Other parts of this series:
- Day 1 of InsureTech Connect 2017: The changing nature of risk, customer engagement and cost reduction
- Day 2 of InsureTech Connect 2017: IoT, AI and Innovation
- InsureTech Connect 2017: Insurers and insurtechs need each other
- Define partnerships, scale adoption, rethink operating models: Thoughts from InsureTech Connect 2017
Many insurance CEOs are attending InsureTech Connect this week. John Cusano shares his thoughts on incumbents’ challenges—and the opportunity for insurtechs.
I’m pleased to be with my Accenture colleagues, our clients, and the rest of the insurance and insurtech industry at InsureTech Connect. Yesterday was full of excellent plenary sessions and conversations, and I wanted to share some of my big takeaways from the day.
One major impression from yesterday is that there’s definitely momentum around insurtech. First off, there’s the vastly increased audience size—1,000 attendees last year and 3,800 this year—with 75 percent of 2017 attendees in senior-level roles. Also interesting is that while the majority of insurtech activity has been in North America, one in five attendees comes from outside the US and a total of 48 countries is represented.
In listening to some insurance CEOs, it sounds like many incumbents are looking to the insurtech industry to help fuel innovation, adopt new business models, and address some of the challenges and opportunities in today’s market. In particular, a few topics dominated the conversation.
The changing nature of risk
The changing nature of risk was part of a plenary discussion led by Matt Leonard, a partner at Oliver Wyman. He shared five areas in which risk is shifting under insurers’ feet:
- Elimination of human involvement, such as autonomous vehicles
- Availability of real-time controls, such as sensors
- Increasing connectivity
- Rising geo-political uncertainty
- Climate change
I would add cyber risk to the list, which arguably is a consequence of the first three points.
Improving customer engagement
Insurance still has to overcome the “sold, not bought” barrier, and improving customer engagement is a key part of that. Insurtech can offer insurers greater insight into risk, which then can enable more granular and variable pricing models. That’s good for insurers’ profitability—and just as important, will be well received by customers.
Another key challenge that many insurance CEOs mentioned is the high relative cost of insurance as a value proposition to their customers. Approximately 40 cents of each dollar is going to things like administration and distribution, and that’s just too high in today’s customer-centric economy. It’s certainly too high to be well-regarded by insurance customers, and it creates space for the smart use of technology, automation and insurtechs to lower costs and bring more value to customers.
Thoughts for day two of Insuretech Connect 2017
As we head into the second (and last) day of the conference, I’m looking forward to meeting and understanding the insurtech startups: where they’re focused and how Accenture might partner with them. We’re always looking for new innovations that align with our capabilities, and innovative ways to help our clients solve problems.