In my forty- four years in the life and health industry, I have observed many technological advances in the business. Starting as an agent in 1980, I would need to write to my home office in the US to get a computerized sales illustration. It took several years for computers to be commonly found and used at agency offices. Since then technology has continued to advance with increasing acceleration.
Since coming to Asia nearly 30 years ago, I have had the pleasure to hold the country CEO position for more than 20 years with MNCs in five different markets across Asia. I have seen many technological developments in our industry during this time. I have also learned many lessons over the years.
First I have to say that insurers generally have a bad rap as being slow to adopt current technology. While the insurance industry’s legacy systems have complicated the deployment of the latest technology, progress has been steady and deliberate.
Return on Investment
In the early days, specifically 10 to 20 years ago, insurers were focused on efficiencies in the back office and return on investments. Legacy systems were not always compatible with new technologies and understandably companies were reluctant and often couldn’t justify a complete replacement of their respective policy administrative systems. Progress was slower than desired but nevertheless continued. Because of the increased efficiencies and costs savings, the back office was a logical place to start. This however was not always visible to outside stakeholders.
In recent years, the focus has shifted somewhat away from ROI as the biggest consideration to market differentiation. Recent years have seen advancements in better facilitating efficient distribution and the client’s experience, customer service, digital direct marketing and selling, payments, uses of data and much more. The pace of front end, client facing technology uses has only accelerated since Covid -19.
Insurtech’s Understanding the Insurance Business
For quite sometime time their seemed to be a big gap in Insurtech’s understanding of an operators problems and priorities. Tech solutions were often presented to insurers for problems that were not a top priority. For me, as an country CEO, my top priorities were always near term profit and growing new business. If presented a tech solution that didn’t address those areas, it rarely got my attention. In addition, if there were no tested use cases it was almost always a no go. In running a country operation, we had little or no resources to experiment with new technology.
Insurer Priorities and Resources
In a local country operation, IT resources were always scarce and too much time and effort was spent on maintaining the old legacy system. Applying resources to something new required a significant contribution to near term profit or new business growth. Unlike many insurers today, there was simply no sandbox to play in!
Regional and Global Gatekeepers
Another, often frustrating factor, was the fact that your local operations IT agenda was not always within the control of the local CEO. In an effort to provide a consistent regional and global approach, and with good intentions, insurers often adopted a matrix , gatekeeping structure, which required regional or global signoff for any new IT initiative. In addition, for large insurers with multiple country operations, smaller territories were often in the back of the que. Finally, there was often internal thinking that felt ” we can build it ourselves”. This often led to suboptimal outcomes.
Underwritng and medical claims adjudication still a pain point
There is one thing that has basically not changed since the beginning of time—underwriting. Companies still require lengthy health declarations, often medical exams, blood test , urine tests etc. The onboarding experience for the purchase of life and health insurance is still a very painful experience. Current technologies have yet to prove their worth in replacing this archaic system. This area is ripe for change.
Medical claims inflation in Asia is a pressing problem in nearly every market. The risk of private medical insurance rising premiums becoming unsustainable is getting higher and higher. Tech solutions and data analytics promises to provide greater actionable insights in this area and would be well received by insurers.
The Future
Despite the challenges above, technological advances are accelerating in the life and health insurance space. New technology is accelerating at an even faster pace. I attended the recent Insurtech Connect conference in Las Vegas and everyone was talking about generative AI.
Many insurers have long formed their own internal innovation labs with many taking agile approaches to the introduction of new initiatives. Insurers have awoken to the fact that technology can be a major differentiator and are taking a longer-term view. Regional and global IT leads are more willing to experiment locally. Smaller operations are given more autonomy in deploying new technology. The competition for deploying the latest tech is heating up.
My advice to Insurtech companies knocking on insurers’ doors:
- Make certain you fully understand and address the most pressing pain points for insurers.
- Get the attention of the right decision makers, either locally or regionally.
- Bring a proof of concept or use case to demonstrate.
- Propose a low cost and low risk agile solution to make decision making easy . This will often keep the initial decision making local.
- Highlight the differentiating factor s that will make the client company stand out, garnering more business and market share in the medium to longer term.
The future for Insurtech has never been brighter. My attendance at Insurtech connect in Las Vegas was a real eye opener. Many CEOs and CTOs may not know of some of the latest technologies. Keep knocking and knocking on their respective doors!
