InsureTech is a lie.
No, that’s not exactly right: Everything InsureTech says is a lie. A subtle but meaningful distinction.
1: There is no revolution, only iteration
Not applicable only to InsureTech but we need to have an honest conversation about what technology can do. Technology can enhance. Very rarely does it create an entirely new function, process, service, or what-have-you from whole cloth. Even things we think of as “revolutionary” today were iterations typically over decades – the internet started as a US defense program, Watt’s steam engine was an improved version of someone else’s design, and despite centuries of grade school education, Edison did not “invent” the light bulb.
This is not to diminish such contributions but to recognize how technology evolves: by iteration. Meaning there is an existent knowledge base and likely existent physical (or digital) constructs, and those are improved or tweaked in some fashion to make them more useful. This is done over and over again until a specific variant is mass adopted and we in 2024 refer to it as a singular “invention”.
2: InsureTech will not change what you do
Which means that what all these InsureTech companies are promising are just that – promises. And vapid ones at that. Lemonade is not going to “revolutionize” how we buy insurance, because we still need to underwrite, service, etc. Like yeah it’s neat that I can order my favorite food from GrubHub, but is hitting a few buttons corresponding to “Pepperoni Pizza” all that different from picking up the phone? The fundamental service of “ordering a pizza” hasn’t changed, merely how it’s routed.
So it is with insurance. Promises of “altering the fundamental relationship between consumer and insurer” is nonsense. How would you even change that relationship – you going to make it so policies are issued on vibes instead of underwriting? Going to make is so the insurance carrier is the one paying premium to the insured? Or are you going to retain the fundamental relationship of one party paying another to accept risk according to specified criteria and simply (hopefully) make it more efficient?
3: InsureTech is not coming for your job
I mentioned efficiency above, and one of the main “costs” (scare quotes intentional) of insurance companies and brokers alike is personnel. This means a lot of InsureTech is designed to remove that personnel from the equation – why pay several dollars per transaction when you can get a computer to do it for the cost of a lightbulb?
Yet insurance is a highly complex phenomenon. It requires deep understanding, it requires explanation, it requires awareness of regional differences, of case law, of changes, etc. Thus it should come as no surprise that the majority of “disruptor” companies focus on personal lines insurance (home/auto) – by virtue of being tightly regulated those lines of coverage are relatively simple compared to other types of insurance. Yet even then the “SourYellowFruit” companies of the world haven’t delivered much beyond “pre-screening questionnaire that directs to a human”.
I’m not joking here, I recently had an adventure with a handful of such companies while looking for a relatively “easy” type of commercial insurance policy for a small business. And that was the solution when I used each one of them – I answered a handful of questions and waited on a callback from a human.
Remember how one used to be able to call an 800 number and talk to someone who could help us? And now we have to go through all the menus before we find out our option isn’t listed and have to be transferred to a person? That’s the disruption insurance professionals can expect from InsureTech – metaphorically yelling “REPRESENTATIVE!” into the phone every time we need help. Heck, call any number of “Agent Lines” now at major insurers and that’s what you get.
4: Temper expectations with what InsureTech can deliver
Let’s be real: the tech industry, as a whole, produces some pretty negative outcomes. There’s even a word for this phenomenon which I won’t repeat here. This isn’t relegated only to Tech, but I would say it’s hyper-apparent in the tech industry.
Being a bit of a cynic here, think about the technology over the past 10+ years and how it has or has not improved. I now have to reboot my TV every week because its apps screw up. I get advertisements to rent a movie I both own physically and have available through a streaming service. Rewinding in [insert TV App here] causes the program to skip, or commercials to repeat. And DO NOT EVEN GET ME STARTED ON PARAMOUNT+. All in less time than it took for Blockbuster to go out of business.
What else we got? The iPhone still won’t let you transfer music to your device without using iTunes. Social media gave us the largest communication platforms the world has ever seen and turned them into toxic dumps. Your neighbor’s refrigerator is DDOSing you while Alexa figures out what products fit your algorithm.
Add to this the fact that the incentives for most “startups” is to sell, that value often lies in patent wars rather than product, that services are laden with costs and fees, etc. etc. Is all of that really the formula that will help you, personally, execute better?
I told you I’m being cynical. And it is folly to say there aren’t benefits here – hey being able to watch MacGuyver 24/7 is pretty rad – but the point is that what the industry purports to deliver ought to be scrutinized with the actual results produced, because they are often wildly different.
OK smart guy, I guess it’s back to candles and quills
Despite the diatribe, I’m no Luddite. But I am a realist. Think about the technology you do use on a daily basis and, outside e-mail, I’d bet dollars-to-donuts the most important one would be Excel. I’ve seen billions of dollars of assets get insured based on an Excel file. I know world-famous companies that allocate their global budgets in Excel. I’ve seen multi-million dollar sales and $20 purchases alike be determined by the results of a few cells in a spreadsheet.
Excel, while not perfect, is imperative to what we do because it is highly functional, has both a low skill floor and a high skill ceiling, is adaptive, intuitive, and – really the thing that matters – useful.
So that’s how the insurance industry can embrace InsureTech: figure out how it can be useful to you, today. Not how it can “revolutionize” your pipeline, not how it can cut a gajillion in costs, not how it can work in some hypothetical perfect once you’ve bought 4 other products in the ecosystem. Ask yourself “What am I doing right now and what kind of tool could help me?” Ask how InsureTech can help you, not how you can “buy in” to it.
The answer is going to be boring. So boring. It’s going to be something like, “automate filling in these form fields,” or “provide a report of all similar clients,” or “automatically run this analysis”. Because regardless of any revolution that happens those functions still need to be done and are precursors in and of themselves; we’re filling in those fields and running those reports for greater purpose. We need to gauge eligibility, compare costs, find a coverage gap, overturn claim denials, and 10,000 other things which are abstract, highly complex, nuanced problems that require decades of knowledge and effort to solve.
InsureTech, while it will provide a helping hand, will not fundamentally change that.
This article is presently a draft; it may be split into multiple parts in the future