Socotra is one of the leading insurance technology providers in the global marketplace today. It provides a state-of-the-art, cloud-based insurance core platform designed to effectively handle intricate interactions throughout the entire policy lifecycle.
It has also become a fundamental component of the digital ecosystem by equipping international insurance companies with a contemporary, high-quality core system, empowering them to expedite product development, lower maintenance expenses, and enhance customer experiences. As Socotra’s Chief Business Officer, Ekine is responsible for client-facing business, field engineering, pre- sales and partnerships. We caught up with him to find out more.
Your background is in technology and you’re originally a software engineer, so how does insurtech fit into that?
When it comes to joining start-ups, it typically revolves around the people and the team. It hinges on your belief in the mission. So, in my case, I transitioned to Socotra from a research-oriented role, where I led an AI group. This change was driven by the specific problem we were tackling. When I joined Socotra, our focus was on emerging economies. We were primarily concerned with bridging the insurance penetration gap.
Can you tell us a bit more about that?
Sure. For example, in the United States, insurance penetration stands at approximately 11%, meaning that insurance premiums contribute 11% of the country’s $27 trillion GDP. This figure provides a perspective on the scale of insurance within an economy. In contrast, emerging economies, such as developing countries, often exhibit much lower insurance penetration rates, typically ranging from 2%, 1%, 3%, to even less than 1%.
Drawing from my personal background with Nigerian roots, I was intimately familiar with the challenges faced by emerging and developing countries, which motivated me to seek innovative solutions. In this context, Socotra and our private equity partners identified a significant disparity in insurance penetration. This raised the question: what caused this disparity? Our theory, or thesis, was that the insurance products available in these developing countries did not align with the actual demand of the population.
Attempting to introduce insurance products designed elsewhere in the world to these regions proved ineffective. The solution, as we saw it, was not to find a single “silver bullet” product but to enable rapid integration. Rather than adhering to the typical two-year or five-year development cycles typical in the insurance industry, we needed to condense these cycles into a matter of months. This required leveraging modern technology and cloud infrastructure, which we viewed as facilitators rather than standalone solutions. Essentially, our aim was to tackle the problem differently, recognising that conventional approaches were inadequate.
Which emerging markets do you find particularly promising for insurtech?
Southeast Asia and Africa are two emerging markets that hold immense potential for insurtech. In these regions, insurance coverage remains relatively low compared to more developed markets. However, the potential for growth is significant, given the growing middle class and increasing awareness of insurance’s importance as a safety net. As technology continues to advance, it opens up opportunities to reach and serve these underserved markets effectively.
But there are other opportunities within developed nations too. What are your thoughts on regions like California and Florida, where insurers are abandoning customers due to increased risk factors? Are they creating a market gap for innovators?
Regions like California face unique challenges, particularly related to natural disasters like wildfires. Some insurance companies have been pulling out due to concerns about risk and increased claims. However, this situation does indeed present opportunities for insurtech innovation.
Parametric insurance, for example, has proven successful in addressing specific risks like flooding in the UK. There’s no reason why a similar approach couldn’t be applied to cover risks in regions like California. Insurtech companies, with their agility and fresh perspectives, often lead the way in developing new solutions. Even traditional insurers are looking to insurtech for talent and ideas to help them adapt and better serve these challenging markets. Diversity of thought and fresh perspectives are crucial in addressing complex challenges like these.
Do you believe that the speed of technology adoption is increasing in the insurance sector, and are companies becoming more willing to embrace it?
Technology adoption is indeed gaining momentum, but there is still some resistance. It’s crucial to understand why this resistance exists. Merely adopting technology for the sake of it isn’t enough to persuade companies to change their established business processes. My background is heavily rooted in technology, and when I initially joined my current role, I believed that technology alone could solve the industry’s challenges. However, I soon realised the importance of comprehending the unique business problems insurance companies face and why they might be hesitant to adopt software solutions quickly.
