Insurtech is now moving rapidlyinto commercial lines, where attention and intent are focused onimpactful solutions.

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Jawaharlal Nehru, the first prime minister of India, oncefamously said: "The policy of being too cautious is the greatestrisk of all."

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I am reminded of these words when I think about insurancecompanies, which tend to be meticulous, cautious, fantastic beaststhat act and react in predictable ways. It follows that thetechnology that has always driven the insurance business at afoundational level generally plods along at a similarly thoughtfulpace.

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The intent behind Nehru's statement, while not originally spokenabout insurance specifically, has been well taken by the industry,as evidenced by the relatively recent embrace of the InsurTechmovement. With a solid start in the personal lines segment of theproperty & casualty (P&C) insurance space, InsurTech ismoving rapidly now into commercial lines where the attention andintent is focused on solutions that will deliver a strategic andimmediate return on investment (ROI) while still enabling riskmitigation at an enterprise level.

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Integration is the name of the InsurTech game for 2018. At theend of the day, the most successful insurers will be those thatknow how to "play" with flexible yet sophisticated applicationprogramming interfaces (APIs).

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Maintaining a personal touch

With margins shrinking and a decline in net new customersbecoming the norm, personal lines P&C insurers turned totechnology for operational efficiencies and a competitive edge.Willing to break the traditional insurance business model wideopen, these renegades threw caution to the wind and pushed(r)evolutionary changes — like the development of usage-basedinsurance (UBI) products — into the mainstream. This challengedcommercial lines companies with bigger dollar figures at stake todo the same.

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InsurTech entrepreneurs, needless to say, couldn't be happierabout this "push" from personal lines. It got the proverbial ballrolling on the commercial side, where there is easier access tohigher premiums and higher volume.

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Theoretically, at least, the move to commercial lines givesInsurTech an opportunity to prove an ability to positively impactthe bottom line at scale. This is most obvious today as commerciallines use cases expose results from initial attempts to transformtraditional distribution channel networks, and incorporateartificial intelligence (AI) and robotic process automation (RPA)into the rating, underwriting and quoting process to gain deeperinsights through investments in data science and analytics.

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Pie in the sky

As with any movement, propaganda is plentiful. Technologies thatare inherently mismatched with insurers' ability to implement aregiving all of InsurTech a bad name.

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This fact has insurers taking a turn in 2018 toward technologiescapable of delivering more concrete results. Insurers are movingaway from bright, shiny, InsurTech objects, and toward servicepartners, emerging technologies, and solution providers with areturn on investment more immediate than promised for five yearsdown the road.

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This is most obvious as insurers find solutions to existingproblems and improvements for strategically important, buttraditionally troubled, processes such as the digital enablement ofcollaboration between agents and underwriters, the sacrifice ofmanual processes to automation, and improvement of customerexperience through advanced analytics.

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Strategic and ambitious

It is also important to keep a keen eye on APIs as insurers leaninto tactical, practical InsurTech solutions that can deliverresults in important functional areas such as underwriting andclaims.

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Integrations will make all the difference in the future. So,while immediate solutions must be strategic, there also must beroom, and a planned path, for growth.

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Despite a significant push by P&C insurers to completeenterprise legacy system replacement projects in the last 5 to 10years, many are still collared by outdated, and now unsupported,core administration systems. Integrations with third-party dataproviders, InsurTech startups or partners, and emergingtechnologies can enhance the functionality and extend the life ofaging legacy systems, allowing insurers to focus more on customerexperience, new products, and true digital enablement ofdistribution channels.

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This is most obvious in the sheer number of traditionalinsurance technology vendors signing partnership agreements withInsurTech startups, and in the pilot programs and proof-of-concept(PoC) projects through which InsurTech is creating moreopportunities for insurers to engage segments of a changingcustomer base and to secure new business faster.

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The road ahead

There is enormous potential in the P&C insurance industrystill waiting to be tapped, and InsurTech provides a path toprosperity for everyone involved. In 2018, the state of technologyin the insurance industry is strong, and InsurTech is making theentire value chain stronger.

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Ilya Bodner is the founder and CEO of Bold Penguin. He canbe reached for further information or comment via email at[email protected].

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The opinions expressed here are the writer's own.

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