Insights & Expertise

How Tech Disruption Is Changing the Insurance Industry

by Rachel Kipp

chain of lightbulbs

Technology is changing the way we work and interact as customers at every stage of the business cycle, and no industry is immune from disruption.

“When you listen to our CEO he’s not concerned about Northwestern Mutual or New York Life,” says Joseph Mallee, co-president and CEO of MassMutual of Eastern Pennsylvania. “They’re respected and big competitors of ours, but he’s really concerned about Amazon and Google and people who don’t have any restrictions, no preconceived ways to run the business.”

Mallee was among the presenters at the recent InsurTech Symposium held at Saint Joseph’s. The conference, which was sponsored by the Maguire Academy of Insurance and Risk Management, and organized by Michael E. Angelina, executive director of the Academy, focused on the innovation taking place in the insurance industry and the opportunities and potential pitfalls that face both legacy carriers and startups.

At a panel focused on insurtech startups, panelists included Mallee; Bill Keogh, senior advisor at Lockton Capital Markets; and David Gritz, co-founder of Insurtech New York and director of marketing at Livgenic, a Philadelphia-based startup that offers a collaboration and communication platform to help underwriters automate their workflow. The panel was moderated by Jeff To, CEO of Safekeep.com, an AI-guided platform for financial services.

Part of the business case for insurtechs, Gritz says, is a customer base that has different expectations for how transactions like insurance are supposed to work, whether they are encountering it from the business side or as consumers buying a product.

“If you look at the life insurance space, millennials just don’t really understand how life insurance plays into their life,” Gritz says. “But you have a company like Travelers start a service like Traverse, which lets you insure objects like your phone or your camera and they got lots of millennials excited. The demand is there; it just needs to be addressed.”

Customers today have increasingly high expectations for how quickly and seamlessly they can complete a transaction. Data analytics, cloud computing and other technology have the potential to make that a reality, Mallee says.

oseph  he says. “Some people want to meet with an advisor and they never want to do a transaction online. Other people want to do some research online first and then meet with someone. However, the client wants to do business with us, we have to be prepared to do business with them in that way.”

“One of the buzzwords you hear today is omni-channel, where you meet the client where they want to be met."

Joseph Mallee

Co-president and CEO, MassMutual of Eastern Pennsylvania

The industry has historically been very paper-driven; now several startups are aiming to digitize paper forms and find ways to extract the data and move claims along more quickly.

“We’re at the point where if you’re a carrier and you have a paper file room and you’re not able to analyze that data to make better underwriting decisions, you need to start there; you don’t need to go into the unstructured world,” Gritz says. “Most startups are just not there in the unstructured space. But you can just solve the easy problems first.”

Buying life insurance has traditionally been a drawn out and invasive process, Mallee notes. Applicants must complete a lot of paperwork, provide medical information and then wait several weeks for an answer that may turn out to be no. MassMutual has created a platform that aims to make the process digital and employs algorithms to give an automatic yes or no in a significant percentage of cases.

“A millennial customer can better understand going online and filling out an application in two seconds and getting an instant approval,” he says. “This also makes the advisor experience better because it’s not as intrusive – the technology can go in and ask the intrusive questions. You have to educate your advisors on how to use the technology, but it’s incumbent on the carrier to make the investment.”

Mallee adds that MassMutual made sure to involve end users – in this case, the advisors – in the development process. “It’s hard to sit in a home office and know what the customer wants.”

Legacy companies may be leery of changing processes that have worked for years, but startups can start to surmount that obstacle by explaining how their technology or product can “solve an enormous problem or help them create an enormous opportunity,” Keogh says.

“Insurtechs need to come to the discussion with a tremendous amount of humility,” he says. “The idea of the errant insurtech coming in and saying, ‘I’m going to bury you,’ doesn’t sell. You have to approach [companies] with genuine curiosity. They know everything you need to know and if they don’t like you, you’re not going to get it out if them.”

So far, a lot of the activity in the insurtech startup space has been focused on property and casualty insurance; going forward, Gritz sees lots of opportunities for companies focused on providing solutions or tapping new markets in the life and health insurance sectors.

No matter how things shake out in the industry, the panelists said there is always going to be a role for the human touch in the industry.

“We have a special needs planning department – I don’t think a bot is going to be able to do that,” Mallee says. “We have to make sure the a direct-to-consumer company can’t come in and replace us, so we have to become more specialized in the advice we provide.”