You hear the word “insurtech” thrown around loosely. From a bird’s eye view, insurtech seems to encompass all technology and insurance companies plus MGAs that offer insurance online related to any digital insurance capability. However, there are pretty broad aspects within the space that are vastly different from one another. In fact, there are so many meanings for insurtech that it can be a little challenging to understand.
To better explain the various forms of insurtech, it helps to break down the insurtech movement into two distinct eras: insurtech 1.0 and insurtech 2.0. This certainly doesn’t clarify each and every aspect of the insurtech space, but it does help explain how the modernization of distribution differentiates insurtech solutions.
Defining the insurtech 1.0 era
The insurtech 1.0 era can be defined by the rise of online direct to consumer insurance providers. Companies like Lemonade, Hippo, Root, and Next are straightforward examples of companies that emerged during the insurtech 1.0 era. These upstart insurtechs understood that there was a need for a better customer experience when buying insurance, so they built it. But they also became the insurers responsible for all the underwriting, servicing, and claims. This structure complicated their success path down the line.
What we are now seeing is that while the insurtech 1.0 companies had the right idea to create a better customer experience, where they faltered is becoming insurers themselves. The reality is that being an insurer is really hard. Legacy insurers are really good at being, well, insurers. It makes better sense for them to manage the risk and do the underwriting and leave the better customer experience to technology partners that take the insurance product and run it on their systems. This is where insurtech 1.0 companies have failed in being dynamic in both areas.
Moving from insurtech 1.0 to 2.0
As we turn the page on the insurtech 1.0 era, we’ll likely see some of the insurtech 1.0 companies become irrelevant and be replaced by insurtech 2.0 companies. Evolving from an insurtech 1.0 company will be too hard for many, especially those that are publicly traded because they have created a business model based on providing insurance. We’ll also see modern insurance platforms start to replace the legacy ‘Big 3’ technology platforms that are used by the big incumbent insurance carriers. This is how we’ll transition from the insurtech 1.0 era to the insurtech 2.0 era.
There are monolithic insurance technology providers that will not be able to keep up with newer, agile digital insurance solutions. And, there is only so long that a legacy platform can band-aid infrastructure issues. These legacy platforms are too slow and not flexible enough to deliver true modern insurance experiences that will define the insurtech 2.0 era – and ultimately the next 30 years of insurance distribution.
What is insurtech 2.0?
Legacy insurance carriers have proven themselves, in most cases, to not be innovative with technology, so this is where insurtech 2.0 companies will step in to help meet the customer in a faster, frictionless way. Insurtech 2.0 companies are those that digitize the entire end-to-end journey of selling insurance. This includes everything from the application, rate, quote, and bind process, payments, APIs, to policy administration and claims.
Insurtech 2.0 companies enable seamless digital insurance experiences – the right product, at the right time, in the right place. The goal is to revolutionize the process of delivering insurance through technology so that carriers and brands can offer the best possible experience to their customers.
An insurtech 2.0 company in action
Sure is a prime example of how we define the insurtech 2.0 era. Sure’s technology gives the ability to enable an insurance transaction, management, and claim into almost any customer journey. In essence, Sure brings a centuries-old industry into the digital age to make the process of buying and managing insurance more enjoyable for consumers.
Some insurtech 2.0 companies are focused on the more niche, ancillary, micro-insurance types of products. Things like pet insurance or jewelry insurance, for example – which entail an easier technological configuration.
Sure, on the other hand, is unique in the sense that the majority of business comes from working to create digital experiences to purchase and manage complex insurance products. Think of homeowners insurance, business insurance, and auto insurance. Sure is squarely focused on the hard-to-configure insurance products, yet once done, nets a radical difference for the entire value chain.
Sure’s platform handles all of the digital workflows – from policy quotes and binds, to policy administration. This includes both the frontend consumer experience as well as the backend insurance infrastructure to launch a completely digitized insurance experience.
Insurtech 2.0 companies focus on what they do best – technology. As the distribution of insurance continues to innovate, so does the technology in order to create the most enhanced partnership. Companies like Sure are leading the new era in insurance by creating the ability for partners to provide customers with a seamless experience.
