Technology, innovation and… the insurance sector
An interesting article in Techcrunch, “Tech and the changing face of insurance” reminded me of my work with a number of companies in the sector, both in Spain and beyond, many of which display the typical symptoms of consolidated industries subject to regulation.
In the first place, the insurance industry needs to take a long hard look at what it does. This is a sector within which many companies still see innovation in terms of the internet replacing some of the traditional channels it uses as intermediaries (or worse, simply that the market will take this decision for them). It tends to see cost comparison sites as players to bear in mind (with some companies investing or developing them), while questioning the client relationship model (typically based on a problem or something on the social networks that threatens a company’s relationship)… in short, not a pro-active approach. The banking equivalent are those institutions that for years only applied technology and innovation to banking operations, instead of thinking about the many possibilities that technology offers to rethink their activities.
The point of the Techcrunch article is that new situations, new gadgets and new possibilities mean insurance companies are going to have to rethink what they do and how they do it. If we are now able to use hoverboards that burst into flames, if we carshare with strangers or use driverless vehicles, stay in homes belonging to people we’ve never met or rent them to strangers, fly drones that can weigh more than a kilogram with no previous experience, or connect our homes up to all sorts of devices, then it’s pretty obvious we’re going to be facing situations where insurance companies could play an important role.
Saying that we live in rapidly changing times, that people are adopting new habits, or that new products are appearing constantly is as much of a cliché as the use of the term VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) in business schools. But should an insurance company set aside resources to study new situations where it could provide value, even if initially this is only residual? The answer is an unequivocal yes, and not just because of the money to be made, but also because of the “corporate gymnastics” preparing to do so will require.
But beyond the possibility of a company or companies attaining first mover advantage, we also need to remember that we’re talking here about companies that have been around for many, many years, that are highly regulated, and have their own long-established procedures that everybody follows.
If the environment changes at a certain speed, your company will have to match that pace, otherwise it will lose its competitive edge and its ability to capture and retain talent. An insurance company today needs to be aware of every technological development that can create an environment within which it can develop its activity — which is just about any — and to be the first to explore them so as to be able take advantage of them. Anything else is not innovation, so much as smoke and mirrors or simply ticking boxes.
(En español, aquí)
