# Insurtech: Why Established Players Need to Act Fast Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2020-10-30 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: Insurtech Disrupting Insurance Industry with Tech-led Models Meta Description: Discover how technology-led disruptors are reshaping the insurance landscape with innovation and customer-centricity, leaving legacy players in a race to catch URL: https://financedigest.com/insurtech-why-established-players-need-to-act-fasthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/economy-recovery-7-1736838746889-compressed.jpg) _Technology-led disruptive business models are already here and changing the game_ _By **Will Andrews,** Director, Trianz and Satya Madakshira, Director, Trianz_ By simplifying processes and designing around the consumer experience with technologies like machine learning and artificial intelligence, insurtech has propelled upstarts who now threaten to disrupt the insurance industry. Legacy [players will need to hustle to catch up with key](https://www.financedigest.com/sodium-tetraborate-market-key-players-end-user-demand-and-consumption-by-2030.html "Sodium Tetraborate Market Key Players, End User, Demand and Consumption by 2030") innovations, but they still can, as described later in this article. First, it’s important to understand what the insurtech model is built upon and why it is succeeding. Like fintech, insurtech simply means combining [technology with an industry](https://www.financedigest.com/how-blockchain-technology-can-help-the-fashion-industry-make-verifiable-green-claims.html "How Blockchain Technology Can Help the Fashion Industry Make Verifiable Green Claims") – insurance in this case – for the purposes of comprehensive competitive disruption. New businesses leading the insurtech charge (themselves called ‘insurtechs’) are agile, technology-led, and hyper-reactive to new [opportunities on the market](https://www.financedigest.com/food-premix-market-opportunity-analysis-and-industry-forecast-up-to-2031.html "Food Premix Market: Opportunity Analysis and Industry Forecast up to 2031"). They come from the digital-native generation, and juxtaposed to veteran industry incumbents, its their quickness to [adapt to market](https://www.financedigest.com/how-brands-can-adapt-marketing-tactics-to-better-suit-customers-changing-shopping-habits.html "How brands can adapt marketing tactics to better suit customers’ changing shopping habits") needs that poses a significant threat. In every industry, COVID-19 has only accelerated the pace of automation and digitalization, heightening the urgency for incumbents to respond. Conceptually, insurtechs took their cue from innovators like Uber, building their business models upon a tech-enabled [customer experience](https://www.financedigest.com/getting-customer-experience-right-in-financial-services.html "Getting customer experience right in financial services"). Powered by [machine learning and artificial intelligence](https://www.financedigest.com/machine-learning-in-artificial-intelligence.html "Machine learning in artificial intelligence"), insurtechs are trying to redefine consumer expectations with self-service options, mobile enablement, unique customer experiences, and products fashioned on the “sharing economy” concept. This is all meeting the younger demographic right where they live. Millennials have become accustomed to a high degree of autonomy and [influence in the market](https://www.financedigest.com/the-3-ss-of-brand-growth-through-influencer-marketing.html "THE 3 S’s OF BRAND GROWTH THROUGH INFLUENCER MARKETING"). Their preference for customer-oriented experiences – as well as their [growing numbers as insurance consumers](https://www.financedigest.com/bagasse-tableware-products-market-will-top-us-3-75-bn-by-2031-as-consumers-proclivity-for-eco-friendly-and-single-use-product-purchase-grows.html "Bagasse Tableware Products Market will top US$ 3.75 Bn by 2031 as Consumers’ Proclivity for Eco-Friendly and Single-Use Product Purchase Grows") – has had a measurable impact on the industry. **Turning to Face a [Digitally Transformed](https://www.financedigest.com/how-to-create-value-in-digital-transformations.html "How to create value in digital transformations") Reality** In general terms, companies that have moved quickly toward tech-enabled simplicity, convenience, and customer focus are already champions of [digital transformation](https://www.financedigest.com/critical-learnings-in-digital-transformation.html "Critical learnings in digital transformation "). There are indeed some [digital champions among insurance](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") industry incumbents. However, many legacy players in [insurance have yet to fully embrace these transformations](https://www.financedigest.com/transforming-insurance-through-artificial-intelligence-and-machine-learning.html "Transforming Insurance Through Artificial Intelligence and Machine Learning"). It is not uncommon to see companies still using 15- to 20-year-old platforms to [support their services](https://www.financedigest.com/tech-amigos-provides-unrivalled-aws-cloud-service-support-for-autorama-groups-leading-brand-vanarama.html "Tech Amigos provides unrivalled AWS cloud service support for Autorama Group’s leading brand, Vanarama"). Pivoting to [face the new digital](https://www.financedigest.com/digital-ticketing-the-challenges-and-opportunities-facing-ptos-and-ptas.html "Digital ticketing: the challenges and opportunities facing PTOs and PTAs.") reality is a complex and difficult undertaking. Regionality, customer segments, and changing products tend to protract the transformation process. To address the shift towards direct interaction with consumers of personal insurance products, as well as products for [small and medium businesses](https://www.financedigest.com/foolproof-local-marketing-strategies-for-small-businesses.html "Foolproof Local Marketing Strategies for Small Businesses"), legacy players should move away from relying on traditional distribution channels. Even for commercial and specialty products, large carriers should consider [digital and mobile connectivity that meet the customer](https://www.financedigest.com/the-cervical-total-disc-replacement-market-to-grow-based-on-customized-digitization.html "The Cervical Total Disc