Ten years ago, you were lucky if you could apply for insurance online. Today, insurance technology is a major industry force, offering data-driven improvements in underwriting, applying for insurance and filing claims for health, renters, homeowners, auto and other types of insurance.
The transformation is especially beneficial for consumers, who now enjoy more competitive prices and easier claims processes. For unprepared industry giants, though, the pressure is on to adapt or flounder.
Entrepreneurs in any field can learn from the changes the insurance industry is experiencing. For starters, these three conditions signal an industry is ripe for tech disruption:
- A shift in customer preferences. Thanks to companies like Geico, customers went from being wary about applying for insurance online to expecting to handle almost everything online.
- Expansion of funding options. It used to take a lot of capital to make an insurance company work, meaning it wasn’t an accessible industry for startups. In the last few years, though, funding has become available thanks to increased use of reinsurers to distribute risk.
- The availability of new technology or data. Insurance companies live and die by the accuracy of their underwriting. Today’s data processing technology, combined with the wealth of publicly available data, mean that insurers can underwrite more accurately than ever, can control their loss ratios and can pass the savings along to customers.
Maybe the most visible example of tech disruption in recent years was the way Netflix displaced Blockbuster (and the ways it has maintained dominance over the years).
These changes are easy to diagnose in retrospect. But how can you determine in the moment if your industry is on the brink of a significant transformation? Here are a few signals to pay attention to.
Shifting Customer Preferences
The internet upended our lives and expectations as customers. Then the smartphone changed everything again. Now voice-based search is leading another revolution, as will (we’re told) artificial intelligence in the near future. It’s easy to write these changes off as relevant only to those in e-commerce, but it’s smart to understand what they mean for customer expectations in any industry:
- We increasingly expect things to be easy. Finding essential information no longer requires thumbing through an encyclopedia or even typing in a search bar. If you’re making it difficult for customers to buy from you, manage their account or unsubscribe from your emails, expect to lose customers.
- We want answers instantly. We don’t want to wait for business hours to have problems resolved. If you’re not giving customers a way to contact you when they want to, someone else will.
- We’ll adapt to technology. The shift from no internet to internet in our pockets was breathtakingly fast. In any industry, it’s best to accept that change is a given and to invest accordingly. Just as agile development has largely replaced months- and years-long software update cycles, agility throughout a business is the only way to keep up with the pace of change.
On the flip side, all the digitization means companies can win loyalty by offering a genuine human touch. As always, standing out from the crowd is important; what’s changed is what the crowd is doing and what it takes to set yourself apart.
Funding Expansions And Technology Advancements
Thirty years ago, the idea of growing a user base before proving profitability would have sounded like an unfeasible way to build a business. But for many of today’s VC-funded startups, it’s the norm.
Similarly, technology was such that Netflix couldn’t have existed 30 years ago and Uber couldn’t have existed 15 years ago.
You can embrace this reality in a few ways:
- Invest in what used to be called RD. This is now often referred to as an “innovation lab,” or a sector of your business dedicated entirely to dreaming up new ways to solve problems with the best resources you have available. This will give you the edge of a startup with the strength of an industry giant.
- Get friendly with startup founders in your space. You might be able to make everyone’s life better by acquiring one someday.
- Pay attention to your customers. As long as you’re providing them with the best experience and product available given current technological capabilities, it will be hard to go wrong.
If you’re paying attention to the right signals and making decisions based on the current realities of your industry, you should be able to survive and thrive when tech comes for your industry.