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Tech Carriers: Tech Companies That Sell Insurance

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2 July 2021
Rob Norris

Many insurance companies are looking at themselves differently in a digital world. I’ve heard more than one insurance executive say, “We’re not an insurance company – we’re a technology company that happens to sell insurance.” At first blush, this sounds aspirational more than factual. A tech company, by definition, sells technology, right? However, there is precedent in other industries for especially innovative companies to be considered tech companies. Uber, for example, is often considered a tech company even though its primary business is transportation. Another example is Netflix, which is part of the FAANG group of tech stocks, alongside Facebook, Amazon, Apple, and Google.

The blurring of lines between tech companies and insurance companies is something that fascinates me. Welcome to my first blog as a new senior analyst for Celent. I’ve served as a CIO in insurance for nearly 20 years, followed by another three years as an insuretech founder and CEO. I’ve also led engineering and product marketing functions for technology companies outside the insurance sector. I’m excited to leverage this background to produce fresh insights about technology and I hope to challenge the way we think about the business of insurance.

Perhaps the definition of a tech company is less about what it sells and more about how it’s run. What would it look like for an insurance company to be run like a tech company? For the sake of brevity, let’s call such a company a “tech carrier.” Here are some themes that come to mind that would distinguish tech carriers from other insurance companies:

  • Strategy. A tech carrier would make choices regarding how to win that are strongly rooted in digital capabilities, often enabling entirely new business models. It would also look through a technology lens when deciding where to play and where not to play, carefully targeting market segments where customers will make buying decisions based on digital capabilities. And despite the maturity of the insurance industry, a tech carrier would assume a high degree of strategic uncertainty. As a result, the primary manifestation of its strategic thinking would not be a strategic plan but rather a robust pipeline of product experiments.
  • Leadership. Tech companies organize around the management of products. A tech carrier would likely have a chief product officer or perhaps a product-focused chief technology officer, at the same executive level as the senior leadership of underwriting and claims. A product executive would have a strong background in three critical areas: insurance, technology, and human-centered design. The intersection of these areas would be the focus of a dedicated product organization consisting of agile product teams. These product teams would staffed by product managers, product designers, and engineers. Unlike traditional agile teams in IT, these product teams would be concerned primarily with redefining the business and less about supporting it.
  • Research and Development. The primary job of a product team would be research and development, using a deep understanding of the customer to invent new ways of solving customer problems and creating economic value. This would occur across the entirety of the insurance value chain as well as within adjacent value chains that are the source of insurable risks. Innovation would often start from a blank slate and solutions would be designed holistically, encompassing not only technology but also business processes, marketing, partnerships, and organizational design. In a tech carrier, R&D would be funded generously, comparable to but separate from the traditional IT budget. There would be no expectation of immediate ROI because the goal would be to build substantial value over the long term.

I’m humbled to be joining a team that is way ahead of me in thinking about how insurance companies can act more like tech companies. This week, Celent senior analysts Juan Mazzini and Karen Monk released an outstanding pair of reports:

If you’re interested in becoming a tech carrier, I encourage you to read the following reports as well:

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