Britons have failed to keep a resolution and 66% of these didn’t manage to keep them for a whole month.

As the year progresses it becomes harder to keep our new habits; the same research shows that less than 14% permanently adopt their resolutions. The majority of us drift back in to our old comfortable ways and find ourselves making the same resolutions for next year.

It doesn’t have to be like this, you don’t have to work alone, you can partner with RDT. Using our expertise in technology and insurance we can help you to achieve your goals.

We can help you revolutionise your customer onboarding by using external data enrichment to minimise the questions and time required for your customers to get a fully underwritten quote.

Our suite of products cover all parts of the insurance chain allowing you to realise efficiencies across distribution, underwriting and claims settlement.

Contact us to find out how we can help you

Insurance requirements for automated vehicles

The DfT has proposed amendments for the motor insurance framework to include automated vehicles. The amendments will require changes to legislation, however the government says it will change as little as possible in order to enable the market to develop the appropriate products for AVs.

The proposal is that an insurance company will cover both a driver’s use of a vehicle and the car’s AV technology. Having appropriate insurance will still be compulsory and the insurance would cover times when motorists are in control and when cars are in automated driving mode.

Agile - Sprinting and the Daily Scrum

In our previous article on Agile meetings, we discussed sprint planning.  Let’s look at what happens next.

Sprinting and the Daily Scrum

Once we’ve finished sprint planning and have a commitment, we are ready to start the sprint. This is a two-week time box in which the team creates a tranche of working, potentially deliverable software.

During a sprint the team will hold a daily scrum, a 15-minute meeting in front of the sprint backlog (a visual display of what needs to be done, usually in the form of a whiteboard covered in written-on Post-It notes). This provides an opportunity to synchronise as a team and talk about what we’ve done, what we plan to do and anything standing in our way.

The scrum master oversees the meeting and listens out for any problems that may have arisen that could cause a delay.  It’s their responsibility to remove impediments and mitigate any future risk.  The scrum master uses a number of charts and techniques to understand if the team is on track and, if it’s lost direction, how to get it back on track.

We encourage continual feedback, so outside of the daily scrum there are regular conversations within the team and with the product owner to ensure we’re on the right path. The sprint is finished at the end of two-week time box.

Keep an eye out for our next article on the ‘Sprint Review’.