Beyond Disruption: A Calculated Evolution of Insurtech

Ryan Letzeiser
Mar 12, 2024

We are deep into this year’s first quarter and the insurtech space is already making calculated moves. Last year’s headlines boasted feelings of disruption, but this year points to a more thoughtful calibration of ideas already in motion. The future of insurance isn't set in stone, but some emerging trends hint at where we're headed. Today, we'll unpack four powerful forces shaping the long-term trajectory of the industry.

Non-Admitted Insurance Products: A Flexible Frontier

Gaining momentum every day is the shift towards non-admitted insurance products. As risks evolve and climate-related challenges persist, carriers are modifying their strategies to offer more tailored insurance solutions swiftly.

In comes non-admitted lines, which allow for greater flexibility in product offerings and rate adjustments because they are unburdened by stringent state-imposed regulations. The ability to change pricing on the fly will drive insurers towards a higher level of profitability as they will not be hampered by long timelines and drawn out rate approvals processes. This method will also eliminate some of the regulation that influences rate change caps.  

The limitations imposed by rate caps, especially in regions experiencing unprecedented weather events, often restrict carriers from making necessary adjustments to their pricing models.

If an insurer knows that profitability can not be obtained because of the cap, the insurance company would rather leave the state for a pre-determined amount of time and come back with profitable underwriting rather than take a loss. In regions where carriers might be contemplating an exit, leaving a void in coverage, non-admitted lines step in as a crucial alternative.

In 2024, we anticipate a surge in insurtechs exploring insurance segments that bypass the need for state admission. However, because non-admitted lines often get a reputation for being the “Wild West”, this shift also means secure technology and reinsurance backing will become paramount.

Real-Time Rate Adjustments: The Dovetailing of Automation

Whether you welcome it with open arms or view it with a hint of skepticism, AI already lives in the insurance landscape. This evolution of automated learning isn't groundbreaking for insurers aiming for swift and accurate rate adjustments, but the emphasis on greater automation is the linchpin.

For example, traditional underwriting models might categorize an entire region as high-risk due to historical data, but real-time analysis provides a more nuanced understanding.

Picture coastal areas prone to storms. Real-time data analysis can distinguish between properties that have embraced resilient construction measures and those that may be at higher risk. This microscopic level of detail empowers insurers to craft coverage and pricing with more precision, tailoring it based on the latest risk profile of each property. The result? A more accurate and fair underwriting process that doesn't paint all properties with a broad brush.

Greater machine learning and faster automation lead to more and better information at the individual location, fire risk scores that are more than mere numbers, and emergency response data that transforms predictions into actionable intelligence.

Machine learning and AI-based underwriting automation are also poised to play a central role in the non-admitted space we mentioned above. The ability to dynamically adjust pricing, a feature inherently limited by the state-by-state approval process of admitted lines, becomes a significant driver for insurers looking to move swiftly and accurately.

Embedded Insurance: A Seamless Journey

Consumers are becoming more accustomed to streamlined, online experiences for significant purchases, and insurance is no exception. With more consumers comfortable with online transactions, the embedded insurance model, where insurance seamlessly integrates into various touchpoints like property management websites or lender portals, is poised to grow.

The challenge and opportunity for the industry is creating these embedded experiences with thoughtful precision, ensuring that they seamlessly align with the consumer journey. Offer it too early and the consumer may bypass this prompt, offer it too late and the consumer may already have moved on from this transaction.

Think beyond simply offering policies as an add-on. Insurtechs can help create dynamic insurance solutions that adapt to individual needs like real-time quotes based on the specific property you're buying, or coverage that automatically adjusts based on your preferences. 

This seamless integration and personalization can make embedded insurance an intrinsic part of the buying experience, not just a checkbox. Obie wants to make sure that they are meeting their customers where they are. For us, embedded is an area we not only feel like we excel in, but one that is necessary to stay in front of clients.

Cybersecurity: Safeguarding Us and Them

All the trends mentioned so far happen in the digital landscape. Because so much of insurance is done online or through some form of technology, insurers have a responsibility to prioritize robust cybersecurity measures.

Data is the new gold and insurance companies handling sensitive information are increasingly becoming prime targets for cyber threats. As we progress through 2024, the industry will witness a concerted effort towards fortifying cybersecurity. This includes not only safeguarding customer data but also ensuring the integrity of underwriting processes and other critical infrastructure.

A very realistic threat to cybersecurity is pure human error. While insurers implement multilayered systems in the tech itself, we will likely see an increase in cybersecurity training to mitigate phishing attempts, digital scams, and compromised company devices. While it may be extensive to implement this technology, regaining consumer confidence and trust can take even longer.

Precision in Progress

Industry players, Obie included, are fine-tuning existing technologies to align with the evolving needs of consumers and the broader market. We aren’t reinventing the wheel; insurance has always been about protecting the consumer and their property. Instead, we are taking that wheel and adding traction. So no matter what the changing landscape looks like, we are still driving towards innovation.

If you’re looking for a better insurance experience for the long haul, get a quote with Obie today.