The insurance industry faces several tests over the next year, from blockchain moving beyond proof of concept, to artificial intelligence replacing the back office, to the insurance tech stack finally benefiting from APIs in the same manner as the rest of the financial services sector, QED Partners co-founder Caribou Honig told InsureTech Connect 2017 attendees in Tuesday’s keynote address.
Sporting his signature fedora, Honig told a standing-room only audience in Las Vegas for ITC 2017 that the insurance sector suffers a bit from “banking envy” when it comes to the daily engagement that financial services companies have with customers. And Honig notes that insurers face a “toothbrush and dentist” choice. Do insurers want customers to interact with them on a daily basis, like they do with their toothbrush? That’s what banks have. Or do insurers want to continue to interact with clients much like they do with their dentists —once or twice a year.
“We’ll see if the insurance industry over the next 12 months will try to be more of a toothbrush or provide a better dentist visit,” he said.
ITC2017, presented by Oliver Wyman, was kicked off Tuesday morning with remarks from conference founder, Jay Weintraub, who emphasized the networking aspect of the event for established insurers, startups, and financiers.
Honig, who is phasing out of his role at QED to focus more of his time on insurtech, is ITC 2017’s chairman and noted that more than 3,500 people are attending the event, with 20% from outside the U.S. Every continent is represented at the conference, as are some 48 countries, he added. Next year, Honig revealed, more than 5,000 attendees are expected.
Honig drew a laugh when he told the audience to “give a regulator a hug,” given that regulators from 20 states are attending the conference. He noted the importance of regulators being at the event. “If you don’t listen to them, and they don’t listen to you, innovation isn’t going to happen,” he asserted.
The Cambrian Explosion of the insurance sector ecosystem he projected last year will continue, Honig predicted, and he is heartened by opportunities for insurtechs in the claims part of the business, especially the ones working on customer-facing solutions.
But Honig was more tempered when it comes to the changes AI and blockchain might bring, seeing different impacts on different parts of the business. The real potential for AI and machine learning in his view lies in they might do for the backoffice.
He also noted that the only thing more hyped then AI is blockchain, and that the next 12 months will prove crucial for the latter’s practicality. “Do you need to be a first mover in blockchain, or be a fast follower? This year we’ll see if blockchain will matter or whether it’s ephemeral,” Honig said.
In closing, he used a Netflix credo from 2013, “The goal is to become HBO faster than HBO can become us,” to underscore what he sees as the grand contest between the insurtechs and the insurance incumbents. The open question is if the insurtechs can build the strengths and capabilities that made the incumbents effective in the first place faster than innovation executives at incumbents can refactor their tech stacks to acquire the talents of the startups. In the long run, the winners will need to assimilate both the strengths of an HBO and the capabilities of a Netflix.