There was a big buzz about modular tech, embedded insurance and insurance ecosystems at this year’s ITC Europe, says Monique Heyden, Senior Product Manager at Root
ITC DIA Europe took place from 28-29 June in Barcelona, Spain. The theme was built around a simple question: “The future of insurance is here. Are you ready?”, and the event saw thousands of the great and good from insurance boardrooms, entrepreneurial teams and innovation hubs from around the world gather to debate the next frontiers accelerating growth in the market.
The Root team were present on the ground, with co-founder, Louw Hopely, delivering a Show & Tell presentation to the delegates demonstrating how Root’s partners harness the power of its low-code insurance platform to prototype and launch modern digital and embedded insurance products.
It’s fair to say Louw’s presentation generated something of a buzz at the event, with a stream of follow up questions from delegates. Two themes in particular emerged:
Embedded insurance and the importance of APIs
APIs have changed the game for insurance. Comprehensive APIs are transforming the insurance industry, particularly in the realm of embedded insurance and the expansion of ecosystems beyond traditional coverage.
These APIs enable seamless integration of insurance services into various platforms, products, and services, providing insurers and their non-insurance partners with the flexibility to reach new customers through innovative channels.
Embracing APIs also allows insurers to flexibly enhance their customer experiences, open self-service channels, and leverage data and AI/LLM solutions for product personalisation and automation of insurance processes, such as underwriting and claims.
The advantages of a modular approach to technology transformation
A modular insurance platform approach enables insurers with legacy systems to transform their business with strategic focus on specific parts of the insurance value chain. By breaking down the value chain into modular components, insurers can adopt a flexible and scalable approach, integrating new technology providers seamlessly with their existing infrastructure to replace specific parts of the value chain. This approach allows for targeted enhancements of the technological infrastructure of insurers.
During the conference, one common question revolved around replacing the quote and bind process of legacy systems with the Root platform. This transition offers numerous benefits, including accelerated time to market for new products and product enhancements, cost optimisation, and unbounded innovation opportunities.
By using Root's quote and bind module paired with our low-code Product Workbench and comprehensive APIs, insurers can implement dynamic pricing models, launch digital distribution channels for embedded and standalone offerings, or integrate with third-party systems to enhance their pricing or underwriting. This is just an example of what is possible, and the opportunities are certainly not limited to these.
In fact, overall, the modular platform approach empowers insurers to modernise their systems strategically to enable innovation without the need to fully move off well established legacy systems.
What were the most common challenges or opportunities discussed by delegates during the event, and how were they addressed or explored?
During the event, delegates frequently discussed the opportunities and challenges surrounding embedded insurance distributed through non-insurance partners, particularly in the SME sector.
The digital-savviness and innovative mindset of SMEs, coupled with their deep understanding of customer needs, present a transformative opportunity for the historically slow and complex insurance industry.
Embedded insurance refers to carriers partnering with non-insurance brands to distribute insurance products through the brands' channels instead of their own, offering both bundled insurance products with the brands' offerings and creating new insurance-powered value propositions.
One of the key benefits of embedded insurance is the ability to sell through trusted brands, leveraging the existing trust and user experience of these brands to reach customers more effectively. This approach leads to a successful distribution of insurance products and increased value for customers.
Additionally, embedded insurance allows for a higher frequency of customer contact, providing brands and carriers with valuable data to understand customer behaviors and needs, enabling customer-centric product innovation. Another advantage is that insurance becomes embedded in important moments of customers' lives, offering opportunities for penetration, upselling, and cross-selling.
However, delegates also acknowledged certain challenges related to embedded insurance. These included the API maturity of the insurance industry and the importance of selecting the right partners.
To successfully launch embedded insurance offerings, carriers need to collaborate with technology providers that enable them to build insurance ecosystems with distribution partners. Legacy systems often lack the necessary functionality and flexibility, which is where API-first insurtech businesses, such as Root, come into play.
In addition, it is crucial to choose the right business partner, considering factors such as shared values and objectives, expertise and track record in the industry, customer base and market reach, and technological capabilities for seamless integration.
Did you notice any emerging technologies or innovative solutions that generated significant interest or excitement among the attendees? Can you provide examples?
Among the attendees, there was notable interest and excitement surrounding emerging technologies, particularly Artificial Intelligence (AI) and Large Language Models (LLMs). These technologies are poised to revolutionise various aspects of the insurance value chain, from pricing and underwriting to insurance operations.
The application of AI and LLMs in insurance offers several advantages. It enhances underwriting accuracy by analysing data and identifying risk factors more effectively. Moreover, customer service is improved through personalised interactions and quick responses, leading to an enhanced customer experience—an area where the insurance industry has room for differentiation.
Fraud detection becomes more efficient, saving insurers from financial losses, while claims processing and settlement can be expedited through automation. Risk assessment and pricing benefit from data analysis, enabling tailored policies and optimised premiums. Predictive analytics help anticipate customer behavior and identify emerging risks, while operational efficiency is increased by automating administrative tasks.
However, it is important to acknowledge the challenges associated with AI and LLMs in insurance. One such challenge is AI/LLM bias, where the quality of the output is reliant on the quality of input data. Legacy data, which insurers have been capturing over the years, may not always be 100% accurate or structured optimally.
To address this, ethical considerations and robust data governance are crucial to ensure privacy, fairness, and transparency in AI use.
What's your call to action for the industry following the event?
Following this interesting conference, it is evident that the future of insurance lies in embedded, digital solutions powered by insurance ecosystems. To remain competitive, insurance companies should prioritise three key actions:
- Invest in modern technology and partnerships that set the foundation for success in the embedded insurance landscape. This entails leveraging innovative technologies, such as APIs and collaboration with insurtech partners like Root, to build robust insurance ecosystems with distribution partners.
- Focus on customer-centric product innovation by designing and developing products that meet the specific needs of customers and address their pain points. This involves gathering customer insights, testing products in the market, and iterating in a data-driven manner. Collaboration with partners becomes crucial in this process, as they possess valuable data and a deeper understanding of their customers, which can guide carriers in their innovation efforts.
- Optimise the quality of data to gain better insights that can be translated into action and support the adoption of AI and LLMs in the insurance business. As insurance is an information-driven industry, data plays a pivotal role in successful product innovation. Improving data quality and harnessing its potential enables carriers to effectively leverage AI and LLM technologies to enhance various aspects of their operations.
By embracing these actions, the insurance industry can unlock the full potential of embedded insurance, deliver more customer-centric products and services, and drive innovation in a rapidly evolving market. The time to embrace the opportunities and overcome the challenges is now, paving the way for a future where insurance is seamlessly integrated into the digital experiences of customers.
A huge thank you to the organisers of ITC DIA Barcelona for the opportunity to present and network at this event, which was a crucible for innovation and discussion.
