"Insurtech hype halts as disruptors morph into collaborators." Polaris MD Vivek Banga recently met with Katie Scott from Insurance Times to talk about insurtech collaboration, use of data and etrading digital transformation.
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Although digital transformation projects across the industry are rife, legacy technology infrastructures pose problems, says Polaris’ Vivek Banga
Vivek Banga, managing director at insurance software firm Polaris, has predicted that the hype surrounding insurtechs has come to a halt as insurers and brokers look for collaborative partners rather than sector disruptors.
“The hype around insurtech is slowing down and people are forming a more realistic view of what insurtech can offer, ” Banga explained. “More companies are beginning to see insurtech less as a disruptor and more as something to collaborate with. ”
Although seeing what insurtechs have to offer could lead to new technological solutions and experimentation, Banga warned that brokers still have to consider how insurtech innovations can be integrated within a firm’s mainstream technology infrastructure.
“One of the biggest challenges [when working with insurtechs] continues to be how do you take something which is an interesting pilot and then scale it up by connecting to existing technologies? That will continue to be a key task, ” Banga continued.
“Integration with legacy systems is a perennial challenge. Do you build your digital interfaces on top of your legacy system, so they come nicely integrated on day one, but there might be limitations around how slick and clever they can be, or do you build them separately and then only transfer the bare minimum data into your legacy system, but then your teams have to work with two different systems? There is no right answer.
“Even if you start from scratch, in a few years, what you started with would have become legacy, so I don’t think the problem will ever go away. ”
Getting the supporting technology right is an increasing focus as e-trading becomes more prominent – Banga conrmed that e-trading usage is on the up, with Polaris’ own imarket risk exchange platform showing a 30% growth in policy volumes at the end of 2019, equating to more than 460,000 policies.
Another key trend is the automation of both underwriting and information exchange processes. For Banga, this includes an increase in machine learning algorithms, more product sophistication and a heavier reliance on third-party data sources when it comes to rating decisions. He added that risk captures and referral processes also continue to improve.
Live chat is also becoming a tool of greater importance, providing a human element to a digital trading environment. “It acknowledges the fact that commercial lines can be complex and, at times, a broker needs to have a conversation with an insurer, ” Banga said.
Despite this, live chat is also fertile grounds for automation. Banga added: “There are some conversations where a bot can do the job quickly. If you’re clarifying a sub limit, or how much cover is available, that might be on a certain page in the policy document where a bot can crawl and pick it up and give that answer.
“Trying to add that layer of sophistication within live chat is denitely on the agenda. You can’t keep adding people – it’s not cost effective, so you have to look at automation and start removing the easier conversations.”
Broker consolidation can aid technological innovation too – larger organisations tend to have more buying clout when it comes to spending on digital solutions, Banga said.
A differentiation focus
If e-trading, which tends to be product-driven, is making insurance panels more accessible, how can insurers and brokers stand out from the digital crowd? For Banga, the answer lies in differentiation and using data to create a more personalised and customised product offering.
“There will be a surge for differentiation both in terms of insurers differentiating their products and brokers being able to differentiate what they offer to their customers, even if they are relying on etrading panels to deliver the product, ” he said. Another area Banga sees potentially expanding is in the creation of specialist portals where brokers and insurers can exchange information securely, especially in cases where a lot of complex background information needs to be provided. “This is not e-trading, this is not [an] instantaneous decision, ” he explained. “This is just using modern web and mobile-based technology to exchange information between the customer, the broker and the insurer. ”
So, what does Banga see as the main mountains that firms have to turn into mole hills? Creating the aforementioned differentiation will naturally be a primary challenge for the market, especially at a time when it is becoming increasingly expensive to launch new e-trading products that are “truly multi-channel”.
Furthermore, connecting third-party data sources to existing in-house technologies, as well as updating and connecting e-commerce technology in general, could be problematic – a lack of senior leader awareness of tech innovations may also hamper progress in this area. Lastly, Banga noted that firms need to choose a suitable approach for their digital transformations. “Do you go for a top-down, massive digital transformation programme, or do you pick up a few opportunities, create a few pilots and see how they go and [whether] they start creating more demand around them?” he asked. “Personally, I’ve always been more biased towards piloting, but different organisations have different preferences. Where do you start and how do you start, that is a key challenge. ”