SaaS in Insurance... Good or Bad idea?

Rodolphe Strauss
January 25, 2023

With an increase of +25% over the last 24 months, the amount of SaaS solutions used by the financial services industry continues to grow, and the insurance industry does not seem to escape this trend...

But is SaaS really for you? After all, it seems like every week a new technology comes along that supposedly "disrupts" our business deserving of a complete overhaul. Blockchain, AI, Web3, Machine Learning, etc... lots of buzz words but are these technologies really worth investing in? 

This week we take a look at the SaaS case. In which cases is it worth exploring? What questions should you ask yourself to determine if it is in your interest? 

Question #1: What are you selling? 

At the risk of sounding like an open-ended question, this question has in the past been the highlight of some and the bane of others.

Among the examples often cited: Kodak. Undisputed masters of the analog camera, the group had no less than 80% of market share at the height of its glory in 1968. At that time, the group made a business arbitrage that ended up costing them a bankruptcy filing. Their call: Deciding to focus on low margin and high volume businesses. Indeed, the American giant decided to stake its future on the sale of its films and even went so far as to explore razors and blades. 1975 sees the emergence of its first digital cameras. The idea is suggested internally by one of its inventors, then an employee of Kodak, Steven Sasson, but who is asked to remain silent for fear of "shooting ourselves in the foot". 

On the contrary, we have Netflix. If the platform now caters for the “Off-time” of some 231 million users, it owes it to having asked the right question at the right time. In fact, in April 1998, the Streaming Titan launched itself as a DVD delivery service. It was only a few years later that the company decided to focus its development efforts on its streaming technology. Why? Because Netflix decided that the essence of customer value lay in fast access to content, not the medium (i.e.: the DVD) 

What about your brokerage business? Where is the value of your service? What kind of feedback do you get from your customers? Are you being praised for your responsiveness? The quality of your support? The relevance of the challenges brought by your sales people in meetings? Or the interface proposed to the customer? The quality and originality of your UX? 

In short, does your added value lie in the strategy and conceptualization of your offers or in the quality of the tools you offer?

Question #2: What is your cost structure? 

This question is particularly relevant in light of the answer to the first question. Are you investing your time and resources where your customers expect you and value you?

On the technology side first: What would developing your own solution cost you? What deployment and maintenance costs should you expect? Note that an estimated 80% of insurers' IT expenses are allocated to the maintenance of their solution! Is your cash flow able to absorb such a project? Does deploying this solution really leave you free or will it necessarily require the intervention of your supplier in the medium term? 

That’s for the tech side. But it is also crucial to consider your employees' time. Do they complain about wasting time on repetitive and boring tasks? Even if it's just transferring data from a csv to your CRM whilst managing claims. 5 minutes multiplied by 1800 claims per month and the impact would already be the working time of a full time person! 

Analyzing your operations by focusing on the right indicators will allow you to establish the diagnosis of whether or not investing in a proprietary solution would be more profitable than allocating more time and resources to customer service and the conquest of new markets.

Question #3: What level of responsiveness do your customers expect from you? 

If you work in the construction industry, it is likely that your business does not require the same level of responsiveness as if you were in the affinity business. Between stiff competition, competitive bidding, and client-driven deployment times, responsiveness may often be a decisive competitive advantage when signing a new client. 

While traditional insurers take an estimated six months to launch, SaaS solutions offer the ability to do so in as little as one month. 

Similarly, while modifying the product once launched usually takes 18 months (due to the need to store enough history to validate a modification), SaaS again allows for continuous modifications. 

In summary, SaaS will not be the solution for all market players, especially not for the more substantial and institutional risks. But on shorter risks, the software approach allows a certain level of reactivity, a cost optimization and an operational efficiency that could positively impact your business. 

At Seyna, a subscription path adapted to your customers' needs and to your brand is deployed in 1 week. A customized interface to allow your community of business partners to sell your products in 2 weeks. Your personalized insurance program launches in less than a month. All this on a subscription basis, with no set-up fees. 

Interested? Let's talk!

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