The rapid ascension of the global insurtech sector has been incredible to watch and is showing no signs of slowing down. The development of these businesses, the best of which seamlessly blend innovative solutions with traditional products, has marked a make-or-break moment for the insurance industry, which has traditionally been viewed as slow to embrace change that is not necessitated by regulation. Executive vice president for EMEA at Munich Re Automation Solutions, Paul Donnelly (pictured), recently spoke with Insurance Business to give an overview of how digital transformation is impacting the insurance sector.
Insurance has long been viewed as the most conventional [branch] of the financial services sector, he said. Risk-averse in nature, it has only begun to approach digital innovation relatively late in the game.
Yet while the sector was slow to get off the ground, Donnelly detailed, the last 10 years have been something of a rollercoaster ride as the industry rushes, not just to catch up with but to overtake the fintech wave. Today, he said, the trend towards the digitization of services is accelerating quicker than in many other sectors.
Donnelly outlined how Munich Re Automation Solutions first began as an Irish software start-up in 1986 before it was acquired by Munich Re Group in 2007. This acquisition was made to answer the burgeoning need for a technology expert in risk assessment, he said, and has since seen the group become a pioneer in augmented automated underwriting.
As an insurtech that was around in the very early days, when we would come up against a lot of pushback to the adoption of new technology, he said, this rapid shift has been very rewarding to witness.
Looking to the development of the insurtech sector, Donnelly outlined how, when insurtech began, it was a means of making what was already possible more efficient by speeding things up, reducing costs and mitigating errors. However, he has seen over the course of the last year how the sector has evolved from optimizing processes to making the impossible possible.
The newest generation of insurtech has enabled insurers to break through traditional barriers and vastly improve speed-to-decision, he said. We hope 2020 will see insurtech continue to revolutionize not just how the insurance industry functions, but how it is perceived. At Munich Re Automation Solutions, our goal is for applying for insurance to one day to be seen as being as simple as buying something from Amazon. With rapid innovations in insurtech, we believe that day is well on the horizon.
The central challenge currently existing within the insurtech sector, he said, is that every insurer and his dog is now trying to join the insurtech race.
This has put enormous pressure on us to ensure were keeping up, not just with the volume of demand, but with the unique needs of our rapidly diversifying clientele, all while maintaining our quality of service, he said.
The last five years have been defined by a shift towards on-demand client servicing, Donnelly said. He noted that while the insurance sector has not typically been seen as front-and-centre in driving innovation in financial services, 2019 saw insurers increasingly look towards how they can better compete in the eyes of the always-on customer.
Munich Re Automation Solutions recognized the potential for Software-as-a-Service (SaaS) solutions to both vastly improve agility and democratize the market, he said. With a particular goal of better servicing the mid-tier market, we took the leap from an enterprise-hosted service to SaaS. SaaS allows us to provide customers with exactly what they need, when they need it, improving time and cost efficiency.
The core strength of insurtechs is that they allow for radical change to take place in traditionally un-radical institutions, Donnelly said. They are uniquely separate from the everyday demands of the process-laden insurance industry, he said, and thus are in a position of being able to think more innovatively about how to meaningfully disrupt the market and improve customer service.
This allows insurance companies to focus on day-to-day tasks, he said. Donnelly outlined how this is especially significant for brokers within the insurance sector, as a traditional insurance brokers day is made up of 70% admin and 20% business sales, with only 10% left for providing expertise to clients.
Through the digitization and automation of administration tasks, insurtechs allow brokers to focus on where they can really add value, he said.
Donnelly believes that brokers need to embrace the improved speed-to-decision capabilities that insurtechs can provide as data is only powerful when it is harnessed correctly. By partnering with the right insurtech, he said, brokers will be able to capture and process data more efficiently to improve all business processes, from sourcing the right target market to product development.
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Munich Re Automation Solutions on the rise of the insurtech sector - Insurance Business
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