Replacement Market to grow based on customized digitization") where they are. Another improvement is the speed with which insurtechs can process customer transactions, such as by automating operational processes so they don’t [require human touch](https://www.financedigest.com/building-a-relationship-led-bank-requires-a-more-human-touch.html "Building a relationship led bank requires a more human touch"). New [insurance products](https://www.financedigest.com/insurance-products-growing-in-importance-in-2021-and-beyond.html "Insurance products growing in importance in 2021 and beyond") are being developed that can be sold as “pass-throughs,” meaning they don’t require manual review to be sold. One example of this is [travel insurance](https://www.financedigest.com/benefits-of-taking-out-travel-insurance-2.html "Benefits of taking out travel insurance") available at the point of sale for airfare or hospitality, which is designed so that it cannot go outside the bounds of profitability. There will likely always be insurance products that require manual review, such as for artwork or remodeled cars. But the philosophy of operational efficiency – claim processing time being the most obvious one – is nonetheless key to [driving speed](https://www.financedigest.com/covid-19-is-impacting-the-variable-speed-drive-market-size-business-revenue-forecast-leading-competitors-and-growth-trends-2028.html "COVID-19 Is Impacting The Variable Speed Drive Market | Size, Business Revenue Forecast, Leading Competitors And Growth Trends 2028") and responsiveness to reduce cycle time for the customer. Such [innovations have the added benefit of creating opportunities](https://www.financedigest.com/probiotic-soda-market-product-innovation-by-live-soda-and-lifeway-foods-to-create-exciting-growth-opportunities-reports-by-fact-mr.html "Probiotic Soda Market: Product Innovation by LIVE Soda and Lifeway Foods to Create Exciting Growth Opportunities, reports by Fact.MR") for new revenue streams, cross-selling, and up-selling. **Staying Relevant, Playing to Strengths** [Global insurance](https://www.financedigest.com/how-the-global-insurance-market-will-keep-pace-with-evolving-risks-through-data-analytics-and-technology.html "How the global insurance market will keep pace with evolving risks, through data, analytics and technology") powerhouses still hold significant advantages of expertise, brand recognition, capital, economies of scale, and a firmly established customer base. Reputation and seasoning still matter a great deal in this marketplace, as do solvency and reliability. The truth may lie somewhere in between bedrock stability and bright-and-shiny. Some legacy insurance firms will streamline their processes and adopt [digital technologies](https://www.financedigest.com/how-banks-can-use-digital-technology-to-become-more-sustainable.html "How banks can use digital technology to become more sustainable") to obtain the nimble operations ethos and technical insights of the insurtechs. If they are taking a page from digital champions industry-wide, they should: - Focus on R&D and [product management](https://www.financedigest.com/hybrid-theory-promotes-ines-martins-to-global-head-of-product-names-sean-badlishah-managing-director-of-apac-region.html "HYBRID THEORY PROMOTES INÊS MARTINS TO GLOBAL HEAD OF PRODUCT; NAMES SEAN BADLISHAH MANAGING DIRECTOR OF APAC REGION."), looking to agile cloud native development for rich new features. - Prioritize speed in accommodating regulatory requirements, new services, claims processing, and deal closures. - Complete user [experience design workshops to understand the generational](https://www.financedigest.com/the-next-generation-of-customer-experience-in-banking.html "The next generation of customer experience in banking") use patterns. - Solve for combining in-store and omni-channel sales and [customer service](https://www.financedigest.com/how-customer-services-has-changed-during-covid.html "How Customer Services Has Changed During Covid"). - Bundle products with [digital partners and new industry](https://www.financedigest.com/film-and-tv-digital-marketplaces-a-revolutionary-take-on-an-age-old-industry.html "Film and TV digital marketplaces: a revolutionary take on an age old industry") entrants, and design new distribution channels with travel, property and retail vendors. - Leverage innovations to [streamline operations](https://www.financedigest.com/trend-micro-vision-one-stops-threats-faster-streamlines-operations-and-cuts-costs.html "Trend Micro Vision One Stops Threats Faster, Streamlines Operations and Cuts Costs"), be it blockchain for contractual matters and customer ID, or AI visual recognition for instant claim evaluation. - New [business models such as pay-per-use or open-market resourcing](https://www.financedigest.com/workforce-management-the-next-cloud-resource-for-businesses.html "Workforce management; the next cloud resource for businesses?") options that could reduce OpEx and CapEx. The core tenets of this hallowed industry remain the same: [customer acquisition](https://www.financedigest.com/rationalfx-drives-customer-acquisition-with-regtech-platform-from-trunarrative.html "RationalFX drives customer acquisition with RegTech platform from TruNarrative") and growth, value delivery and operations, and value enablement functions. New upstarts would be wise to [consider hybrid](https://www.financedigest.com/should-your-company-be-considering-a-hybrid-cloud-strategy.html "Should your company be considering a hybrid-cloud strategy?") approaches that leverage the core values of insurance institutions, or even consider partnering with them for added reach and capital. Both old and new entities have plenty to gain from [advances in technology](https://www.financedigest.com/cardiac-valvulotome-market-growth-latest-trends-top-players-competition-technological-advancements-outlook-and-forecast-2028.html "Cardiac Valvulotome Market Growth, Latest Trends, Top Players, Competition, Technological Advancements, Outlook and Forecast 2028") and new marketplaces – just as long as the customer remains central to their evolutions. _Read more about_ [_Digital Transformation in Insurance_](https://www.trianz.com/whitepaper/digital-transformation-in-insurance) _on Trianz.com._ **This is a Sponsored Feature.** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---