Not everything can be automated, so choose wisely.

When looking at new technologies or partnering with an InsurTech, focus on the primary business requirements. Will the technology or new capability help deliver more value to policyholders? Will the company gain more market share by leveraging the technology? Will the technology help improve combined ratios by creating more operational efficiencies? In some cases, it may be best to extend the scope of an initiative beyond the policyholder to include other stakeholders, such as brokers or internal business users.

Before moving forward with a project, it is important to perform a thorough cost-benefit analysis (CBA), making certain to rank all the use cases based on expected ROI, and choose the one that would yield the maximum returns. Engaging an insurance-focused technology consultant at this point can be a good way to ensure an effective due diligence process.

Digitize the core and avoid patchwork.

With the proliferation of new technologies available in the market, re/insurers are no longer limited by time-to-market constraints typical of legacy technology and can move quickly with technology enhancements. However, businesses which continue to run core processes traditionally – with vast amounts of low-value data collection, inputting and processing done on a manual basis – run a significant risk of not harnessing the true potential of InsurTech.

Insurance organizations must step back and understand the full picture and make sure that critical core business processes and systems are transformed or enhanced first, focusing on scalability, stability, repeatability, and interoperability. Plugging digital solutions unsystematically across the value chain may lead to high technical debt and broken customer journeys in the future.

Build a culture of failing fast and innovating rapidly.

InsurTech projects cannot run the same way legacy technology has been deployed, maintained, and customized. Businesses need to adopt a DevOps approach, enhance organizational agility, and foster a culture of innovation within IT teams for achieving continuous integration-continuous delivery and realizing InsurTech ROI faster. By using an iterative approach and failing fast, companies can adapt to the world of volatility, uncertainty, complexity, and ambiguity (VUCA), and allow speed to translate into quality. In the insurance industry where compliance costs and risks are very high, a DevOps-led approach is of utmost importance. For instance, security aspects can be introduced earlier in the application development lifecycle through core security functions enabled programmatically within DevOps workflows, eliminating vulnerabilities and achieving compliance automation. A recent Novarica report suggested the average speed to market is now seven months for new products, and three for modifications, and it will continue to shrink as insurance companies adopt agile, innovative development practices.

Enhance data-centricity.

Data is the lifeblood of the insurance industry and is used to augment decision making across the insurance life-cycle — from underwriting and actuarial all the way to claims. And predictably, the success of any large-scale digital transformation project depends on the availability of data and its quality. Consider an automation use case in underwriting where data needs to be collected from multiple sources and loss runs and claims history need to be assessed. What happens if the data resides in silos across the organization? Without enough data, the automation bot will not be able to make decisions on the underwriter’s behalf. The same is true of any AI or machine learning use case. There is an urgent need for re/insurance organizations to streamline data management practices and enforce data governance policies if investments in new technologies are to deliver the promise.

Bolster technical skills and improve organizational efficiency.

Ensuring the right talent is employed and engaged to properly execute on the incubation, scaling, and maintenance of InsurTech projects can be a challenge. Businesses should invest in strategic partnerships with knowledgeable, industry-expert consultancies, and service providers to deliver the much-needed velocity for sustaining the pace of innovation and ensuring a good ROI.

Partnering with services providers can further augment InsurTech ROI as digital enablement is directly dependent on the smooth running of core processes and systems. Technology without well-structured, optimized workflows, and human resources to support those workflows, is never a good investment. A combination of insurance services and InsurTech will lead to a leaner, responsive and cost-effective operating model, creating operational efficiencies and driving cost savings, without increasing capital expenditure and operational risk.


Investment in InsurTech has grown exponentially in recent years, with new worldwide funding commitments of $6.37 billion in 2019, and there are no signs of this momentum slowing in the coming years.

There has been a paradigm shift towards digital, with 20% of insurers’ 2019 IT budgets devoted to digital strategies and capabilities. A recent report from QBE North America and Village Capital found that 79% of insurance executives believe artificial intelligence (AI) will transform how insurance products are produced and delivered.

There are tangible benefits that can be delivered to new and existing policyholders if insurers have a prudent InsurTech strategy in place, and if the right resources are deployed at the right time. There are practical ways in which re/insurance organizations looking to make strategic investments in InsurTech can accelerate return on investment (ROI) from selecting the most appropriate use case and building competencies to promoting data centricity and embracing next-generation technologies.

The slideshow above illustrates five best practices for locking in InsurTech ROI.

Why this matters to you

If an InsurTech project is to have any real value, it will go way beyond simply tinkering with business as usual. It will involve a transformation in business processes, and those companies that go down this route need to be prepared for profound changes in the way they operate.

Buy-in from management and staff, therefore, is essential, and a well-thought-out change management program needs to be prepared and executed. Insurance CIOs must also be wary of the “rip and replace” approach. In certain cases, hybrid integration — with the use of APIs, hybrid cloud infrastructure, use of third-party data, and more — may deliver the same or even better results. It’s important to remember to ask the right questions at the start of the process. With this in mind, chances are the correct InsurTech solution can and will revolutionize the business and drive the expected ROI.

Manish Khetan is chief strategy officer at Xceedance. He can be reached for further comment or information via email at