Who is Winning the Insurance Innovation Race?
In our last post we described the five points on the technology-adoption curve. We pointed out that the most desirable ratio of benefits and drawbacks is to be found on that curve’s upside – among innovators, early adopters and early majority. In today’s post, let’s survey who in the industry is winning the race.
Early adoption for the win: Progressive
Progressive is a great example of an insurer that’s benefited from consistent early adoption in an industry which is, shall we say, not known for innovation.
“The car-insurance industry is a huge laggard with technology uptake,” said Meyer Shields, an insurance analyst with Stifel Nicolaus. “Progressive is appropriately recognized as being a master of data analysis.”
Shields is talking about Snapshot, the technology that Progressive invested in long before usage based insurance was a thing. That move paid off. Because the company adopted early, it gained a competitive lead, forcing other insurers to burn rubber to catch up.
Bucking the laggard stereotype
Carl Ford, a contributor to IoT Evolution Magazine, suggests there’s value in bucking the insurance laggard stereotype. “Insurance companies are logical early adopters of technologies,” he said. “Accountability, security, verification, and usage are all drivers for insurance to be raised and lowered. It would also be a key aspect of redesigning services.”
The advent of the IoT, for example, brings opportunities for insurers to “change or modify the nature of policies to expand services.” In this landscape, “automotive has been the first mover.”
Other early adopters of the industry
Innovation can be found across the insurance industry. USAA, American Family Insurance, Generali, MassMutual and AXA have all made it a priority to invest in new tech, said InsuranceNetworking.com.
There are others, too. Hartford Steam Boiler joined forces with the IoT company Waygum earlier this year, the first investment of its new venture capital arm. Transamerica Ventures is out to transform Transamerica by investing in enterprise-focused tech. And XL is looking for “partnerships outside of the traditional underwriting space.”
Early adoption and usage based insurance
Today, usage based insurance is part of “the bleeding edge of underwriting trends,” said Gregory Locraft, an insurance analyst with Morgan Stanley, and as we’ve seen, it pays to be close to the front of the race where new tech is concerned.
That said, it’s not just “bleeding edge” anymore. Usage based insurance has been steadily climbing the technology-adoption curve. In Ford’s words, “While in the U.S. the commercials for Progressive would indicate that the company is the only one using a UBI, which it calls Snapshot, the reality is that half the industry has programs in place that take advantage of the technology.”
Bottom line, even if the bleeding edge isn’t where you find your fit on the technology-adoption curve, we recommend you position yourself among the early majority, where the ratio of risk to reward is pretty hard to beat. If you haven’t considered adding UBI to your offerings, now is the time to make that move.
Want to know more? Download our Comparison Sheet and see how smartphone UBI stacks up against a hardware-based program.