Out of all the financial services sectors being innovated, insurance has been the one sector that has lagged behind. With legacy practices and sometimes little transparency into what is happening within the business, insurance is ready for an upgrade, the people are ready for insurance 2.0.
I will admit, that saying that insurance is behind in all sectors is a bit misleading, we’ve seen great success in the recent past in sectors such as health, in platform services that are innovating in the B2B space, and of course in innovative new spaces such as the gig economy and for short term needs like AirBnB rentals. There are, however, still some areas that have seen little to no innovation occurring. Life insurance, for example, is still very much a legacy industry with paper-based practices, having to work with individual brokers and with little transparency. For many sectors of insurance, it’s time for a change.
As we work through our new COVID-19 reality, I believe that one sector that will do well during this pandemic is the insurance sector. Let’s face it, we all need insurance in one way or another, wheater it is on our car or for our health we all need something. How we interact with and use insurance is where we are going to begin seeing changes. While many of the legacy practices won’t change overnight, I do believe we will now begin seeing some back-office innovation, especially since most of the population is now working from home. Companies need transparency and siloes need to be broken down now more than ever before. We’ve always needed innovation in back and middle offices, now we need it more than ever before.
So, you might be asking yourself, where do the InsurTech’s come into all of this? Well, one area we’ve already seen innovation is in extended benefits and how we use and interact with them. A few years ago, we saw a shift towards healthcare spending accounts vs. the traditional extended benefits. I love a good spending account, I can allocate money where I want to use it the most. So, while I still want my usual dental and prescription, I will probably never use the podiatrist benefit and would rather that money be put towards a benefit I’d use. We’ve also already seen a shift towards insurance in the gig and sharing economies. As our economy rebounds will probably see a good amount of growth as recently laid-off people need to make up further income in new and exciting ways. InsurTech is coming, we’re just building up to a gradual industry with many strong players helping to build the ecosystem.
As we continue to grow and adapt to this new world and way of working, the opportunity for InsurTech is massive, some areas we’ve already seen in-roads and others are primed to be innovated. It’s key to remember that this won’t happen overnight, it takes time to build and scale. It’s also key to remember that while you are innovating look for your key partners in the market. Many who read this will think insurance is boring. I’d like to think it’s the opposite, it’s a complex and interesting industry that wants to work with partners in the market and if you ask me, the time is now to get moving on that next big project.