"The insurance industry will change more in three years than in the last 30, and the disruption that is about to hit us won’t take that long to change the landscape," said Pranav Pasricha, CEO of Intellect SEEC and Carrier Management contributor. The drivers are, not surprisingly, big data and artificial intelligence. And they're going to make their presence known in all areas—from distribution, to underwriting, to claims.
Machine learning can predict loss propensity across thousands of factors. Loss detection and fraud detection can be more accurate. Payments can be faster. But innovations such as these aren't merely fine-tuning the direction of an otherwise stable industry. In some cases, insurtech startups are getting ready to take the wheel for themselves.
Insurtech startups going rogue
Fifteen hundred tech startups are planting their flag in the areas of insurance and risk management, according to Joseph Harrington at Carrier Management — with or without collaboration from traditional distribution partners. With 140 venture capital firms betting $6 billion on them, these startups have both capacity and motivation to proceed on their own.
This marks a change. About 10 years ago, tech startups approached insurers as vendors. “Now they’re no longer vendors,” said Jacqueline Lesage Krause of Munich RE/HSB Ventures. “They’re not waiting for you.” Krause says that startups have discovered how to become MGAs and they're going to market as such, innovating across the entire value chain, from sales, marketing and distribution to underwriting, loss control and claims.
They're able to do so for two reasons: the cost is lower (less than 10 percent of what it might have been 10 years earlier, by one account) and the capital available is high. "In a decade, our venerable, well-established carriers with legacy systems and cultures — if they manage to survive — will be anachronistic," said Kathleen Reardon, CEO of Hamilton Re.
Legacy methods will kill or be killed
We've known for a long time that the legacy claims systems hobbling traditional insurers were a ticking time bomb. Today, that's impossible to ignore. If the old behemoths don't get the ax, their presence will prove fatal to insurers that harbor them.
Insurtech startups — or risk transfer startups, as the case may be — have the speed, agility, and capital to "fail often and to fail quickly, and move on and learn from that," said Keith Moore, CEO of CoverHound Insurance Solutions. Tony Attia, CEO of Slice Labs, put it this way: "We can build a whole insurance company faster than we can integrate into your claims system."
But he's not ringing the death knell for traditional carriers just yet. "Insurance companies are resilient, and they can continue to be resilient if they move quickly and decisively," Attia said.
The FedNat Insured Web is a great tool for our insureds!
They like having a centralized location to view policy info, make payments, upload policy documents, and elect to become paperless to receive a discount.
The insureds also can file a First Notice of Loss for a claim and access exiting claim info. Silvervine recently enhanced the site which allows insureds to upload policy documents directly to their policy. The uploaded docs go directly into our workflows and save a lot of manual effort on our part.
From my visits with agents, the agents appreciate the app for the amount of time saved on having to download and attach photos directly to the policy.
The app can also reduce the amount of staff required for a busy office to fulfill underwriting requests for photos.
When training agents they are amazed at how quickly the photos attach directly to the policy. After taking photos using the app and before they make it back to their desk, the photo is already attached to the policy. They also like the ability to attach additional photos for pre-existing damage.
Customer Service is seeing an improvement with retention as the text message definitely triggers phone calls from insureds to make payments.
The insureds love the fact that we notify them on their phones because they state that sometimes they don’t receive their mail for various reasons.
The insureds are paying more attention to the texts then to their actual mail. We try to set all of our customers up on that option if we notice that they are not currently enrolled, as it builds great customer relations as well as retention.
As a company we have adopted the use of Policy Scan for all our policies, and our agents have adopted the use of the app as well.
Not only is it easy to use, there is also no more worrying about losing photos, having to store photos or photos being attached to the wrong policy.
With Policy Scan we have increased efficiency in our workflow and reduced our exposure on the risk.
Silvervine’s core administration solutions easily handles multiple carriers within multiple states, including accounting, payment processing, immediate policy issuance and endorsements.
What started out writing one product, one line in one state has now grown into mulitple products, multiple lines and writing in multiple states. We have over $95 million in annualized premium in-force and we expect to grow by 20% during the next year all serviced by Silvervine.
Silvervine was our insurance software system of choice when we started the company in 2006. Silvervine enabled us to begin business within a few months of licensing the company. Today, we are one of the top 20 homeowner’s writers in Texas and SIlvervine’s solutions have been an integral part of our success.