A whole new industry – Insurance in the 2020’s.
Published on October 11, 2019
Chief Executive of Global Futures and Foresight, Futurist, Strategist and Keynote Speaker
Traditional planning and strategy aiming to project a year or two out will not cut it given the range and nature of change, especially technological change. This is shifting towards a five year plus horizon from both leadership and execution standpoints, although it remains that while some 75 percent of CEOs have innovation at the top of their agenda, close to only 25 percent are looking to self-disrupt.
Technology changes the very nature of insurance products and services, and so the core of industry itself. Insurance should remain an enabler for people to take on risk that is otherwise too large, yet its processes need to change. Some of the Insurtechs, for example, could be viewed as the outsourced R&D functions and innovation hubs of existing players. There is plenty of historical precedent – as with Microsoft –of large firms approaching the point of no return and failure, only to renew via purchases and new partnerships. Appropriately some insurers are setting up their own VC firms to experiment and hedge their bets.
Process innovation does not stop there. The whole supply chain needs to rethink their proposition as multiple new models for engagement emerge. Agents and brokers still have a role to play, but young talent is unlikely to want to work in current roles. Automation can help shift the role towards spending more time with customers, help provide strategic advice and generally shift into more personalised service. Many of the tasks agents and brokers currently do will be automated, yet a promising future is available should individuals be prepared to embrace it. When looking to reposition themselves, current professionals and firms should be cognizant of the key macro trends simultaneously creating both opportunities and presenting challenges
- Consumer use of new channels (such as voice) and automation (i.e our own personal digital assistants. As consumers we embrace what make sour lives easier as it enables us to do more. This needs to be mirrored in the supply side.
- Personalisation of the nature of risk/cover. Traditional annual products will be replaced by dynamic and variable cover.
- Risk mitigation will trump compensation. This requires capabilities that can handle a flood of real-time data, often from the expanding IoT. Continuous underwriting for example, requires both a different process and different technological base.
Our assumptions of what insurance is, are being challenged. This is perhaps especially dangerous for those who have had recent success, as it reduces the need they feel to change. For any players, several key questions need addressing in helping chart a way forward
- Higher purpose is fundamental – what are we about as a company? It’s about protection and the management/mitigation of risk. Does allowing harm to come to people and then compensating them count as protection? What does protection mean now and in the future? What does that mean we do? Someone will play in this space, how do we?
- Too many people have a future vision of doing more of what they already do. What’s driving towards the future we want? Can we acquire the skills and capability to do what we want to do when we get there?
- Can we remain relevant? A lot of new products take advantage of digital models of engagement, but we have not yet looked at what we do differently as a result.
- As a consumer I need someone to tell me what I need, I’m not smart enough to know what I want. I don’t care about products (rotary requirements aside), I want answers. Life-cycle and lifestyle products will be key. Can insurers deliver?