When insurance companies consider new tools, there is usually only one question: buy or build? Is it more profitable to work at home or with a partner? But recently, the answer to this question has become more nuanced. In fact, even saying "buy and build" creates a false dichotomy. Rather than thinking in binary terms, insurers should ask themselves another question: how can they get the most out of technology, internally, externally or a combination of the two?
The appeal and limitations of "Construction".
There are many reasons why service providers are reluctant to partner with insurtech. Adding a third party to your organization always involves change management. If mismanaged, it leads to failures and inefficiencies that are the opposite of what carriers expect. From this point of view, and given the amount of media already available, working from home may seem reasonable.
But if insurers are seriously considering the build-only option, they need to know what it entails. Looking at raw data is one thing, but turning it into actionable tools is another. Taking full advantage of a technology solution involves several steps.
Access to information . policyholders today have access to an unprecedented amount of information. But big numbers don't always mean high quality ( more than 75% of insurance executives report problems with cleaning data before analysis ). Insurers must be careful when looking for information, including images, license records and risk information, or they will make poor decisions in the long run. - point.
Improvement through artificial intelligence . Even if the insurer has access to the highest quality data in the world, this is only the first step. The real power lies in the use of artificial intelligence (AI) to transform real estate data into risk assessments and other predictive analytics, exponentially increasing the technology's impact.
Make it available . good data doesn't mean much without automated processes that can't be used by underwriters, adjusters and other insurance professionals. These tools must be designed with the user experience in mind, otherwise efficiency technology can do just the opposite.
We understand why insurers tend to build. They believe this gives them more control over the process and minimizes change management. But creating a technological solution is a big undertaking. If a service provider wants to maximize value, it is unreasonable to expect them to do so themselves. Hence the advantage of working with a partner. development of these tools is their absolute priority. They have the time, resources and expertise to "build" what insurers cannot. All this begs the question. Can insurers collaborate with InsurTech partners and retain the benefits of their solutions?
A promise of cooperation
The answer is yes, but only if the primary connection is changed. Insurtechs need to start acting more like partners and less like suppliers. Historically, many of these companies have done little to make their tools transparent and understandable, creating an environment of mistrust. In order to restore trust, insurance companies must adhere to higher standards. They should be informed in advance of the limitations of their technology; they must also adapt to the unique needs of insurers. By focusing more on transparency and collaboration, insurance companies will become more attractive partners for insurers.
As a result, the best solution for carriers is neither to buy nor to build, but a combination of the two. This could mean that operators use their own policy data to assess risk, but then feed it into third-party AI models. Alternatively, if insurers have developed their own models, they can augment them with partners' data to fill knowledge gaps. After trust is established between the insured and the insurance company, there is no longer a need for a serious "buy-and-go" mentality. Instead, both companies can use their expertise to create the best insurance experience possible.
How to evaluate an insurtech partner
In order to build this bright future, it is important that insurers carefully evaluate potential partners. This evaluation process must be rigorous and thorough to determine whether companies are eligible. A good checklist might look like this:
Audit technology . Insurers need transparent and self-explanatory tools, not hidden in black boxes. This is especially important for artificial intelligence, as biased models affect the results. Insurers should always ask AI models for performance metrics to test their effectiveness.
Pay attention to the problems . the solution must meet the unique needs of insurers, not one-size-fits-all. Therefore, when meeting with potential partners, insurers should focus on specific issues. If a company doesn't show how well its solution fits your needs, but instead talks about vague benefits, it's not the partner you're looking for.
Take a test drive. Forget the fancy promises. what is this solution for? A good way to test property insurance technology is to perform a retrospective loss analysis, that is, how the tool could have predicted losses in the past based on simulations. Not all insurance companies offer this, but they should. You deserve to see the technology before you buy it.
Ask about downloading . If you're looking for a reliable partner, ask about joining early and often. Does the company have a dedicated customer success team? Will they provide advanced training? Insurtechs should do everything possible to help employees adopt new tools with minimal disruption to existing systems.
For insurers, it is transparency, adaptability and smooth change management when evaluating a partner. If an insurance company meets these requirements, it is more likely to take full advantage of digital transformation. Ideally, policyholders can even import their own policy data to enhance the solution or integrate into their existing workflow. The best solution is not a "buy or build" but a collaboration between insurers and insurance companies. By working together and leveraging their strengths, they create a smarter and faster insurance experience.
