Advisory firm Oxbow Partners has highlighted the three key themes to watch in its latest report 

Oxbow Partners has identified three key insurtech themes to watch and what these mean for insurers in its latest report, the 2021 Insurtech Impact 25.

The three key themes are:

  • Distribution and product: from infinity to embedded insurance and ecosystems.
  • The underwriter of the future: modularity and machines.
  • Private health insurance disruption.

The report, which was published on 24 March, stated: “Executives must take a broad view of their marketplace, which goes beyond the confines of insurance, and develop hypotheses about how it will evolve over the next decade.

“They must then make complex decisions concerning their distribution, proposition, technology, operations and supply chain.”

A necessary investment

Oxbow Partners said it remains “bullish” on the model of embedded insurance.

Embedded insurance refers to cover that is embedded within a product or service, such as a smart home product that comes with optional insurance.

Oxbow Partners is ”bullish” for three reasons – sharing economies and e-commerce are creating a huge demand for embedded insurance, it is critical to accessing new customer pools and needed for innovation in other areas.

The report said: “Embedded insurance could be the future of motor insurance.”

Meanwhile, speaking about ecosystems, the advisory firm admitted that this has already become part of insurers’ reality.

“We see ecosystems as a small evolutionary step from embedded insurance. Indeed, whilst many insurers continue to talk about ecosystems, many of the companies mentioned in this report – and many more – are already playing in them,” the report continued.

“Embedded insurance is no longer an innovation experiment but, in our opinion, a necessary investment to stay relevant for a large part of the future insurance premium pool.

”We believe that insurers will need to develop new go-to-market strategies and Munich Re’s 2020 partnership with John Lewis, a large British department store, might be a window to the future.”

Rethinking underwriting

Data and analytics has been the most popular category in the last four Insurtech 25 reports.

This year’s edition said: “Companies need to rethink how they make use of these new sources and techniques [to] succeed in the digital decade.

”They will move from large internal databases to ecosystems of interconnected data sources and analytics platforms. The impact will be a transformation in the underwriting and claims functions.”

Oxbow Partners believes that firms need to rethink their underwriting submission and claims triage processes.

This is because many claims triage systems are “still a basic queuing system”, but artificial intelligence and natural language processing (NLP) could help organisations’ modernisation efforts.

Companies also need to automate as much of the underwriting and claims handling process as they can, the report added.

It said: “The ambition should be a no-touch model across the business – recognising that for some risk classes or types this is likely to remain an unattainable goal.

“Finally, insurers need to determine which capabilities they build in-house and what they outsource.”

Meanwhile for more complex risks and claims, “the starting point is collecting more robust data”, Oxbow Partners said.

Untapped opportunity

Lastly, as health insurance is not compulsory it could be a “huge opportunity” post-Covid-19, with many consumers more aware of the need for cover and many travel insurance policies not including this as standard.

The report said: “Covid has been a genuine catalyst of lasting change. Most obviously, insurers have had to accelerate their adoption of telemedicine during the pandemic.”

Telemedicine can include preventative propositions, such as mental health apps.