To win insurtech 2.0, focus on underwriting before growth

The insurance industry has seen its first wave of innovation.

Insurtech 1.0 brought a centuries-old product into the digital era by giving customers a way to apply for insurance online, similar to the initial novelty of opening a bank account online. Everybody rode off into the sunset after customer excitement translated into investor excitement.

Not quite. It seems some might have flown too close to the sun instead of focusing on customer experience on the front end.

Insurance is about risk. Digital insurance innovation should focus on using technology to assess and price risk in real time.

Everything else can flow from the innovative underwriting foundation, which is an instant, digital customer experience, sustainable growth unburdened by excessive claims and the ability to embedded insurance in other digital journeys.

The insurtech 1.0 wave flowed in the wrong direction by focusing first on growth and then on underwriting. There is plenty of time to reverse the tide, as the enormous appetite for convenient, modern insurance products has only been whet.

Insurtech companies need to keep pace with the demand they have created through sustainable unit economics and wise risk management.

How should you build upon next-generation underwriting? Our five-step plan for winning in the insurtech 2.0 era is here.

Realign your business around underwriting excellence

Refocusing on innovation starts with your business.

The questions you should ask are:

• Do your primary KPIs include ways to measure underwriting outcomes alongside traditional growth metrics?
• Do a majority of your employees work on underwriting directly or indirectly?
• Do your company goals include explicit underwriting goals?
• Can all your employees articulate how/why underwriting is a differentiator at your company?

It might be worth rethinking your goals, metrics and organizational structure if you have answered no to one or more questions.

Prove your models

Smart growth is the name of the game in insurtech. Resist the urge to quickly scale acquisition before you have built confidence in your engine. How do you do that?