Insurance Industry Leaders Warn Not To Do This In The Face Of A Recession And Recession

This is part of the list supported by AgentSync

If the US or global economy crashes, it won’t be the first time – and it won’t be the last. Despite their eagerness to get off the gas, insurance industry leaders warn that stopping investment in modern insurance technology could be a mistake. This is true for private businesses and capitalists, as well as companies that have to invest in upgrading their old equipment.

Financial times and insurtech

Whether the recession is at its peak, and how deep it is, is still up for debate. In light of a long list of economic indicators (for example, declining, but declining premiums, high consumer spending, low unemployment, high layoffs, and uncertainty about the future of the economy), insurance leaders are wondering what this means for their businesses.

Should insurance carriers save money by avoiding big costs to upgrade their technology?

Will ordinary investors and venture capitalists sit on the sidelines, watching to see what happens, as the demand for insurtech grows?

Should insurance companies, struggling to find and retain talent, ask employees to do what they always do, and hope for the best?

According to industry experts, the answer is an emphatic “no”. In fact, he maintains, it is imperative that the insurance industry continues to move forward into a modern and digital future. Those who don’t, he warns, risk being left behind and unable to find them.

How financial uncertainty affects VC investment in insurtech startups

It’s 2023 and all over the world there is a lot of talk about the decline in start-up capital and stoppage of business investment. While it is true that VC investment is down from a few years of history, the facts from the insurance companies are that the investors are still interested in renovating the insurance.

According to Dan Israel, general manager of the Iowa-based Global Insurance Accelerator (GIA), insurance companies are still willing to sell.

“Companies that continue to thrive, even startups looking for funding, are the ones that can find a way to raise money quickly and strengthen the foundation of their business,” Israel said.

GIA serves as a symbolic incubator for insurtech startups. With financial support and mentorship from other industry participants (Grinnell Mutual, Farm Bureau Financial Services, and Allstate, to name a few), Israel said the GIA teaches business startups what they will need to succeed. complex industries like insurance. For GIA, this means pushing startups to solve real problems and create a sustainable, and profitable business, which is more important today than ever.

As for whether investment can and should continue as the economy faces new uncertainties, Israel said, “It’s always going to be something. If it’s not inflation, it’s COVID, or a recession, or a change in government policy. Smart investors, smart investors.” , and those who continue to draw and promote innovation. Because these companies need to innovate in the way they work to reduce risk and reduce costs precisely because the economy is not well known.”

How economic uncertainty affects insurance premiums in technology

The technical problem of entry insurances

Some carriers see how insurtech investments can help them thrive in a booming economy. Grinnell Mutual is a property-casualty insurance company founded in 1909 and headquartered in Grinnell, Iowa. In 2015, they were a GIA founding investor member, demonstrating their continued commitment to investing in insurtech innovation.

The company’s longevity gives leadership a unique perspective on the need to continue investing in technology solutions that improve customer engagement, performance, and business performance.

“Today’s economic and financial environment has meant that insurance companies like Grinnell Mutual must carefully evaluate how money is spent in all areas of the organization,” said Dave Wingert, executive vice president and chief operating officer. “The investment we want to make in insurtech, as well as all of our technology solutions, is focused primarily on the economy.”

“However,” Wingert said, “we often feel it is important to continue to invest in areas that will provide the greatest return, rather than deliberately delaying projects until things improve.” Our goal is to be smart without being stupid.”

Modern financing from digital-first insurtechs

On the other end of the spectrum, Pie Insurance was founded in 2017 to make the experience of purchasing workers’ compensation insurance easier for small business owners, and has grown into other lines since then.

Speaking about how the modern economy affects his economy in technology-even as a co-founder of insurtech-Pie and the CEO of John Swigart emphasized Pie’s reliable approach in looking at the business needs that Israel establishes when starting GIA. the founders.

“We’ve seen insurtechs struggle in recent years because, in part, they’ve invested heavily in technology to grow rapidly and improve user experience, while neglecting the needs of insurers and core metrics,” Swigart said. “Technology is part of the foundation we are built on so regardless of the economic situation, it is not something we can turn off or stop investing in. Instead we focus on using it for our growth and health in a sustainable way.”

This approach, to make smart investments in technology that will advance the main business goals instead of reducing the flow of money to insurtech, is the most popular strategy for investors and insurance companies.

How investing in insurtech can benefit carriers and organizations especially in difficult economic times

It’s often tempting to look at new technology investments as the low-hanging fruit of budget cuts. But, as industry leaders like Israel, Wingert, and Swigart warn, this approach can have unintended consequences that hinder long-term growth.

“Technology can help people become more efficient at their jobs by streamlining and managing manual tasks that no one else wants to do,” said AgentSync CEO Niji Sabharwal. “As everyone scrutinizes budgets and tries to plan for lean times, it’s important that we don’t overlook how short-term costs, such as adopting a strategy that makes everyone profitable, can bring short-term benefits.”

Sabharwal’s views are in line with a recently released study from the Jacobson Group, which found in 2023 Insurance Talent Trends that many insurance and financial services companies have failed to meet their targets in the past few years. The report said, once repetitive tasks are automated, these companies can improve their technology in advanced ways. Summary: Going forward, a small group of well-qualified insurance companies will have select companies and may not select businesses that return them to busy work.

For these reasons, if no other, the smartest in insurance say 2023 is not the year to stop investing in insurtech.

Market for Leadership

Leave a Comment