Wow … what a week it was at InsurTech Vegas 2024! How far the event and the industry has come from the original ITC back in 2016! Majesco was there from the beginning, and I have been there every year as an original “OG”!
While it has grown in all facets – attendees, sponsors, exhibit hall, speakers, and more … it is an event that continues to change as the industry changes to stay relevant and to push the industry out of our comfort zone and challenge us.
A New Phase for InsurTech
I have been talking with many others in the industry on where we are with InsurTech. Today it is a much broader community of not only startups, but established companies – both insurers and technology partners, which was obvious when you went through the exhibit hall. I believe we are in a new phase for InsurTech – which I am calling it the “teenager” years, represented by new risk and investment assessments, relationships and partnerships, and business demands. It is a phase where innovation is no longer a stand-alone area of focus, but now an integral part of every company to fundamentally change the way we do business for a modern world.
Because of this, InsurTech is highly focused on the core business and technology that can redefine how business is done with both the operating model and technology foundation. The reason is that today’s pressures and challenges of macroeconomic factors, increased cost, and combined ratios, operating performance, expanding risks, and technology advancements are compelling insurers to respond to the need to improve, both operationally and innovatively. InsurTech is a key component to make that a reality.
Today’s operational business models are falling out of synch, and the technologies that provided their foundation must be re-tuned or replaced. Over the last ten years, insurance has been on a non-stop quest to transform and optimize the business. However, much of it has been incremental and short-sighted, layering technology on outdated business processes that have created and intensified many of the operational challenges faced today. The impact is being felt with increased operational costs, a fight for talent, rising customer expectations, profitability challenges, and intensifying risks.
The operational business model and technology foundation must change to be relevant in today’s modern world.
Boeing vs. SpaceX
A stark example of not rethinking the operational model and technology foundation is the difference between Boeing and SpaceX. Here is the background reported by Ars Technica.
About 10 years ago, NASA gathered together senior leaders who had developed the Space Shuttle and oversaw the construction of the International Space Station. With the Space Shuttle’s retirement, they needed a replacement vehicle to send astronauts to the orbiting laboratory. Boeing was the favorite by the majority and poised to win the entire contract. But a few argued for SpaceX. The decision was held off for a few months, then Boeing received $4.2 billion to develop a “commercial crew” transportation system, and SpaceX would get $2.6 billion. While Boeing did not win it all, there was a widespread presumption they would easily beat SpaceX to the space station. That did not happen.
Boeing decisively lost the commercial crew space race with their Starliner spacecraft, having completed only 6 missions as compared to 14 missions for the SpaceX Dragon as of May 2024. Furthermore, SpaceX is earning revenue for each mission, while Boeing has run over in both time and money. Differences between the two were highlighted – company culture, design philosophies, decision-making structures, technology advancements, and a focus on agile innovation.
Then, on October 13th, 2024, SpaceX solidified its position as the leader when it broke new ground and landed the rocket booster stage at the Texas launch site during the fifth test flight for carrying people to the moon and Mars. It is described as a feat of technical wizardry and demonstrates the universe of possibilities by rethinking the operational model and technology foundation!
It is a shining example of why the insurance industry must embrace a rethink of the insurance business. Traditional thinking limits innovation and progress! In today’s fast-changing world we must move beyond the legacy and internal mindset of “this is how insurance is done,” to one that recognizes the world has shifted and we must as well.
Insurance Innovation – A New Frontier with AI and GenAI
We are in a dynamic and rapidly accelerating technology landscape, particularly with GenAI poised for significant adoption and impact – which we saw throughout ITC.
While data and analytics are and have always been a stalwart for the insurance industry with business intelligence reporting and predictive models, the accelerated adoption of AI/ML models and now GenAI is changing how we do business, changing the kind of business we do, and providing better risk assessments and insights than ever before.
But just like SpaceX rethought how they would use the technology differently, insurance must rethink how we use analytics to make a more powerful impact.
This is where embedded analytics, rather than bolt-on analytics, is transcending traditional limitations and unlocking transformative and optimization value. It is seamlessly embedded into solutions and workflows across applications with access to all the operational data in real-time. The business impact of embedded data and analytics, including GenAI, will drive profitability and growth, lower cost ratios and improved combined ratios, and bend the operational cost curve. It addresses a looming industry challenge regarding talent replacement and organizational knowledge as the industry loses nearly 50% to retirement by 2030, bending the learning curve and keeping much of that knowledge in place and in use.
At Majesco, we are rethinking how our solutions are architected and using technology including analytics and GenAI that we highlighted at ITC. Our next-gen data and analytics strategy and foundation with a data lakehouse includes:
- all data from systems with real-time updates,
- embedded business intelligence within the workflows and with capabilities for personalized dashboards,
- embedded AI/ML models built or from partners,
- and GenAI in everything.
It is vastly different than many other solutions and avoids a fragmented and incremental approach. Majesco Copilot, our embedded GenAI tool, enables insurers to achieve a new way of doing business and a new level of operational optimization and innovation that has yet to be seen in the insurance industry.
At ITC, we announced our solution benchmarking using GenAI, highlighting how we’ve shattered industry norms by reducing workflow and transaction completion times from 10-15 minutes to a mere 30-60 seconds for many. This transformative leap delivers an incredible 10-20 times boost in productivity for tasks and transactions, revolutionizing customer servicing, driving quality, consistency, and operational efficiency.
And the pace of advancement for GenAI is only accelerating, creating even greater opportunities. GenAI is poised to be a game changer for the insurance industry!
Recommitment to the Future of Insurance
The AM Best report published May 2, 2024, provided a very telling financial assessment of P&C insurers with highly correlated innovation assessment scores, noting that those with higher innovation scores had significantly higher net premium written growth, lower expense ratios and greater efficiencies. Furthermore, more non-innovators were overrepresented among downgrades.
We now have real benchmarks on the impact of intelligent solutions and financial data on the investment by insurers in technology and innovation, demonstrating the real business value and results that can be achieved and providing a way forward for those who are challenged in keeping pace with the market challenges and demands.
Without the insurance industry, the economy would grind to a halt. People and businesses would struggle with risk uncertainty. As an industry, we must recommit to ensuring the economy, people, and businesses can operate and grow. Growth is often driven by change.
The pressures and challenges of macroeconomic factors, increased cost, and combined ratios, operating performance, expanding risks, and technology advancements are compelling insurers to change their operating model and technology foundation.
Are you going to be like Boeing, using your time and money operating like you always have done? Or, are you going to be like SpaceX and rethink how you operate and use technology?
My bet is on those who embrace change to reimagine a new future. A new operating model. A new technology foundation. Those who change will capture the potential and possibilities of the Future of Insurance.
It is an exciting time to be part of this industry and drive sustainable, valuable change!
Are you ready to innovate to launch?
We are, and we are so excited about the future of insurance!
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