Expert interview: Nicole Schepanek, co-founder, Aureus Capital

Insurtechs will speed up innovation for the incumbents, but I think the larger technology players like Google and Amazon present a greater challenge


Embedded insurance partnerships, big funding rounds for insurtech and cyber insurance providers – these are just some of the major industry developments over the past year.  Insurance veteran Nicole Schepanek gives her take on these trends in this one-on-one interview.


Businesses must be agile to keep up with changing customer expectations so how have insurers with legacy systems adapted? What are some of the problems that legacy systems have created over time?

Legacy systems have existed for a long time and were not designed to fit with the state-of-the-art technology. As technology improved, add-ons were attached to the systems, but the entire process is expensive, tedious and takes a long time. Moreover, at some stage legacy systems will not have experts who can fix the problems because the pool of experts will become smaller as time goes by. 


Legacy systems also contain many repetitions of the same product because for a long time, there was no standardised way to create new products. Teams in different countries duplicated offerings but labelled them differently internally. Over time, the problems compounded. So now teams can take a long time to respond to claims because they needed to trace the exact policy version that was purchased.


To go down the path of simplifying a product is a strategic question that requires executives to envision how a new or simplified product will look like.


A decision to simplify products paves the way for a much faster process in processing claims, visualizing data..etc. What are the major trends behind this type of digital transformation?

Evolving customer behaviour is a big driver behind digital transformation because they expect the claims process to be smooth and easy rather than paper driven. Efficiency is another reason, along with embedded insurance which I think is a hot topic because it is another source of revenue for the insurer and the digital ecosystem.


Tell us your thoughts on the competition. Do insuretechs present a challenge to the incumbents?

I think insurtechs will speed up innovation for the incumbents but I think the larger technology players like Google and Amazon present a greater challenge because these companies have ventured into insurance as well. 


Where do you think insurtechs have the biggest impact?

In my opinion, insurtech companies like PolicyDock who partner with others give the sales side a big lift. Sales is always the one important bit. Claims is another area where insurance technology companies can help an incumbent realise efficiency gains because insurtechs are built on technology with a much greater speed. Moreover, when people discuss how to make claims better, it’s not all about money. Service quality is an important focus and security more broadly.


Why do you think the insurtech space has grown very quickly over the past few years?

Growth in the insurtech space has been significant because investors want to see where the next big thing is and I think there is a lot of potential to innovate in insurance because it is a slow industry and thus, an incremental change can have a big effect on the industry. 


What would you say to people who are worried that going to digital means a loss of jobs?

We are living in a time where there is a lot of disruption but with any disruption, comes the creation of new types of jobs because you can provide broader services and tap customers in ways that were not possible in the past. This is what we will see with embedded insurance for example. Individuals with certain types of skill sets will be required to fill these positions. Predictive analytics is a skill that will be more useful than traditional retrospective analysis but that only fills a sub-section of market needs. There will be other positions that companies can help people prepare for. If you do it correctly, your business will grow. Upskilling will be crucial as a society.


What do you believe is the new normal in insurance? The major trends?

Embedded insurance is a big one. Cyber insurance is another area that has potential because more businesses are demanding standalone cyber coverage. Moreover, digitalization, data analytics, and cyber-attacks are major trends of our time that underpin the necessity for cyber coverage. 


I also hope that more insurers will spend more time, money, and effort creating more innovative products that protect people. That means creating policies that do a better job of covering what people have, that do a better job of assessing risk.


Out of all the problems we’ve touched on, which pain points do you think insurtech startups like PolicyDock solves?

The advantage is that PolicyDock allows rapid data analysis to be done, all of which without abandoning the legacy systems. PolicyDock’s APIs can be easily connected to different kinds of data points so one advantage of the synchronisation and data harmonization is that forms can be pre-filled for customers. In the end, the customer will get a simplified, smoother experience.


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