Insurtech companies must find innovative ways to differentiate themselves and adapt as artificial intelligence (AI) continues to permeate even traditional insurance practices, according to Melbourne O’Banion, CEO and co-founder of Bestow Inc. Bestow, recognized as a leading insurtech company, according to CNBC, navigating the evolving landscape of the insurance industry.
O’Banion, in an interview with InsuranceNewsNet, suggests that insurtechs should find ways to pivot their core business models to keep pace with technological advancements.
The Imperative of Differentiation
“If an insurtech’s business model is completely dependent on an AI tool or software that a competitor can easily pick up and utilize, then the insurtech probably doesn’t have a highly durable and sustainable business model,” O’Banion stated. He emphasized the importance of companies bringing something unique and differentiated to the market.
Adapting to AI’s Impact
O’Banion acknowledged that the growing adoption of technology raises questions about where insurtechs stand in this “second wave” of transformation in the insurance industry. “When the wave of insurtech investments started happening, AI really wasn’t much of anything that people were discussing. In an era of AI and with a lot of the advancements and tools that are coming about, where does insurtech stand?” he asked.
He further commented on the rapid pace of change, stating that insurtechs need a core business model that is defensible and sustainable long-term. “The speed and pace of change and transformation, just in the broader software and technology industry, is accelerating at a pace that I think is very hard for everybody to keep up with AI. So, I think you have to have a core business model, as an insurtech, that you can defend and that you’re building something sustainable over the long term,” he said.
Leveraging AI to Build Strengths
O’Banion suggested that insurtechs may benefit from integrating AI as a tool to augment their existing business models, focusing on capturing its benefits rather than direct disruption or competition. Bestow initially built and proved out its platform before deciding to monetize it by enabling carrier clients to use it effectively.
“I think what insurtechs need to do, and what we did at Bestow is we built and proved out our solution and platform and ultimately decided how to best monetize it. Our view was enabling our carrier clients to leverage all that we had built was a much better way for us to monetize the platform and enable them to get all the benefits from it, and partner with them rather than necessarily compete with them,” he explained.
Bestow began as an early adopter of AI on the consumer side but has since sold its life insurance subsidiary to focus on deploying its solutions, software, and platform to carriers.
Specialization and Customization
Specialization and customization are emerging trends among insurance companies looking to differentiate themselves, which insurtechs can leverage by starting with a specific problem and building precise solutions, according to O’Banion. “I think the insurance industry is heading into an increased era of specialization,” he noted. He advised insurance companies and insurtechs to “start with a problem; there’s a very broad canvas with which companies can utilize AI.”
Augmentation, Not Replacement
O’Banion emphasized the flexibility of the insurtech industry, which aids in staying ahead of AI development, and stressed the importance of augmenting existing practices. “In a regulated industry like insurance, you have to navigate the complexity of utilizing AI tools in a regulatory space. We like to think of it as not replacement, but augmentation… Whether it’s developing software, leveraging AI tools and solutions to develop better software or developing AI solutions that your partners can leverage and utilize, which is what we’re doing (Bestow),” he said.
Founded in 2016, Bestow initially provided digital life insurance. It has since evolved to offer digital solutions to American insurers. Bestow is headquartered in Dallas, Texas.
