What is Insurance as a Service?
Like it or not, today’s insurance market is experiencing disruption. Cloud computing, artificial intelligence, blockchain and many others are revolutionising the fields of finance and insurance. What that means in practical terms is big changes for insurance as we know it.
Much of today’s technology is steeped in software, and insurance models are no exception. Software as a service, otherwise known as SaaS, opened the door to XaaS or anything as a service. In essence, the term refers to any service available via subscription over an upfront purchase. XaaS is credited with improvements in efficiency, innovation, time to market as well as customer experience.
Next in line comes Insurance as a Service. As you may have guessed, the natural extension of SaaS and XaaS is specific to the insurance sector. Here’s how Insurance as a Service can help insurers deliver a great customer experience by tapping into smarter, tailored and contextualised options.
The problem for insurers
Customer expectations for products and services are continually on the rise. They seek contextual, streamlined experiences for swift and simple solutions. Meanwhile, insurers struggle to meet demand. For example, research shows that 70% of customers are dissatisfied with the traditional claims process. Social media has put publicised gripes and disappointments on blast to the detriment of insurers.
Innovating the user experience is the best way to counter this phenomenon. With a perfect combination of user-friendliness, client control, and guidance, insurers can win back customer approval. This helps insurers deliver a consistent experience across devices and digital channels.
Adapting cloud-based technologies will also help service providers enhance claims underwriting and processing. According to Accenture, 63% of insurance organisations state the single largest business boost has come from cloud-based technology. The bottom line is a moment of truth for insurance as a service.
What is Insurance as a Service?
Insurance as a service leverages state-of-the-art technology platforms for better service regardless of channel, digital platform, device or stage of the customer journey. These platforms are often built from the ground up to optimise access from every angle – to be flexible, configurable and easy to integrate, use and consume.
Using this model, insurers can build and deliver a new insurance product in a matter of days. It’s also easier to integrate with other services within the value chain like delivering insurance products as part of existing customer journeys. Really, what’s not to love about seamless integration?
Insurtech companies are usually in charge of creating and maintaining these Insurance as a Service platforms. Insurance as a service is a spin-off of Everything as a Service with a focus on the specific requirements of the insurance industry. It is a type of Software as a Service (SaaS) and offers the flexibility to access any type of software insurers might need via the internet. This reduces the complexity of software and hardware management.
Which types of Insurance as a Service models are available?
There are two types of Insurance as a Service models: full stack and specialised. Insurance companies may apply one or another model depending on their internal capabilities and their product creation requirements.
Generally speaking, full-stack includes end-to-end solutions for digital insurance services. From quotes to payouts, full-stack Insurance as a Service covers core processes in the insurance value chain without the need for additional services or custom-built integrations.
There is another more specialised model of Insurance as a Service. Some Insurtech companies focus on specific pieces of the value chain such as underwriting or claims. They often require integration into other core services owned or developed by the insurer.
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Benefits of Insurance as a Service
Insurance as a Service leverages many advances in technology such as big data, machine learning, flexible and open APIs, low code development, UI/UX, A/B testing and the Internet of Things (IoT), to name a few. As a result, insurance as a service makes a lot of things possible for insurers:
- Improve the customer journey through third-party and first-party data
- Create, test and deliver simple, flexible, and innovative insurance products quickly and easily
- Test and optimise new ideas at any point in the value chain through A/B testing and analytics
- Increase efficiency in claims and payouts via automation using integrations with IoT devices or other data sources
- Deliver contextual insurance products on customers’ digital platforms
- Segment and target customers for lead generation
- Provide flexible growth and adaptability to changing market needs
Insurers ultimately need to modernise their core technologies, but this type of digital transformation can take years, and in the meantime, the market will wait for no one.
With insurance as a service insurers can modernise legacy technology stacks a lot quicker. This enables them to create new products and experiences that meet customer needs, keep up with trends and maintain a competitive edge.
Because Insurance as a Service is cloud-based, it’s scalable, faster to deploy, and more efficient than legacy approaches.
It also offers opportunities to peak efficiency and lower business risk by introducing new programs. Automation makes quotes, policy changes, renewals, and other tasks faster and easier for the customer and the insurer.
Companies are also interested in proactively managing losses. Intelligent sensor technology at home can flag issues before problems arise. Car sensors also provide real-time data during an accident, which can shorten claims reporting or enable automatic payouts.
Considerations in adopting Insurance as a Service
Like any new approach, integrating Insurance as a Service comes with a learning curve. Companies will naturally have questions including the following:
- Which features and capabilities are available?
- What are the specific advantages over traditional approaches?
- What customisation options are there to work around specific requirements?
- What are the vendor agreement terms?
- How is customer data protected, accessed and used?
- How are security and compliance requirements covered?
- How long does it take to implement?
- What’s the implementation cost?
The answers to these questions will help insurers select the appropriate vendor and solution.
Crafting your Insurance as a Service strategy
Customers are now looking for an elevated experience from their insurance company. Those that don’t adapt will fall short in today’s tech-driven market.
If this seems a bit much, know it’s not all doom and gloom. Shifts in the insurance landscape also represent a massive opportunity for growth.
Insurers who prioritise the client experience will pull ahead. Creating a digital strategy and implementing Insurance as a Service can help companies stay competitive.
Get involved in Insurance as a Service
Insurance as a service is changing the way we think about the industry for brighter days ahead. Watch key industry thought leaders come together to discuss the Insurance as a Service model is the next big thing after SaaS and PaaS. Download the virtual roundtable recording to join the conversation on the unexplored potential of insurance.