Persistent inflation, rising risks, soaring litigation costs, and heightened competition have P&C insurers facing mounting pressure to compete on price amid economic uncertainty. To protect and grow margins, insurers will need to lean into technology investments that give them the insight and agility to write profitable business, optimize efficiencies, maximize customer retention, and control litigation costs.
According to McKinsey, insurers employing modern data and analytics technologies, for instance, can see loss ratios improve 3% to 5%, premiums rise 10% to 15%, and retention in their most profitable segments leap as much as 10% relative to other companies. Those harnessing a cloud-based platform that enables them to leverage the latest insurtech innovations and data sources will always hold a distinct advantage over less nimble rivals.
But hunting for the hottest insurtech innovations is never easy—even in far less turbulent business environments. With insurtech VC investment down 53% and M&A exits up 40% in the past year, identifying the most compelling insurtech value propositions is likely to grow tougher when cash-strapped startups get locked up (or acquired outright) by other insurers racing to gain an edge.
Then again, getting a head start is the whole idea behind the Guidewire Insurtech Vanguards incubator program, a first-of-its-kind initiative designed to help P&C insurers quickly gain access to insurtech’s cutting-edge value propositions as Guidewire scouts out new additions to our PartnerConnect program.
A year ago, I posted about how our inaugural Insurtech Vanguards address key technology trends reshaping P&C insurance. This time out, let’s explore some of the competitive tensions facing the industry—and how some of the latest additions to our program can help insurers rise to the challenge.
Underwriting Intelligence: Selecting the Right Risks–and Retaining Them
Improving underwriting and retention performance has always been key to boosting competitiveness, with data and analytics capabilities now critical to putting distance between best-in-class performers and other contenders.
Success in this area requires moving beyond traditional risk-segmentation models and underwriting criteria, toward approaches that leverage machine learning, ML, and predictive analytics fueled by rich data sources to uncover and target the most profitable (or costly) prospects and customers as early as possible. When integrated with a modern insurance platform like Guidewire, that’s where our latest crop of Vanguards come in.
By leveraging advanced deep learning technologies combined with behavioral economics data and curated intelligence, Pinpoint Predictive, for instance, enables insurers to make highly accurate loss predictions for customers and prospects—including their propensity for litigation—long before underwriting or even quoting begins.
Meanwhile, ForMotiv segments high-intent applications to focus marketing and outbound efforts on opportunities with the highest chance of closing. For its part, Veruna leverages AI and deep learning to help independent agencies identify the best opportunities for leads, referrals, and upsell and cross-sell potential.
And ReFocus AI uses ML-based statistical modeling to enable insurers to maximize retention by identifying who is most likely to leave, up to six months in advance.
Context Is Everything: Liberating and Leveraging Trapped Data
With profitability hard to come by, wasting manpower on processing incoming documents and data—or tracking down proprietary data trapped in silos—just won’t cut it anymore. Even in the best cases, the data in these assets hasn’t been rationalized, curated, or contextualized, let alone made actionable.
Enter: Insurtech Vanguards like Quantexa. This company’s Decision Intelligence platform, for instance, unlocks silos and connects billions of disparate data records to inform faster, more accurate, and fully contextualized underwriting, risk intelligence, and anti-fraud decisions.
Others, like Doxci (formerly Slipbot.io), Paperbox, Kanverse.ai, Gradient AI and Torch.AI leverage machine learning and other AI technologies to instantly extract meaningful intel from documents or other types of data, and make it actionable to CRM, underwriting, claims, and other teams. The reduction in manual processes enabled by Doxci’s solution, for instance, can decrease operational expenses by as much as 30% while unlocking the value of proprietary data.
Paperbox and its AI-based inbox intelligence solution automate email and physical document processing from both physical and digital mailboxes. And in the case of Gradient AI and Torch.AI, proprietary data is also fused with intel from tens of millions of claims and additional, public data sources—social media, geography, and more—to uncover hidden context and correlations through a deeper, ontological understanding of an insurer’s data, and make it available and usable everywhere it’s needed.
Efficiency Matters: Enabling the Ecosystem
Embedded insurance and other distribution-focused ecosystem strategies are increasingly crucial to success. And the power of an ecosystem approach to innovation doesn’t stop there. Usage-based, pay-as-you-drive insurance and automated FNOL are others. But tools for managing specific elements of an insurer’s extended ecosystem of suppliers, agents, and other partners can also drive significant cost savings while giving them the ability to scale up operations and deliver superior customer experiences.
Case in point: Codafication. This Vanguard offers an end-to-end, cloud-based project management platform that gives insurers’ teams everything they need to triage and manage subcontractors, direct repair networks, and others in processing property and contents claims. Collaboration is simplified with trackable histories and a single source of truth for all stakeholders. And virtual triage technology, automation, field tools, and other capabilities reduce 80% of manual processes and shorten the claim lifecycle. Which comes in handy when scaling for large catastrophe events.
And then there are payments. New members like Sureti (payment rails from carriers to certified restoration contractors) are indeed at the Vanguard of their respective value propositions as insurers expand the reach of their ecosystem operations.
Claim Disputes and Litigation: Leveling the Playing Field with Analytics
The more than $30 billion increase in repair and replacement costs seen since 2021 isn’t the only form of inflation insurers face today. Social inflation and increases in third-party litigation funding have pushed the percentage of claims that go into litigation up more than 47% in recent years. The number of verdicts of more than $20 million is up even more—putting additional pressure on expense ratios.
