This post is part of a series sponsored by AgentSync.
The evolution of technology in any industry follows a similar pattern. Change doesn’t happen overnight. Rather, we see an industry progress from infancy to maturity as it uses the technology at its disposal. At the same time, the actual capabilities of technology continue to advance, so that what was once “cutting edge” soon becomes standard, and the next innovation has room to take its place as the latest and greatest.
According to Niji Sabharwal, co-founder and CEO of AgentSync, the insurance industry is at an inflection point. As key players in the industry have reached a moderate, basic level of digitization (Accelerated by the need for a more distributed, remote workforce thanks to COVID-19), the next wave of insurance technology (insurtech) may be starting to catch on. We’ve seen this progress happen so quickly in other industries—hospitality is one example—that insurance technology has only just scratched the surface of what’s possible.
There are a few reasons why insurance lags behind industries like hospitality in adopting technology.
- The well-established nature of the insurance industry (it has a history dating back thousands of years!).
- The fragmentation of the industry and how it is regulated, often on a state-by-state basis.
- Lack of standardization of best practices across the industry: There are almost infinite ways of “doing things” until the end result is done in compliance with regulations.
- With an aging (and shrinking) demographic of the insurance industry workforce, an entire generation of professionals is retiring, along with skills and knowledge gaps.
But, times they are changing! At least we can see it from the perspective of rapidly evolving insurance technology with an equal focus on ensuring hassle-free compliance for insurance carriers, agencies and MGAs. And Creating a modern digital experience to meet the needs of the growing insurance workforce.
We sat down with our co-founder and CEO, Niji Sabharwal, to discuss the waves of insurance technology, where the industry is now, and where it might go.
Wave no. 1: Digitizing existing processes
“The first wave of insurtech was mostly about digitizing existing processes. Here are a few reasons why.
First, digital processes facilitate the integration of new and inexperienced users into the process of redundancy and supervision.
Second, fundamental gains in efficiency mean that the same processes can be performed with a leaner workforce if necessary.
Third, a digitized insurance process, from underwriting to claims payment, will reduce the need to tap internal legacy knowledge bases, even at carriers, agencies or MGAs.
– Niji Sabharwal
There are thousands of carriers, agencies and MGAs, and no one has a comprehensive process or structure for how each one does business. The insurance industry is incredibly regulated – yet these regulations are inconsistent from state to state, meaning that each of these thousands of insurance companies follows different rules and creates unique processes to accomplish the same goals.
As Niji points out, digitalization has transformed existing insurance industry processes. For one, adopting digital processes inherently standardizes the way an organization operates. Daily tasks can go from “the way Martha did it for 25 years, but no one knows why” to a standardized and repeatable process that anyone, even a new employee, can follow. This becomes even more significant with the knowledge that The average age of insurance agents is almost 60and profession Millennials and Gen Z are facing a talent shortage.
“We’re already starting to see significant changes in the industry by digitizing existing processes, exchanging faxed paper for signatures for emailed pdfs and click-button contracts.
If taking an existing process and putting it into a computer can have such an effect, imagine what the second wave of insurance technology will look like.
– Niji Sabharwal
Wave no. 2: New use cases, transformative innovations for digital insurance applications
as 2022 InsureTech Connect (ITC) Conference Insurtech companies are often ready to move past the first wave. Yet, as this is a burgeoning era, understanding its implications is to enter a realm of speculation.
“For the second wave of insurtech, things are starting to get really interesting. To hazard a guess, this is where the industry can see and feel the impact of artificial intelligence (AI). Some insurtech companies are already doing this by using publicly available or purchasable big data sets to train AI models and automate things like underwriting and contract recommendation. are coming
– Niji Sabharwal
Insurance companies that use business intelligence as part of a strategy can operate like a large carrier, but with a smaller, more efficient workforce. Again, this forecast may seem super futuristic for insurance companies that still rely on manual processes, but early adopters are not far from realizing the benefits of AI, automation and application programming interfaces (APIs, code gateways, etc.). an application).
“The second wave of insurtech will be about finding new use cases for existing technologies, experimenting and realizing what can work with 10,000 policyholders to work with 1 million policyholders.
Building scalable technology and linking tools together through ‘chaining’ APIs will make all of these solutions more effective and efficient.
– Niji Sabharwal
Often, business models within jurisdictions are not too far apart, at least within the same state or territory. Every life insurance company or property and casualty carrier operating in Ohio has similar requirements for solvency and reserves. They often process the same data for underwriting and developing new products. Also, depending on the state, those businesses may be set up for similar rates, or, Like Connecticut health insurers, carriers may have the same ceiling for profit margins.. Under these traditional terms and data sets, business models should be very similar.
As a result, most business marketing – at least currently – is about differentiating a business in the insurance industry either through its branding or its internal culture, or the non-insurance services it provides in addition to their core product. But basically, many of the basic possibilities of insurance remain the same. As Niji says, the second wave of insurtech will begin to change this, giving companies a different edge in terms of how they structure their deals and use the data available to them.
“Because of the fragmented nature of insurance, the second wave of insurance will be a long process. It is difficult to build a consensus among many institutions controlled by different authorities, and building something lean and comprehensive is not a straightforward proposition. .”
– Niji Sabharwal
Nevertheless, it is an interesting concept to imagine the number of areas that could be affected by the emerging technology. Onboarding, commissions, compliance … there are many possibilities.
Wave no. 3: Mega Insurance?
Since Insurtex is not entering what we might consider the second phase of innovation, publishing predictions so far on the future of the third wave is really just a shot in the dark. Who knows where insurance technology will take us?
One guess is that once chained APIs — multiple applications, linked together and feeding information to each other in real-time — will become commonplace across different companies or different business sectors, some large mergers and acquisitions may follow traditional long-term. Term carriers void small insurance policies. It seems likely that small pieces of technology will come together to create a few monolithic industrial titans.
Alternatively, it may be the other way around, where smaller, more aggressive firms have the tools to compete at a higher level while being tighter and faster.
Regardless, we have a feeling that to some extent a rising tide lifts all boats: the insurance industry as a whole will continue to benefit from technological innovation and digital transformation of its processes. While we keep an eye on “big data” and are wary of protecting vulnerable populations from digital disruption, we can be excited about the ways insurtechs can improve the industry for both those working in insurance and its consumers.
If you’re interested in riding these waves with us, check it out How AgentSync Manage can help you Turn a roadblock into an asset with our insurance license compliance system. Whether you’re just starting to automate once-manual processes or ready to envision the future of Wave 3 together, we’re here for you.