Hi all, Julie here.
Insurtech is one area that I’ve yet to really grasp. Largely because I don’t even understand how regular insurance works to begin with lol. I just know that no one likes it, it’s very outdated, there’s a lot of random paperwork for everyone involved, and it’s just kinda a mess. My friend (and FTT Community Member) Andrew Wynn is the Co-Founder and Co-CEO of Ascend, which is trying to make insurance payments a bit more modern. Here’s a Q&A I recently did with him.
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The biggest misconception about insurtech?
One that I notice a lot is this idea that we’re trying to replace the entire insurance industry from the ground up. Insurance is a very old and established product, and I think at its core that’s not going to change. As a risk-sharing mechanism, it will still be the core offering. What will change is what we're protecting (ex: hacks), how we’re protecting it (telematics), and how we’re interacting with our insurance providers.
In terms of interactions, insurance will move away from being this invisible thing behind the scenes or some piece of paper that we have somewhere that covers us. If something goes wrong, we're going to know what our policies are, understand them more easily than in the past, and easily take advantage of our coverage. That information is going to be a lot more accessible. The experience that insurance companies offer will be a much more modernized, digitally native customer experience, and we’ll interact with them a lot more.
The biggest hurdle to modernization in this space?
Insurance distributors and carriers face two main issues here.
- Huge, bureaucratic, companies that have existed for a long time.
- Insurance isn’t just a “nice to have” not to mention insurance businesses/people are generally risk averse.
These two things coupled together make modernizing insurance akin to modernizing government or healthcare - a challenge to say the least. That said, there is a huge opportunity because of its pervasive, critical nature. The inefficiencies and poor customer experiences because modern tools don’t exist are felt everywhere. The consumer demand for improvements are there and, intellectually, so is the demand from legacy insurance companies. The biggest challenge will be working through these legacy players to modernize their underlying infrastructure so they can be successful in today’s digital world.
What impact on collections does modernization have?
Insurance is one of the few things you can “get” without paying for. The typical insurance purchase flow goes from quote, to bind (where your insurance coverage starts), then to payment. This creates a collections gap for distributors who have sold the product but haven’t yet collected the payment. This is largely a result of the outdated payment methods and mediums (ex: mailing a check). With Ascend, we close this collections gap by modernizing the underlying insurance payments infrastructure. When distributors use Ascend bind, the payment becomes a single step - reducing risk for the distributor AND providing the customer a much better experience.
We talk about real-time payments a lot at Fintech Today. How does RTP impact your business and insurance more broadly?
Ascend is all about payments. Our APIs automate insurance payments end-to-end — from an online point of sale with BNPL financing to the distribution of commissions and carrier payables. This enables insurance distributors to sell more policies by eliminating labor-intensive, expensive processes while providing customers with the great online checkout and financing experience they've come to expect. Reducing payment friction and improving financing operational processes benefit all players in the insurance value chain. Ascend works with anybody who collects insurance customer payments whether that be a brokerage, MGA, or carrier going direct. We can support multiple parties in the process including:
- The policyholder: ease to pay electronically at the point of sale with instant ability to finance.
- Insurance broker: Super easy to collect payment & downstream money movement by automating payment processes.
- Insurance carrier: Drastically reducing the time it takes them to realize premium allowing carriers to accelerate the time to invest their money. They get paid faster and ultimately lower the cost of insurance.
We built Ascend on the premise that, as the insurance industry moves from offline to online, insurance distributors will need to provide a modern seamless customer experience with a payment infrastructure in order to keep pace with the increasing demand for high-quality customer experiences.
Is fraud more or less of an issue in insurance payments?
Well, we all know that with the digitization of nearly all industries and processes, cyber risks pose a bigger threat than ever before. That’s why we’re witnessing the rise of cyber insurance to protect ourselves from the financial risks that come with operating in a digital landscape. Technology has evolved so quickly in recent years, and it’s not slowing down. With every positive evolution, there’s also the negative. New risks are always arising and no industry or facet of one is untouchable, including payments.