COVID-19 is reshaping insurance. To help insurers adapt and thrive on the other side of the pandemic, we released our report Crisis Manifesto: How insurance will change post-COVID. Today, we talk with Dustin Yoder, CEO of Sureify about the future of insurance.
What are your thoughts on the changes you’re seeing in the insurance industry? What specific gaps, blind spots and challenges has COVID-19 exposed? What existing trends have been accelerating?
We are definitely seeing digital enablement agendas accelerating in life insurance right now and some existing blind spots being exposed and resolved due to COVID-19. Pre-COVID the life industry involved a lot of in-person, in-office or human/manual processes that required an in-person connection somewhere in the chain. For example, creating awareness of the product at an in-office meeting, underwriting the policy, the final signature, post issue servicing during the policy, and lastly the claims process. It is fair to say that the entire industry or at least most insurers were “digitally exposed” on some level in their sale to claim lifecycle.
Many of us have been through a number of these experiences ourselves, as we went into our agents office, met with an agent, with our spouse, to sign papers in order to buy a policy; even had a yearly review …every few years. Obviously COVID-19 makes this all difficult, and currently impossible. Not to mention, well over 50% of individuals buying life insurance have to go through a human element in the underwriting process for their insurance. Yes, accelerated underwriting is on the rise, but in most cases, an in-person exchange of fluid samples, to prove all the things you said in your application, was required. Thus, COVID disrupted that application process and many are still on hold.
We hear the industry has hundreds of thousands of applications that have been submitted but can’t be underwritten and formally enforced.
In the last 60 days, we surely see the industry kicking it into high gear to adjust to this new normal. Yes, It already was 2020 but COVID-19 has changed the world of insurance. All life insurers systems, processes, and standard operating procedures now need to be enabled for full digital. Full digital enablement is the new agenda that every insurer now has as we are not returning to the same world we had two months ago.
COVID-19 has exposed enormous innovation gaps in the insurance industry.
In order to survive, big insurers need to behave more like startups. They need to build ventures in-house, partner with tech innovators, adapt quickly, close innovation gaps and build trusted solutions.
What is your perspective on startup collaborations with large insurance companies given this digital push that COVID has created. Do you think they will be collaborating with more startups moving forward? What type of roles will small companies play in shaping the industry’s future?
It’s a double-edged sword and both sides are very sharp right now. If a startup has a direct fix to a direct problem, it’s going to be easier to accelerate that collaboration. However, insurers are all about trust, long-term relationships, proof points, and security which can make it difficult for start-ups to penetrate with new brands, concepts, ideas and technologies, since meeting in person is not possible at this time and thus to get real traction.
The good news is that carriers have more pressing needs today than 60 days ago. So, if a carrier needs something essential to run their business, they are more likely to purchase from the best vendor offering it on the market. Yet, to have the opportunity to find the prospect, you need exposure, build relationships, and it may be harder today than 60 days ago. In the past you would do this by meeting with people at conferences, visiting any given insurance companies office, and even having a combination of showcases, conferences, on-sites, webinars, etc. So how does someone break into the industry when we’re simply online? That’s the sharper side of the sword; it’s going to be much harder to get in.
Another thing we are seeing is that it is harder if you’re solving a longer-term problem and not a COVID-19 related problem. The budgets are shifting away from anything ancillary. The mindset right now is find the bleeding and stop it. If that’s what you do, you have a good opportunity. Startups that are really proposing something innovative and disruptive to the industry – and a little projective, may find it more challenging. You can see acceleration taking place in life insurance but it’s a little unknown right now.
What should large companies be focusing on?
First, things first, making sure you can sell, service and conduct their core business at full speed. Yet, we believe COVID-19 is going to create a lasting change on the expectations of the end-customer and internal teams, thus creating more pressure to ask what the real need is. For example, a consumer’s willingness to allow others into their homes or their willingness to engage in person is unknown. Thus, what does this really mean for enabling their core business at full speed? Insurers will have to overcome their digital exposures and work rapidly to cover the gaps with their staff and customers….and it will be evolving rapidly. The data will tell the story of what really needs to be done.
What advice do you have for startups looking to bring innovation to the insurance industry after pandemic?
Focus on a vertical. Bringing innovation to insurance is easier said than done and trust is key. There are a lot of hurdles to overcome, security requirements, compliance issues, insurers requiring a certain amount of liability insurance, use cases, data validation etc. Yet, the industry is excited about change and needs technology to play a major role in almost every area. Again, my core advice would be to focus on a verticalized problem/solution and master it. The more time, money, learnings you have invested in solving an insurers problem, makes you that much more exciting and hard to push away. Being everything to all people in the insurance space will not get you very far and you will grow tired in due time of the endless sessions of executive edutainment and contracts.
No, Sureify did not do everything right the first time, but I can say that a focused effort to enable life insurers is a core to our success. Also, we did start with architecting and tackling security and compliance needs at the beginning, enabling sensitive data protection, and making sure we had pre-built our platform in a way that would be generally accepted by insurers’ security, compliance, and risk assessors.
What do you think medium- and long-term impact will be for the rest of 2020, and how should large insurers and insurtech startups prepare for the road ahead?
COVID-19 is going to require the industry to enable all systems and processes to be digital for the short and long term. Thus, some technology companies and some insurers who change are going to come out even stronger … but many others will be shut down. It’s the hard truth and one to accept and work hard to overcome.
Yet, we are all driven by economies in general, so the one thing that no one has a crystal ball for, is knowing if consumers will have the money to spend and insure more or less of their risks. This will ultimately affect us all.
At Sureify, we are optimistic and believe the pure nature of what we do puts us in a spot to help companies reach their customers from anywhere, overcome digital exposures needed to be solved today, and thus, we feel fortunate and hopeful for continued growth.
The future of successful insurers will rely on a willingness to embrace strategic alliances, listen to new consumer needs and act decisively in uncertain times. Please read the full Innovation Opportunities in Insurance after pandemic report here.