Three lessons insurtech can learn from the iPhone

by Dan Woods, Founder and CEO

Fueled by nearly $5 billion of investments in 2020, the insurtech industry has reached a new fervor—and rightfully so. A host of next-generation technologies are transforming every point of the insurance value chain: IoT devices enabling personalized ratings, telematics data powering usage-based insurance products, drone inspection services verifying claims, and AI chatbots delivering interactive customer experiences—just to name a few.

With all this investment, one might wonder where insurtech is headed. Will it remain a collection of disparate technologies, or will it reach some kind of convergence? To answer these questions, it can help to look at the mobile device industry, which experienced a similar period of rapid and chaotic technological advancement before it was brought together by a single, revolutionary platform: the iPhone.

Throughout the first half of the 2000s, the puzzle pieces of mobile technology were appearing and moving. Blackberry and Palm smart devices allowed users to email and browse the internet from anywhere. Digital cameras and MP3 players completely changed how people created and consumed media content. Touch screens, mobile CPU power, internet connectivity, and battery technology were improving at breakneck speeds.

Then in mid-2007, the iPhone arrived. It tied together an intuitive interface, robust multimedia features, and powerful applications—all in one elegant device. Users could make a call, take a photo, and answer an email without switching between a phone, camera, and computer. Later, the technology extended to use cases that the inventors couldn’t even imagine, such as ridesharing that combines GPS, ecommerce, logistics, and more.

The iPhone had this level of impact because it was more than a device: it was a paradigm shift. This new paradigm was so effective that it’s been canonized into a universal part of our everyday lives—but why?

I believe there were three specific factors that shaped the success of the iPhone paradigm, all of which are applicable to insurtech today:

1. A developer-friendly ecosystem 
2. True cloud-native architecture
3. One platform for all use cases

The culmination of these factors literally changed our way of life, and here’s why they’ll change insurance technology too. 

1. A developer-friendly ecosystem

Because of the App Store’s profound impact, it’s easy to forget that it wasn’t launched until a year after the original iPhone, with the release of the iPhone 3G. It didn’t take long for the digital marketplace to break records though. Within a week of launch, users downloaded apps over 10 million times.

How did Apple achieve this benchmark for its fledgling product? It deeply recognized that third-party developers are key, and it fully embraced them. The technology was completely transparent with open APIs and public documentation that empowered developers to create engaging and intuitive iOS apps. Soon, the “mobile first” movement had developers creating applications and entire companies that only interfaced with users via the iPhone.

It’s noteworthy that not all smartphone manufacturers had this philosophy. Apple and later Android built developer-friendly ecosystems, but Blackberry did not. Developers wanted to create on open platforms, where they could experiment and deploy apps quickly; and users wanted to be where the apps were. In the end, the closed approach made Blackberry a powerful captain of a sinking ship. 

Today’s insurers face a similar dilemma with closed platforms. While there are many incumbent policy administration systems, none of them have public APIs (as can be seen from their websites). Why is this the case?

Blackberry’s environment was closed due to business strategy, but legacy insurance platforms are closed due to customization. Whereas one insurer’s customization of a given platform may modify an API endpoint, the next insurer completely disables it. Yet another insurer’s customization could have a completely different set of APIs altogether. Since there is no single version of a given platform to document, it is impossible for developers to create reusable applications for it. Legacy insurance platform vendors may have different reasons from Blackberry for being closed, but the result is the same.

If insurers want to quickly and easily connect their platforms to the next generation of insurance technology, they’ll need a developer-friendly ecosystem with public APIs. A partner-forward ecosystem is the foundation for insurers to seamlessly share data, improve customer experiences, and accelerate innovation. 

The value of such a connected future is widely accepted, as evidenced by all the policy administration platforms that tout their partnerships with third-party technologies. However, a business partnership is one thing, and an integration that instantly installs is another. Try “installing” one of these integrations for yourself, and you’ll see how far we are from the iPhone App Store.

2. True cloud-native architecture

One of the many marvels of the iPhone was that it made the internet “pocket-sized,” and we quickly discovered that the implications went far beyond the browser.

Consider how the iPhone turned GPS from a handheld fossil to our very own personalized navigational portal. Standalone GPS devices need manual upgrades and only direct people from point A to point B; on the other hand, smartphone maps give users a much richer experience that includes real-time accident rerouting, public transit routes, rideshare options, destination recommendations, gas prices, restaurant reviews, location photos, hotel booking, and countless new features seamlessly added before we even notice.

How can the iPhone deliver so many complex and resource-intensive services? Because the smartphone itself is a mere interface to an expansive and staggeringly sophisticated cloud, where powerful servers host all the necessary software and data.

The merits of cloud are well known, which is why all legacy insurance vendors are racing to proclaim that they’re now “cloud-based” or “cloud-enabled.” However, being in the cloud is a lot more than installing classic on-prem software on a public server. 

How can insurers tell if their platform is actually cloud-native, or merely an on-prem transplant? You can simply request an evaluation login, because a true cloud platform should offer quick, free trial licenses. If the license lasts more than a week, it’ll upgrade automatically—and the upgrade will be so smooth, you’ll only notice if a new feature appears or you read the release notes.

Insurers with a native cloud platform will experience instant access, constant availability, continuous updates, multi-tenancy, and elastic scalability.

3. One platform for all use cases

When Steve Jobs unveiled the iPhone in 2007, he called it “an iPod, a phone, and an internet communicator“—all in one. It’s fascinating how Jobs’ statement felt so expansive at the time, but sounds so modest now compared to the smartphone’s current capabilities. Think about how many people have stopped buying cameras, MP3 players, flashlights, calculators, GPS devices, and dozens of other single-purpose devices because they own an iPhone. 

Today, insurers are still relying on an array of systems designed for a single insurance product: commercial auto, term life, general liability, etc. That means each time insurers want to enter a new market or reach a new type of customer, they must customize the software or even purchase an entirely new system. And any extensions or integrations they’ve developed for one product won’t automatically port over to other products. Then, maintenance costs multiply quickly.

Just as the iPhone supports many disparate applications with a single core mobile platform, the final piece to the insurance core technology paradigm is supporting any insurance product, geography, or distribution channel on a single core insurance platform.

This core insurance platform should be as versatile as the iPhone, applicable to new use cases without any changes to the platform itself. This allows insurers to spend less time rebuilding systems and more time focusing on the attributes that actually differentiate their products from the competition. With that kind of efficiency, insurers can rapidly and easily test and iterate ideas, bundle complementary products, and diversify their offerings—all with dramatically reduced maintenance costs.

Putting it all together for the insurance industry

We know how open APIs, cloud-native architecture, and platform versatility converged for mobile devices. But what will this future look like for a core insurance platform?

Insurers will be able to access their core platforms instantly via web browsers. Third parties can create a world of apps and integrations and scale them easily. Every piece of software is continually upgrading and improving without downtime. And all the effort insurers currently spend on maintaining redundant code is instead spent creating stronger differentiators that can benefit end customers.

It may sound shocking that insurance technology vendors haven’t meaningfully acted on these lessons, but that spells opportunity for platforms like Socotra that share this vision and are rushing to actualize it. The insurance industry is one of the most critical pillars of the world’s financial infrastructure, and it deserves better technology. Anyone with an iPhone knows how it’s supposed to be; now we just need to do the work.