By Tony Tarquini, director of insurance, EMEA at Pegasystems
Insurtechs are entering into the insurance industry with unique thinking and a fresh perspective, placing pressure on large traditional competitors to do more and encouraging big players to improve service for their own customers. While this is a good thing, not all of them succeed. Billions have been squandered on failed insurtech start-ups.
Willis Towers Watson estimated in a January 2020 report that total global funding commitments to insurtechs in 2019 was $6.37bn. Despite this, around 184 funded insurtechs shut up shop in the past three years – a lot of investment gone that cannot be got recouped. Instead, this money could have been used to solve existing insurers’ biggest business technology challenges, namely successful digital transformation and resolving their myriad legacy IT issues.
Insurtechs vs. insurer legacy technology replacement
Capital funders in insurance appear to be committed to dispensing large sums into new insurtech start-ups, a lot which do not survive past a few months, as opposed to established organisations. This prompts the question, “If a great percentage of what is being invested does not add value, what is the point?”. Insurance companies have massive legacy technology issues, and $6.37bn a year could buy a lot of replacement technology and resources. Rather than putting so much capital into new ventures, insurance companies should look at proven technology solutions that would go a long way to getting rid of legacy systems. This does not mean replacing old IT with like for like modern code that will then soon become a legacy itself, but removing legacy altogether with the introduction of no-code/low-code IT. Such platforms would help traditional insurers transform into the agile insurance equivalent of Amazon or Google, enabling them the ability to aggressively tackle the challenge of innovation.
The issue of failing insurtech start-ups is critical, and one that will haunt the insurance industry for years to come unless a change of thinking occurs. Even the COVID-19 pandemic may not be enough to dissuade legacy players from going on the hunt to find the next insurtech start-up to invest in that promises to ‘transform their organisation’. So many insurtech start-ups have failed in the last three years alone that it is clear that insurers planning to start a new insurtech internally to showcase digital transformation is not the right strategy for success. Yes, some thrive, but they are in the minority, so what is the alternative?
Change needed in investment provision processes
Right now, there are different criteria for budgeting money towards insurtechs than into insurers’ internal IT teams. Instead, there should be a consistent approach for how money is invested. Investors should take one or both of the following steps – option one: apply the same rigorous thinking to the insurtech community that they do to their spend on vendor technology, option two: free up the budget that would have been invested speculatively on a new insurtech to use on upgrading the existing insurance business’s IT solutions. If there was consistency on how money was spent, insurers would have significantly fewer problems, better IT and an improved means of challenging the world of innovation.
Option one: apply a more rigorous insurtech investment review process
Applying a more rigorous evaluation process can reduce the risk that an insurtech start-up will fail and investment will be lost. This can be achieved by ensuring those making decisions about how budgets are spent funding insurtechs are provided with more insight and evidence from individuals pitching for capital. This means providing a robust business case with a highly detailed business plan and defined outcomes. Too many insurtech founders fall in love with their solution without understanding the real problem they are trying to solve. As the COVID-19 pandemic has highlighted, an explanation of how the business would be able to survive through situations of adversity would not go amiss either. This would give investors confidence and assurance their money will not go to waste.
Option two: free up external spend to replace legacy technology
Another option is to free up spend that might have gone towards an insurtech for an internal IT project instead. The people who know the answer to the question, “How can we create a successful future for our insurance business?” already work at the insurance company and are ready and waiting for the tools they need to do their jobs better. They know where the technology problems lie, what their customers want and what needs to be done to fix internal technology issues because they have the experience – they just need to be listened to. Incumbent suppliers have a wealth of new ideas and technology which can deliver significant innovation at pace and scale. The key to success here is finding those vendors you can trust to deliver on the vision.
