Faegre Drinker partner James Fischer participated in a panel on March 3, 2020, at FinTech Global’s InsurTech Summit in London. In a private interview, Jim gave his insights on the question, “How Are Insurtechs Changing the Customer Experience?”
Insurtechs are changing the customer experience in two principal ways. They are creating competition for underwriters, to try to bring products to market. And they are, on the other side, trying to create innovation and enhance the customer experience for the underwriters themselves. So it depends on which side of the coin a particular startup is involved.
The consumer is looking for speed in terms of claims, in terms of being able to be underwritten and to provide innovative products. If insurtechs focus on developing new products that can solve customers’ needs, like many other disruptive spaces, they will have a better, advantageous way to succeed. That depends on perspective. From an underwriter’s perspective, the data is the key. Data helps them to underwrite their product, to make sure that they are delivering a product that is solving a need and solving a problem. From the standpoint of the startup, it depends on the type of invention or innovation they are trying to create. If they are trying to create a product that is data-driven, to help an underwriter create either a new product or create speed to deliver their existing products, then perhaps data is the key. And if their product is more in line with trying to develop either a service or some form of other customer experience, while data might play a key role, it may not be the key role.
Faegre Drinker is focused on three areas in the insurance space: One is to work with the underwriters themselves in the regulatory environment, which can be very complex, and to deliver that service in a global way. The second area is to work with the underwriters and other insurance providers to help them make investments into insurtechs and into startups. And the third is to work with the insurtechs themselves and the startups to look for commercial partners, to look for capital sourcing, and to help them execute on their legal needs.
I believe the industry is at an inflection point. The insurtech space has been around for a while now, several years. And we are starting to see companies look for their next round of financing, and for underwriters to start to make decisions about whether or not their investments in their insurtech funds or particular startups are yielding the results that they are looking for. And as a result, we are at a point where we’ll start to see some succeed and unfortunately some perhaps fail. And so, at that point, the industry itself is going to have to make a decision as to whether or not to move forward. I personally believe that they will, and they will do so in a continued way.