InsurTech is transforming our industry, bringing new efficiencies and opportunities to the incumbent model. By working together, insurers and technology firms can better respond to what clients are telling us they need – and shift to a truly customer-centric approach. Further to this, the most sophisticated players recognize that individual partnerships accelerate progress, but many partnerships when structured correctly contribute to an ecosystem driving an exponential effect. This is how we bring a digital advantage to the insurance industry, which can drive both superior customer experience and profitable growth.

InsurTech’s trajectory has followed that of its older sibling FinTech, where banks quickly learned to embrace new talent and advances in digital technologies These digital advances have created an elevated expectation from customers of better products, better prices and better services. While banks have continued with in-house tech development, around payments and lending services, for example, they also understand that the intersection of high pace technology advancement and more demanding customer needs is too complex to effectively tackle alone.

At the same time, FinTech entrepreneurs know that while they may have a unique solution, they won’t be able to drive sufficient scale by themselves. And this is what is key: making innovation a reality through its ability to achieve volume across the ecosystem and build an engaged network.

Aon recognized early on that partnerships were going to play a big role in the future of InsurTech, to improve customers’ digital experience, boost claims performance or enhance underwriting insights and outcomes.

Just one example is Aon’s collaboration with Claim Central which conducts remote inspections using live video streaming. This protects both customers and insurance company employees from potential COVID-19 exposures while enhancing policyholder experience and reducing the claim’s lifecycle and cost.

In another case, we are collaborating with The Climate Service to help drive greater awareness of climate risks through scenario analyses and manage the financial impacts with opportunities for clients to reduce earnings volatility and improve balance sheet resilience.

What do we look for in quality partners?

A value proposition that clearly focuses on an unmet need, which is differentiated from competitors, is a prerequisite. The business model should focus on the ability to scale and generate profits not only on customer acquisition. Ultimately, we’re seeking truly transformative ideas that will disrupt the existing insurance value chain.

But there are other considerations, around strategy and vision:

• Alignment on how monetization will work without being a distraction to strategic vision
• Best-in-class products / services
• Exit strategies to avoid “unholy matrimony”
• Details of any minority investors
• Cultural and geographic alignment

Speed

Aon monitors all the companies we do business with to make sure our shared vision is maintained. But at the same time, we’re careful not to get in the way: the last thing we want to do is slow an InsurTech down. A key benefit that incumbents gain when partnering with emerging technology firms is speed of innovation. That is why we have a dedicated team that is building processes to absorb and enhance that speed rather than become a distraction and interfere with our partners’ visions.

Figuring out how to have influence and not interfere isn’t easy, but we’ve found that it can teach us a lot.

Right now, the industry has undergone a tremendous amount of experimentation. Large insurance incumbents and start-ups have been cycling through projects and engagements on multiple fronts.

Looking forward, while we will see capital continue to flow into this space, buyer behaviour has changed during COVID-19. We expect a transition from experimentation to a flight to quality, where emphasis is placed on piloting and validation for more sustainable partnerships. As these relationships are refined and matured, we will witness more high-quality and long-term partnerships eventually take their place in the mainstream to transform the impact of our industry through a stronger ecosystem.

Everyone Wins

The ideal collaboration creates an environment where everyone wins. Customers gain access to cutting edge technology that materially increases revenues or decreases costs. InsurTech benefits from Aon’s expertise, input on roadmaps and market access. Aon continues to grow its catalogue of differentiating insights, benefits from early adoption of innovative technology and creates new sources growth. The net innovation benefits not just the industry as whole, but society more broadly, and creates a more competitive environment. The major trends impacting society, such as climate change, cyber risk and the impacts of automation, are too large to address alone and too relevant to clients to set aside.

Moving the Ecosystem Forward

Strengthening the ecosystem requires an informal, collective agreement that we are all trying to move the industry forward. While there is always a healthy competition among rivals, there are many areas of growth and efficiency where multiple parties can win. We may be required to sacrifice short-term benefit for long-term gain, stand side by side with a similar solution or trying something that fails. Progress is never easy, particularly in such a mature industry. But, by listening to the customer and the market we can strengthen the ecosystem.

About the Author

Jeff Simon is a VP in Aon’s Data & Analytic Services solution line focused on strategy and business development. He is a leader of the Innovation & Partnerships function, which is responsible for global strategic partnerships and driving Aon’s engagement with the emerging technology ecosystem.

Over the last 9-years at Aon, Jeff served in several roles including Talent Consulting, Finance & Operations and Corporate Strategy within the CEO Office. Prior to Aon, Jeff was at a technology development start-up based out of Atlanta.