To win insurtech 2.0, focus on underwriting, not growth

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Like many heirs markets are ready for change, the insurance industry has already experienced the first wave of innovation.

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Much like the original novelty of opening a bank account online, insurtech 1.0 has brought a centuries-old product into the digital age by giving customers the ability to apply for insurance online. The excitement of the customers turned into the excitement of the investors, and everyone drove off into the sunset.

Well, not quite. It looks like some of them may have flown a bit too close to the sun: focusing on front-end customer experience does lead to rapid growth, but failing to focus on back-end underwriting can lead to a lot of claims, very quickly.

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This is because insurance is inherently risky. It follows that innovation in digital insurance should primarily focus on innovation in digital underwriting—essentially the use of technology to properly assess risk in real time.

The truly magical (and most misunderstood) fact is that everything else can simply flow from this innovative underwriting foundation: instantaneous digital customer experiences, sustainable growth not burdened by over-claims, and the ability to embed insurance into other digital journeys, creating the best experience for customers. consumers, partners and insurance companies.

By focusing first on growth and then on underwriting, the wave of insurtech 1.0 has essentially gone in the wrong direction. But there is plenty of time to turn the tide — consumers’ huge appetite for convenient, modern insurance products has only warmed up.

Insurtech companies must keep pace with the demand they have created through sustainable unit economics and prudent risk management.

So what does focusing on next generation underwriting really look like, and how should you build on that? Here is our five step plan to win the insurtech 2.0 era.

Redesign your business around underwriting excellence

Refocusing on underwriting innovation starts with refocusing your business.

Ask yourself the following questions:

  • Do your core KPIs include ways to measure underwriting performance alongside traditional growth metrics?
  • Are most of your employees underwriting directly or indirectly?
  • Do your company’s goals include explicit underwriting goals?
  • Can all your employees articulate how/why underwriting is a hallmark of your company?

If you answered no to one or more of these questions, it may be time to rethink your goals, metrics, and organizational structure.

Prove your models

No one likes to judge growth, but in insurance technology, smart growth is everything. Resist the urge to quickly scale an acquisition until you have faith in your underwriting engine. But how to do that?

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