Agile technology that doesn’t become legacy is needed
Software is available that allows insurers to fix their legacy technology issues by replacing their monolithic legacy IT – which was not designed to interact directly with customers – with a unified, low code platform, controlling customer facing processes that helps them build for change and facilitate any future innovation quickly and easily. This software breaks down silos by bringing information together into a single hub, eliminating the need for manual work copying information across different channels. Edits to business applications in the platform can be made quickly and easily with drag and drop functionality as time spent manually coding changes is not needed. By positioning the business logic of what your company uniquely does (versus your competition) in this central layer, you can deliver innovative software in days, not weeks or months. Now IT is no longer the inhibitor and it is down to business to decide what innovation to initiate.
This software leverages intelligent automation and case management enabling insurers to make service customer-centric and deal with each customer case with a consistently high level of service. For example, if a customer gets in contact with a query about their policy, a case can be set up, next steps can be instantly defined, and tasks can be automatically assigned to employees based on their role and expertise. This software provides a single source of truth on customer requests and is made visible to multiple teams so everyone is on the same page about what should be done by whom and by when. It easily simplifies data management and automates a lot of the manual processes often involved in customer service, speeding up customer response times and boosting satisfaction.
Tools such as AI and natural language processing are also available that can further optimise customer service, finding new tasks that can be automated, such as understanding customer sentiment from the language they have used in an email. If a customer is angry and threatening to cancel a policy for example, the urgency required to remedy the situation, along with a list of recommendations about how best to do so would be provided to the customer service agent, enabling them to provide the best service possible and thus arrive at the optimal outcome. All of these capabilities are available now and being extensively deployed successfully in other industries. Why fund a tech startup to hard code this kind of technology for your business, usually restricted to a single product or line of business, when it is already generically available?
The way forward
It is great that insurtechs are attracting new, entrepreneurial individuals to the industry who otherwise might not be interested in insurance and that innovation is being celebrated. However, there is a disconnect between the entrepreneurs who seek to resolve the symptoms evident in the insurance industry and the industry practitioners who understand the underlying causes, so it is vital any business case for investment into insurtechs is more carefully considered. It is also important that established insurers are being heard and supplied with the innovative technology solutions they need to solve their own problems. A lot can be achieved by equipping established insurance organisations with the technology they need to say goodbye to legacy IT issues, but this success cannot be realised without the same investment as insurtechs, which are a far riskier investment.
TOP 5 LINKEDIN PROFILE OPTIMIZATION HACKS FOR ASPIRING BANKERS
According to Firmex, finance professionals cannot afford to be not on LinkedIn. A significant number of organizations acquire talent in the financial industry through LinkedIn.
Especially for aspiring professionals, your internet presence matters a lot as recruiters are most likely to search your name on the internet before making a decision about your application.
As an aspiring banker on a professional platform, you should consider changing the outlook of your profile, to garner the recruiter’s attention. Your profile is unlikely to get noticed if it is out-of-date and inaccurate.
Here’s how you can optimize your LinkedIn profile:
Here’s an example of a good headline for a banker:
“Aspiring Banker majored in finance specializing in forecasting and risk management best practices”.
Scrolling through most professional profiles for bankers on LinkedIn, these individuals pay little attention to the headline.
A well-optimized headline gives the recruiters reasons to click on a profile. Though you just have 120 characters to make it great and charm the recruiter.
You can include pointers on what you are trying to achieve as a banker, or include your major as a way of connecting the skills-gap. If you are an MBA degree holder, then you can reflect this on your headline along with the major.
Though here are a few things you should know about creating a headline:
- Be professional and avoid writing words like “superstar worker”, “top performer”, etc.
- Be discreet with your job search, don’t directly mention “looking for a job”, “unemployed”, etc.
- Research on other professional’s headlines with a network presence.
- Include the usage of strong adjectives/action verbs.
On LinkedIn, develop meaningful connections with professionals and recruiters. With little effort, you can significantly increase your number of connections.
However, having 5000+ connections is not valuable if they are irrelevant to your interests. Hence, keep your connections limited to professionals in the finance industry.
