Moderator: Scott Walters - Affinia
Expert: Gavin Dobson – Hood Group
The session was split into three areas for discussion:
- What are the key trends that are going to transform the market in the next 5 years?
- What new start up brands are threatening to disrupt traditional consumer brands and insurers?
- What practical ways can you encourage innovation in your organisation?
What are the key trends that are going to transform the market in the next 5 years?
- There was a consensus that the insurance industry is hog tied by legacy systems and attitudes that make innovation very difficult to achieve.
- Consumers are not interested in insurance: they do not wake up in the morning and yearn for insurance, but they do need it.
- While it is easy to market lifestyle products; holidays, games, theatre etc, it is far harder to make someone excited about an insurance product.
- It was generally agreed that innovation in insurance will not be about new products in the traditional sense, but new ways of transacting, marketing, promoting product.
- Peer to peer propositions and the sharing economy are areas that insurers need to take note of.
- Unbundling products and pay as you use propositions are the future.
- Lifestyle promotions can drive sales. The Vitality product was given as a good example of insurers who have recognised that people want to be rewarded for the good behaviors that underwriters value such as going to the gym, eating properly etc.
- The rise of GPS location tracking, Fitbit etc, has given insurers a wealth of information that can be used during underwriting.
- Insurers and banks consider themselves slaves to their IT systems rather than masters. Insurance company records have historically not lent themselves to easy interrogation or manipulation for CRM purposes. In order for innovation to occur this can mean looking at outside resource, JV’s with startups, taking over startups, or hot housing innovation.
- Using big data should make selling home insurance as simple as travel insurance. A caller’s phone number can be linked to an address and postcode. The system should be able to tell how long they lived there from land registry, and how old the house is. Credit records can tell the financial risk, google maps what sort of house it is and how well looked after, and crime statistics and flooding information from the environment agency is readily available. The system could even use Facebook, Instagram, Twitter, LinkedIn to see what else the customer gets up to.
- Customers’ expectations are changing and what they can expect to achieve in life also. No longer is the assumption that you get a job, get married, buy a house and settle down. Younger people are far more interested in how they can get on the property ladder than whether they need a pension.
- Machine learning and artificial intelligence are seen as the new ways to streamline business, reduce errors and costs.
What new start up brands are threatening to disrupt traditional consumer brands and insurers?
- New startups in the insurance arena are generally considered a good thing. One reason is that to transform a sleeping industry it will not be done from within. New guys with new ideas, not traditional insurers will provide new markets.
- The new startups may be in peer to peer, Awareness and aggregators who are promoting product, possibly in different ways.
- Gamification, the application of game-design elements and game principles in non-game contexts is where startups could have a major influence on how and what the insurance industry will be selling in the future. Immediate purchase of insurance in the same way you buy a game on an app. Far from being threats to established brands and insurers startups should be seen to be breathing life into the industry.
- You need the right culture in your business to be able to breed innovation.
- Two businesses in the group had hot housed their innovation areas out of the established HQ structure. Offices were set up and treated like a startup venture. These businesses were given carte blanche to come up with ideas, prototypes and test the theories. By being outside of the “that will never work,” “that will never happen,” “that will never get signed off by compliance” culture they created their own culture that allows for innovation.
- Employing non-insurance professionals was then seen as an advantage, to bring in new ideas and ways of doing things.
- Breeding a culture of innovation is easily said but difficult to achieve, there will always be more followers than leaders. But if the insurance industry is to flourish, new ideas, products, and services for the millennial generation, and probably imagined, designed, and created by the millennial generation need to be adopted.