At the “Making Insurance Better” startup competition, more than 50 early-stage startups competed in one of the first events of its kind in the InsurTech space in Israel. The event – hosted earlier this month by Start-Up Nation Central, IDI Insurance, and venture capital firms Viola and Moneta – engaged local startups across various industries to apply their technologies in insurance companies.
Before we announced the winner (Agamon), we sat down with the CEO of IDI, Kobi Haber, to understand his take on the impact of the coronavirus pandemic on the insurance industry, what the upsides of the crisis are for InsurTech, and why the Israeli tech ecosystem could be faced with one of its greatest opportunities yet.
“The digitization of the insurance industry is one of the positive side effects of COVID-19”
Question: Let’s talk about the relationship between technology and insurance and how the recent period has influenced both. We are living in a pivotal time for humanity, in which technological processes are going to seep into every area of our lives. How has the recent period affected the insurance industry? Which processes are accelerating for insurance companies and which ones are experiencing a slowdown?
Answer: There is no doubt that the arrival of the technological revolution for the insurance industry was pushed forward due to COVID-19. Some processes were happening before the pandemic, but everything that has happened with COVID-19 in recent months has really expedited the transition – from operational changes like working from home, to digital processes that touch on the sales side and customer experience. Our value chain is undergoing automation and is much more digital and technology driven. Actually, I think that the digitization of the insurance industry is one of the positive side effects of COVID-19.
Q: Although the insurance industry is being digitalized, it seems that many people still view insurance companies as bureaucratic, slow and even outdated. In which ways does IDI see the connection between technology and the insurance industry, and will this relationship intensify in the future?
A: Just for the sake of clarity, there is a difference between traditional and direct insurance companies. Direct insurance companies are more advanced to begin with, more technological, and our core systems are more advanced, which gives us an advantage in working with startups. We are deeply invested in innovation, hence the initiative to work together with Start-Up Nation Central on this InsurTech competition.
This connection extends to the world of data analysis and the application of technologies and digital processes. From our activity on WhatsApp through our RPAs (Robot Process Automation) and bots for customer service, I have no doubt that the digital reality is here to stay.
If you ask me to specify where we are likely to see more of these digitalization processes occurring, I would say that the ideas from the outside are going to provide solutions across the value chain. We are currently looking at solutions that are tied to data analysis since we have a large database that we’ve built up over the past 25 years.
“We are like kids picking candies from the trees”
Q: Some of the startups that participated in our challenge don’t come from the insurance world. Many come from the healthcare or transportation industries. In order to integrate innovation from such companies, insurance companies like IDI need to be flexible and open to changing existing processes. Some of these processes are not simple. Why is it worthwhile for insurance companies to cooperate with startups? What is the value that an organization like IDI gets from such an engagement?
A: In this competition, our goal was to achieve a competitive advantage, and further advance the company’s technological capabilities, as Israel’s leading direct insurer, through the application of innovative technology.
Our outlook at IDI is open to innovation – we believe that it is our future. But not all of the bright ideas can come from inside the company. We collaborate with startups to make our company better, more connected and to provide more value for our customers. We are like kids picking candies from the trees.
However, working with startups is not easy. With success stories also come failures, which is the nature of working with startups because they are early-stage companies and their success is not guaranteed. A lot of hard work is involved and sometimes the organizational mindset needs to shift in order to facilitate the relationship. Working with startups requires a lot of managerial dedication; at IDI, we are committed to this process.
As for the tech sectors, I don’t believe in the complete separation of InsurTech and solutions for other sectors; for instance, a company can have an amazing idea to streamline operations in an entirely different sector. This is particularly true of data analysis, which is the major transformation the insurance industry is currently undergoing. I think that the secret to success is being flexible and open to new solutions wherever they may come from.
“Work out all the ‘kinks’ before launching internationally”
Q: The Israeli tech ecosystem is one of the most advanced in the world, with over 6,500 technology and startup companies that market solutions around the world. Yet, most of the funds invested come from foreign investors. Due to the current economic crisis and limitations on funds to invest, it is likely that these transactions are going to decline significantly. We recently saw the Israel Innovation Authority’s initiative to incentivize local institutional investors to invest in the ecosystem. In your opinion, how important is the initiative and what value can we expect to see from it?
A: The Israeli high-tech industry has tended to look outside of its borders and has largely ignored the local market. The funds, customers, and markets are all located overseas. However, I think that it is our duty as members of the business community in Israel to use the COVID-19 pandemic as an opportunity for growth. There are so many things that can be done to help the Israeli tech industry survive the crisis, and this competition is the product of that outlook.
With limited access to foreign markets, solutions can be introduced locally. There is a golden opportunity here for the industry, for financing bodies and the local economy. If everyone works together, it can really be a win-win – it will help Israeli startups overcome the downturn, it will provide us with access to the innovative technologies that would usually drift overseas, and it will give startups the opportunity to work out all of the “kinks” before launching internationally.
To learn more about Israel’s InsurTech sector, explore our latest FinTech report.