- Connect with individuals that are relevant in the finance industry and send a personalized message along with the connection request.
- You are most likely to get ignored if you mindlessly send out requests. Though LinkedIn advocates being active, you should derive an invitation strategy for effective network expansion.
- Message recruiters that are hiring professionals in the finance industry and ask them for advice on how you can further optimize your profile.
Your LinkedIn profile works as a digital resume. It should give an idea of a constructive career progression. Hence, LinkedIn profile optimization becomes quite important.
- Write points in a bullet form, don’t include long paragraphs.
- Mentioning your roles and responsibilities isn’t ideal. Construct the points in a way that showcase all your accomplishments & contributions.
- Add your projects separately; do not add them in the career highlights section.
As with any other search engine, recruiters are dependent on the algorithm to show them the best profile as per their searches. Based on a certain set of relevant keywords in your industry, recruiters will try to search for candidates on LinkedIn.
Here’s how you can use keywords to optimize your profile:
- Research: Thoroughly research the keywords that are of prime importance in the finance industry. Check the profiles of other professionals on LinkedIn and refer job postings to gain an understanding of how to sprinkle these keywords in your profile.
- Section: Utilize each section efficiently of your LinkedIn profile to showcase your contributions and achievements. Don’t just stuff your profile with contextual keywords. In the end, your profile should foremost be easily readable.
- Industry and Skills: Update the industry in your profile and include all the skills you are familiar with. Further, you can even include skills that you are not familiar with. Let’s say you need to include “Budget Forecasting” in your profile and you have not had any real-life experience with it. You may write it as “Interested in gaining experience in budget forecasting”.
Skills & Recommendations
Recruiters look for professionals who can deliver, hence your profile should include the skills that are highly relevant to your targeted profile. Though in the banking industry recruiters search for general skills as well. So, make sure your profile is a match for both.
Further, just listing your expertise is not going to be enough. Get your mentors, employers, etc. to write you a stellar recommendation. If you provide credibility for your skills then it can do wonders for you.
- Just as the headline of your profile, your picture is equally important. Make sure you use a professional-looking photograph.
- Continue to engage with your connections through comments and professional messaging.
As you are a banking professional, your profile is probably going to end up looking like all about your core competencies, However, it is important to include a few pointers about your hobbies that describe your personality as well.
HOW MILLENNIALS CAN GET AHEAD WITH THEIR MONEY
Granville Turner, Director at company formation specialists, Turner Little.
Millennials are often painted as globe-trotting creatures that spend more money on avocadoes than their future. But that can’t be further from the truth. Millennials tend to be good savers, at least compared to other generations. Industry data shows that more than 70% of millennials have started putting money away for retirement and beyond.
“Millennials still struggle with investing. Often because they feel they don’t know enough about the market, but it’s never too late to invest in your understanding. It’s a great way to make your finances work harder for you,” says Granville Turner, Director at company formation specialists, Turner Little.
Here are some things you can start doing now, or preparing for, to set yourself up for a future of learning and investing:
The most apparent advantage millennials have over older generations is the luxury of time. Whilst everyone can weigh up the risks and rewards of investing, you’re particularly well-placed to see a solid return on your investments.
When you invest money for longer, you can become less phased by the ups and downs and be able to view inevitable declines as opportunity instead. It’s better to look at yearly or even longer figures for a more accurate reflection of performance.
Put your money to work
Money that sits in a savings account, uninvested, is almost certain to lose value over time due to inflation, or a creeping higher cost of goods and services. If your money is growing or earning you a return, it’s going to help you reach your financial goals faster.
Many millennials believe you need to have a serious amount of money to start investing. But in reality, even small contributions can build over time. The important thing is to start early, and make it a habit.
If you’re ready to start having the right conversations about the future of your finances, get in touch with us today. With years of knowledge and expertise, we’ll be able to assist with any enquiries, no matter how complex.
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