Here Comes the Judge
Frank Petersmark | November 14, 2016
I recently had the opportunity to judge the ACORD Innovation Award finals as part of the recent ACORD2016 conference in Florida. The finals were the culmination of several months of presentations made by insurtech startups looking to make a difference in the insurance industry.
The good news is that there’s a great deal of activity on the part of a many smart people who see an opportunity to change the way insurance is experienced by customers. The less than good news, at least thus far, is that it’s not entirely clear how much of all this new activity will be embraced, and how much change it will ultimately bring to the industry.
To be fair, much of this is new to the industry, especially the notions of customer centricity and information ubiquity and it’ll take time and fortitude for many in the industry to process it all.
The ACORD Innovation finals were a microcosm of just the kinds of winds blowing into the industry. Among the finalists were startups whose ideas and solutions directly addressed many of the perceived deficiencies in the insurance industry. One finalist had a solution for a virtual insurance agent based on artificial intelligence and real-time data collection and analysis. The company has an intuitively easy website and once a prospect enters their information they get instant recommendations on pricing, coverages, and crowd-sourced references to agents in their geographic area.
Another of the finalists created a small hardwire device that, once installed in a vehicle, made any smartphone in that vehicle a “dumb phone,” with only the ability to make phone calls. Their aim is to decrease the instances of distracted driving accidents, especially among younger drivers.
Still another finalist had an app that allowed international travelers to quickly find reputable medical facilities and doctors if they fell ill or were injured while traveling. They also saw an opportunity to bundle this service with travel insurance.
In all it was a great example of the kinds of innovation entering the industry. Interestingly, most of the insurtech activity is coming from outside the industry, as was the case with the ACORD finals. The common thread running through most of these new entrants is their focus on improving or otherwise altering the status quo in the insurance industry.
That’s commendable, and some might even say optimistic, given that the insurance industry is historically reticent about changing too much too quickly and with some good reason, as it’s a model that has worked well enough for some hundreds of years now.
However, change is coming to the industry, and to the credit of many inside the industry there is a recognition of what some fresh, outside thinking can bring to insurance carriers, their policyholders, and their agents and brokers. Many insurers have already embraced the new wave of innovation and are using it as inspiration for changing their own companies, before other forces change it for them.
While I was humbled to participate as a judge during the ACORD Innovation contest this past year, in the end there’s only one judge that really matters and that’s the consumer of insurance services and products. Nearly all of the insurtech and carrier activity is aimed at placing the customer in the center of the insurance world, and that is certainly a change for the industry.
Within a short period of time—at least relative to the history of the industry—customers have become king. That’s why nearly all of the startup activity outside of the industry, and the innovation within the industry, is now aimed at putting the customer on the insurance throne.
That’s something many in the insurance industry need to come to grips with, and quickly. The judges of the past—underwriters, actuaries, claims adjusters, agents, etc.—now need to give way to the judges of the future.
(Frank Petersmark is associate vice president with the research and consulting firm Novarica.)
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