Yes, the tendency among juries to sympathize with plaintiffs is contributing mightily to runaway verdicts. But plaintiffs’ lawyers and consultants have also invested heavily in robust data, analytics, and other technologies to identify and exploit liability opportunities, as well as to find potential new clients and favorable jury members via social media.
Our latest Vanguards are here to help. With names like CaseGlide (unified claims litigation management for predicting and managing case outcomes, defense counsel selection, data sharing, and more), Optimalex (predictive analytics decision support tools to improve consistency, fairness, and efficiency in claims management and dispute resolution), and ClaimsEdge (court analytics, attorney selection, and secure collaboration), these insurtechs are helping insurers level the playing field in their favor.
CX Satisfies Customers: Simplifying Engagement
According to J.D. Power’s 2023 U.S. Property Claims Satisfaction Study, efforts to streamline processes and improve the customer experience through digital engagement may be missing an important element: simplicity. That’s a problem at a time when 74% of consumers say they’re ready to comparison shop, and half say they’re ready to switch carriers.
Specifically, rising levels of severe events have led to longer claim cycle times, which, in turn, have made it difficult to limit customers’ need to contact their insurer with questions. But that’s not all. From making policy changes, to buying more or different coverage, to finding policy docs or paying a bill, “digital” doesn’t yet always equal “easier.”
Queue new Vanguards like Glovebox, a client experience platform for independent agents that offers a white-label, carrier-connected mobile and web application that makes it easy for policyholders to access policy documents and ID cards, pay a bill, initiate a claim, and more. With Glovebox, policyholders can get quotes quickly and easily, and request service and report claims using an automated chatbot.
Others, like Fize, offer API-based integrations for insurers, agents, and others that simplify the front-end user experience in web and mobile channels. Prospects and policyholders can bypass manual data entry when applying for coverage or making changes, and instead securely connect to their current policy data from any carrier to receive hyper-personalized recommendations to best suit their needs—simply.
Remote Inspections: Avoiding Risk, Optimizing Response
According to Juniper Research, the value of premiums underwritten with the use of computer vision, app and aerial image capture and other remote inspection technologies could top $20 billion by next year. They could also prove crucial to reversing those sinking claims satisfaction levels documented by J.D. Power. After all, homeowners who are pleased with the claims process are 80% more likely to renew their policies and contribute to as much as 30% more profitability.
So it shouldn’t be surprising that insurtech innovators in this space continue to join the ranks of our Vanguards. Among recent arrivals: Hosta a.i.,which leverages patented spatial and material analytics to automate onsite property assessments with just a few photos. Carriers, contractors, or homeowners themselves can snap images using any camera or mobile device and upload them to a link-up to the insurer’s cloud platform—no special app required. Configurable APIs enable insurance reps to instantly see detailed structural and spatial measurements, conditions, and risks, CAD and 3D models, and even an itemized bill of materials, directly within their established workflows.
Meanwhile, ICEYE and its satellite-based flood monitoring solution provide insurers with near- real-time, high-resolution visibility into areas impacted by flood so they can prioritize CAT response efforts and reduce costs. Integrated with a cloud platform like Guidewire, ICEYE technology could also help insurers cover otherwise uninsurable properties, create compelling new parametric offerings, and expand into untapped markets. It was enough to earn ICEYE victory in our first annual Pitch Day competition.
Commercial Insurance: Unlocking New Opportunities Large and Small
Despite delivering strong financial performance over the past few years, commercial carriers are not immune to rising workers’ compensation expenses, climate risk, the war in Ukraine, or any of the other challenges we’ve discussed thus far. Fortunately, the availability of rich data sources and advanced analytics make it possible to gain competitive advantage in existing lines while expanding into new ones at key moments for this segment.
Indeed, commercial insurance is well represented in our latest pool of Vanguards, which includes Relativity6, which offers API-based tools that predict the six-digit NAIC code for any business so commercial underwriters can confidently quote business, better detect fraudulent activities or claims, and provide more relevant marketing messages. There’s also TensorFlight (an API-based, neural network-enabled desktop inspection platform for commercial property) and GigEasy (a new platform offering a rent protection benefit for gig economy workers).
In the face of laws imposing penalties of up to $50,000 for workers’ compensation payments deemed to be “unreasonably” delayed and other new mandates, it’s worth noting the addition of Atomic (real-world insights into employee and employer data to streamline workers’ compensation processes) and IntegerHealth (advanced analytics for quantifying and ranking healthcare providers based on patient outcomes for self-insured employers and workers’ compensation programs).
Regulatory Compliance: Making Privacy a Priority
You name it: GDPR, CPRA, HIPPA, LGPD, PCI DSS, and more. The fact is, P&C insurers must comply with an ever-growing array of privacy regulations in every market they serve. New Insurtech Vanguards like Private AI give them the tools they need to manage and protect sensitive data.
The company’s AI-powered solution automatically detects and replaces over 50 different types of personally identifiable information (PII) in over 47 languages. Processing data using artificial intelligence helps combine cybersecurity and privacy to help carriers keep valuable and applicable data operational while complying with regulations the world over.
It’s All Just the Beginning
As we continue to identify the hottest, most innovative insurtechs, we’ll surface them to our existing community of customers based on their specific challenges and business goals. Learn more about the Insurtech Vanguards program here. Plus: Watch a short video on key insights from our inaugural Pitch Day event—and keep your eyes peeled for this year’s competition in the coming weeks!