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Insurtech is about more than investing in state-of-the-art technology

The Covid-19 pandemic has focused the global re/insurance industry on the benefits of a move toward digitalisation. However, it is becoming clear this means different things to different firms.

The coronavirus has forced the industry’s hand, compelling firms to look at their fixed overheads and consider how technology can be used to reduce those in the future. The same can be said for a company’s cost base. These are issues firms have been aware of for many years, but the changes that were forced on all businesses, not just the insurance industry, has created a renewed drive to tackle them. 

Barriers, which in the past would have seen some areas of the process and cost base deemed to be taboo, have been broken down. The momentum for the implementation of technology and the desire to move to a more digital operating model has increased and it is unlikely the brakes will now be applied.

It has led to an increase in the profile of insurtech and the level of interest both in external and internal insurtech solutions. It has also asked questions of the market’s business processes and operational efficiency.  The move to remote working, and the changes this has required has provided the opportunity for technology to prove its worth as an enabler in reducing costs and improving operational effectiveness. Technology has streamlined operational processes and is now key to engaging stakeholders across the value chain effectively and consistently, regardless of location and market conditions.

When announcing the market’s interim results Lloyd’s chief executive, John Neal, said the market needed to hold its nerve in the face of rising rates and the opportunities they may present. Given the speed with which Covid-19 has driven the need for changes in the way they work, a similar message could be given to firms when they consider their future operational models. Firms need to ensure they take the time to ensure they are clear about what they want their digital offering to look like.

It should not be a case of simply spending money on technology. Firms need to have a focused idea about what they want to achieve. It may well centre around the creation of a unique digital customer experience. It might be to leverage data to optimise cover and reduce premiums, or the development of new products and services. Whatever the aim it needs to be understood across the business.

Larger organisations are spending money on technology; however, their challenge is that there remains a lot to change. Digitalisation is now seen as a key goal for many businesses, but this is not solely achieved by the technology that you implement.

To be a digital business requires a different operating model, business mindset and capabilities. It requires fundamental changes to the business and the way it operates. It goes back to the need for a clear understanding of what you as a business want to achieve. 

If true digitalisation is the aim, firms need to be committed to the wholesale changes this will require. There is a danger that comes with a failure to fully implement the steps needed on this journey.


It is not a process that should be embarked on lightly. Were you to only digitalise part of the business, you open yourself to additional risks and challenges that may result in additional costs for a process that was designed to streamline and enhance efficiency. In our discussions with clients in markets such as London, many revolve around the industry’s expectations of what can be delivered. Data remains an important issue for many firms in terms of how they can connect it at the back end, overcoming any legacy issues they may have. This also highlights the importance of better understanding the performance of your products and the ability to better target those products and services.

While the use of technology to enhance the ability to underwrite remains a focus for many in London and beyond, technology is also driving changes and delivering benefits in the claim’s operation. We are working with clients keen to explore areas such as claims triage systems that can identify claims to be paid automatically, reducing the level of human interaction, and enhancing the decision-making process.

While the complex nature of many claims in the London market do not fall into the triage sphere there is a lot that can be achieved in streamlining the claims process to reduce manual involvement and speed payments. Fundamental changes to the way claims are processed is at the heart of Lloyd’s efforts to change the way the market operates. There is a clear recognition the benefits that can be delivered in relation to the speed of payment and the frictional costs of claims are significant.

Covid-19 has in many ways exacerbated the pace of a change that  was already under way. It has allowed the benefits of technology in all areas of the re/insurer’s operations to move from potential to proven. The pace may be increasing but firms must ensure they have a clear idea of their preferred destination when it comes to enhancing technology and digitalisation before they embark on the journey. 

Author: Tom Maleczek
Published in Insurance Day 18 September 2020