The world of insurance is typically not one closely associated with rapid innovation, but the growth of the insurance technology sector (InsurTech) is changing that, and the whole insurance landscape along with it. Capgemini recently announced the findings of its inaugural World InsurTech Report, revealing new insights into this growing sector. We caught up with Shiva Balasubramaniyan, Capgemini Vice President, Technology (Insurance), to talk about the report's findings and how InsurTech is impacting the insurance sector as a whole.
Consulting: What led Capgemini to start producing this report?
Balasubramaniyan: We started venturing into InsurTech with a lot of focus back in Q4 of 2017. We're mostly in the exploratory stage, trying to understand what's happening in the space and how it's relevant to us and what it means to Capgemini. We talked to a number of accelerators and startups, we thought it was a great opportunity in front of us to collect some trends and share that information back with the world. When you talk to the insurance carriers, startups, accelerators, everyone has a different point of view, they were always looking for what's the collaboration model, how InsurTech is going to impact investment, a lot of questions are coming out, so that was a starting point for us to do some more research about the trends and how this is going to shape up as we move forward.
Consulting: What are the big InsurTech trends you're seeing in the marketplace?
Balasubramaniyan: When we did a market scan we were able to categorize all InsurTechs in three categories. One is the enablers, the InsurTech that provides a lot of technology solutions into the market. The second was we found a lot of InsurTechs on the distribution side, brokers and online marketplaces where you can compare quotes and buy your policy. The third is a full-scale insurance carrier, like Lemonade or any other startup providing microinsurance. In our classification we found each had multiple technology factors and needs, so broadly, the distributors, the enablers and the full carriers are the three areas that we looked at, and they had a lot of corresponding underlying technology that supported them in the process.
Consulting: What is the state of the InsurTech sector?
Balasubramaniyan: It's booming. This year, we talked about investment. The investments in InsurTech space has really grown, increased by 36 percent annually between 2014 to 2017, so that's a big investment jump we've seen by insurance carriers as well as venture capital firms. So it's an area showing significant promise. Most InsurTechs are focusing on customer experience within the insurance value chain, so their investments, their technology focus and enriching the customer experience was all very important.
Consulting: What are some of the biggest challenges InsurTech companies are facing?
Balasubramaniyan: There are a number of challenges. First and foremost is collaboration. A lot of the big insurance carriers have very big brands, which none of the InsurTechs have today. Collaboration was a big challenge, the difference in culture, scale and agility. Integrating their InsurTech solutions into a large insurer's value proposition is a big challenge. Of enablers, distributors and full carriers, the full carriers are on their own, they don't have much of a dependency because they're operating as their own insurance company, for example providing microinsurance for mobile devices.
Consulting: What are some of the big consulting opportunities around InsurTech?
Balasubramaniyan: We started looking at everything as an end to end more from a solutions standpoint, cyber insurance is a big focus. We expect a lot of solutions around it. We have significant opportunity to manage that risk and to embedding InsurTechs on the overall insurance value chain. Insurance has a lot of great opportunities for us as a consulting organization, we have a great advantage to bridge and embed InsurTechs and integrate them in the value chain itself. Cognitive document processing is a big thing happening now in the market, whether it's feeding letters, forms, images, applying artificial intelligence on top of it, there's a good amount of focus on that, as well as automating the rating process for small commercial insurance. These are great opportunities for consulting organizations today.
Consulting: What were the biggest takeaways from the report?
Balasubramaniyan: When we did this research, we also looked at what is the way forward. How does this strategic collaboration work. As part of the World InsurTech Report we had highlighted something on InsurTech partnership potential assessment. That assessment has certain characteristics explaining how an insurance carrier should partner with an InsurTech in the near term and also in the longer term. There are some very good characteristics we believe will have big value, not just for consulting organizations but for insurance carriers in partnering with InsurTechs.
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