Other parts of this series:
Traditional insurers are in the enviable position of being able to partner with startups with a range of innovative capabilities, and stitch them together to solve industrywide challenges.
In the previous posts in this series, we looked at what incumbent insurers can learn from insurtech startups and how partnerships can help insurers unlock trapped value. In this post, I’ll explore the value to be gained from combining the capabilities of multiple startups.
Our research shows that the insurance industry as a whole is vulnerable to future disruption. In part this vulnerability is the result of challenges insurers face—in operational efficiency and innovation, high labor and transaction intensity, inefficiencies in the value chain, low brand prominence and insufficient investments in advanced digital technologies.
Many insurers exhibit an understandable reluctance to embrace innovation, which comes down to a straightforward fear of change and an inherent aversion to risk. When you remember that insurance primarily exists to help reduce and manage risk, it’s not surprising that insurers remain quietly conservative and reluctant to change.
Dipping their toes into insurtech, either alone or through a hosted accelerator program, could offer insurers an effective and relatively safe introduction to innovative technologies and solutions, new strategies, a different organizational culture and more agile operating models. But I think there’s an even greater advantage to be had. Rather than engaging with insurtechs through isolated initiatives, I believe insurers should combine the capabilities of multiple startups (including those from beyond the insurtech space). This could enable them to jointly solve some of the biggest challenges facing the industry.
Participating in a broader ecosystem of startups, insurers could provide their deep industry knowledge, to support and encourage their ecosystem partners to inspire and drive each other’s technologies forward. This kind of collaboration and cross-pollination could accelerate the pace of innovation, ultimately helping insurers tackle bigger issues around customer experience, product innovation and service delivery.
But traditional insurers cannot leave all the work to startups. They need to take a leadership role by:
- Identifying the issues that need to be solved.
- Stitching capabilities together or developing a series of solutions.
- Delivering innovation at scale.
There’s a difference between incremental change, which mainly demands thought and money, versus genuine innovation, which also needs courage and vision. Insurers that can see the big picture, have a vision for the future of insurance and embrace innovation at scale will be the ones in the best position, not just to survive disruption and see revenue growth, but to drive an industrywide transformation.
If you’d like to learn more, read the report: Fearless Innovation: Insurtech as the Catalyst for Change within Insurance