Thoughts About the 2015 InsTech Industry
In no particular order, here are some of my thoughts, comments, and questions about the 2015 insurance technology industry. The only companies I mention that I own stock in are Apple and IBM.
Keep in mind that I don’t cover health insurance in any fashion.
- Initially, I erroneously thought that CSC needed Xchanging more than Xchanging needed CSC. I believe that CSC has tried to sell itself 3 (or 4 or more?) times and suitors had no interest in the insurance area. But CSC does provide Xchanging with reach, a cornucopia of professionals skilled in many solution areas and, of course, outsourcing services experience.
- Thank you, California, for acting in a very reasonable and logical manner regarding your new regulations for autonomous vehicles. When lives and property are in play, Silicon Valley’s philosophy of “ready, fire, aim” has absolutely no role. The lawyers are already whetting their lips in anticipation of a tsunami of lawsuits to come – vehicle manufacturers, software developers, telco firms, and any other company even remotely (sorry about that but no pun intended) involved with putting and moving the autonomous vehicle on the road (or private property), and, of course, the driver behind the wheel (even if the driver is behind the wheel of non-autonomous vehicle).
- IBM has continued to logically vacuum up data rich sources (i.e. Twitter, Facebook, Weather.com, Sports) through partnerships to feed Watson and its Cognitive Business Solutions. I wonder when some of the fruits of this activity will find their way into apps on Apple mobile devices used by businesses?
- The insurance industry will continue in 2016 (and 2017, 2018, 2019, and 2020) to incrementally adopt technology. We need to keep in mind that the speed of the technology life cycle is one matter while the much slower speed of adoption of any technology by the insurance industry is another matter. And the hoped for accelerated speed of technology adoption by insurers from Millennials, VCs, and other investors in so-called disruptive start-ups is yet another matter. However, the insurance industry will not be “dismantled” during the next five years or even the next 10 years regardless of how slowly the industry adopts technology.
- An insurance start-up doesn’t have the luxury to ignore the rules, regulations, or laws of the jurisdiction in which it wants to conduct business. Insurance regulators, State Insurance Commissioners, and (I assume) reinsurers won’t let that happen – back to the situation of lives and property at risk. Not to mention the financial risks – oh, I just mentioned it.
- We’ll see more acquisitions of established technology firms that support the insurance industry like CSC’s acquisition of Xchanging. I wonder what technology firm will acquire KeyLane? Or will KeyLane come over to North America and garner a reasonable and growing market share?
- Real-time streaming video “feels” like it is ready to take off in the insurance industry. But “taking off” in an industry that historically moves slowly does not mean that real-time streaming video will garner even 10% share (for customer service, claim management, agent/broker on boarding) in the next 2-3 years. Should real-time streaming video take off (much) faster – of course because the insurance industry needs this capability to offer more personalized interactions with clients.
- I like Salesforce – I use it in my small company and used it years ago in Financial Insights, IDC. The company’s acquisitions make sense to me (why haven’t they acquired Clari? I can hear the Salesforce executives say “we don’t need Clari because we’re building that type of capability ourselves.) I believe that Salesforce can generate reasonable market share in the life insurance industry (particularly with life insurers that have career agents). Gaining appreciable market share in the P&C insurance industry is another matter – agencies and broker firms are not going to toss out their Applied Systems of Vertafore solutions quickly (or possibly at all). But I wonder how long Salesforce can operate (at their current level of marketing and acquisitions) without generating continual annual profit (rather than just having a profitable quarter every now and again?) Would Salesforce attempt to acquire either Applied Systems or Vertafore? Salesforce and Vertafore already have a partnership. Is Vertafore trying to have dinner with Salesforce without becoming the main course?
- I didn’t hear or read much about Vlocity during 2015. Maybe I missed some of their press and news releases. I think Vlocity offers a reasonable business model for insurers building on Force.com. Of course, if the insurer doesn’t use Force.com or if they do but don’t want to replace their current core administration systems then Vlocity’s growth will be slow. If either situation is true, how long a runway does Vlocity have? (I have absolutely no idea.)Like you, I’m looking forward to 2016 and what it brings for current and emerging technology firms supporting the (non-health) insurance industry.Let me know your thoughts, comments, and questions about the list above or any related issues.