Could you elaborate on the factors contributing to the resistance in the insurance industry?
Certainly. Insurance professionals are risk assessors by nature, and they apply this mindset to their decision-making processes. When confronted with new technology, they tend to take a step back and carefully assess the risks and benefits. Our role is not to rush the adoption process but rather to educate them. It’s a two-way street—we need to educate ourselves about their industry while helping them navigate the path toward embracing technology.
When we first started our journey, around 2014-2015, discussing cloud solutions with large insurers was met with scepticism. They insisted on an on-premises version of the software. After some deliberation and interesting experiences, we decided to stick with the cloud approach. Now, the industry’s perspective has shifted significantly. Insurers have come to accept that the cloud is secure and are gradually moving parts of their business operations onto cloud platforms. This shift mirrors the broader trend of technology adoption in various sectors, including the Department of Defence in the U.S., which also took time to embrace new technologies.
What do you believe is the most crucial technology adoption currently needed across the industry?
AI is a hot topic, but it’s not the only one. In my opinion, what’s particularly noteworthy right now is the concept that Gartner has recently been emphasising, which has transitioned from an IT term to a business term known as “composable enterprises.” This term highlights business outcomes enabled by technology.
Let me elaborate; “Composable enterprises” is essentially a term that connects business outcomes with technology. It’s about breaking down the traditional silos within insurance organisations and thinking about how technology can enable various business objectives. For example, we’ve been talking about microservices for a long time, but now we’re focusing on how they impact specific aspects of insurance, like loss ratios and underwriting channels.
The key difference is that we’re looking at technology as a means to achieve business outcomes, not just as an IT component. This approach shifts the perception of the IT department from being solely a cost centre to a strategic enabler of business goals.
How does this approach differ from previous perspectives on technology adoption?
It’s a shift in perspective. In the past, we often discussed technology in isolation, focusing on its technical aspects. Now, we’re taking a more holistic view, considering how technology can directly contribute to achieving business objectives. This approach aligns IT and business objectives more closely, bridging the gap between the two.
While generative AI and similar technologies are generating a lot of excitement, what truly excites me are the specific business use cases that emerge from these technologies. For example, I recently discussed with a client how they plan to use generative AI for specific tasks, and that’s where the real value lies. It’s about translating technology into tangible business outcomes, which is what businesses should focus on to remain competitive.
What’s next for Socotra in the coming months?
While I can’t disclose future plans, I can share that Socotra’s “Core Plus” concept aligns with the idea of “composable enterprises.” We’re moving toward an end-to-end solution that combines best-of-breed software providers seamlessly. This approach simplifies the customer experience, similar to how you install apps on your smartphone without worrying about the technical details.
Our goal is to create a marketplace where insurers can select and integrate software solutions effortlessly to address their specific business needs, focusing on outcomes rather than the individual components. We’re committed to making insurance operations more efficient and customer-centric.
What inspires you in the insurtech industry today?
The primary inspiration for me in the insurtech industry is addressing the protection gap and increasing insurance penetration. This is a personal motivation because insurance serves as a crucial safety net for individuals and communities.
It’s unfortunate to see discrepancies in recovery efforts between regions hit by similar disasters, like tsunamis, where recovery is swift in one area but prolonged in another. This discrepancy often comes down to differences in insurance penetration. Emerging markets, such as Southeast Asia and Africa, stand out as areas where improving insurance coverage can have a significant positive impact.
Interview by Joanna England
Joanna England is an award-winning journalist and the Editor-in-Chief for Insurtech Insights. She has worked for 25 years in both the consumer and business space, and also spent 15 years in the Middle East, on national newspapers as well as leading events and lifestyle publications. Prior to Insurtech Insights, Joanna was the Editor-in-Chief for Fintech Magazine and Insurtech Digital. She was also listed by MPVR as one of the Top 30 journalist in Fintech and Insurtech in 2023.