Is insurance disappearing fast enough?
I imagine all my many ex-insurance colleagues are screaming at their screens right now. Whilst the title of this piece might seem controversial on the face of it, I would never say that insurance companies or insurance itself isn’t valuable. It’s just, well, people don’t want to buy it. Everyone knows it’s something we need. We equally hope we don’t have to use it and that’s because insurance is there for when things have gone wrong. The answer — insurance needs to disappear. Disappear into the products and services we love and want to protect. Disappear into preventing the worst, rather than being there when it actually happens.
The disruptive challenges facing the insurance industry have never been as fierce yet insurance companies are still closed off to something within their control: Collaboration.
The ability to automate underwriting using AI will get so sophisticated that we won’t need underwriters. Completely removing human error and enabling brands to evaluate risk on a case by case basis within an inch of its life within seconds.
The stellar combo of AI and Blockchain has the ability to completely illuminate fraud by analysing data and identifying patterns, as well as making tamper proof records. And fraud is the most costly overhead for insurers after claims making this transformation game changing in terms of bottom line performance.
And rapid advances in technology is reducing the probability of risk. Whether it’s driverless cars improving safety on our roads, flood detectors, remote security in the palm of our hand, dog GPS trackers or wearables that provide health insights, technology is making life safer and much more secure.
So if not careful, are insurers running the risk of becoming extinct? And maybe my headline was on the money after all?
The answer: insurers need to get closer to the needs of their customers (not further away) and collaborate with partners who have the capability to deliver products, services and experiences that customers want and that are seamlessly integrated with the protection they need. Sounds easy? Wrong.
I spent over half my career working inside insurance companies trying to get them to change how they work and it was hard yards. Insurers struggle to see the customer behind the policy or that they are more than just a set of risks. And as for collaboration — it’s viewed as some kind of magical place akin to Narnia (I was definitely seen as one of the strange people or maybe a talking animal!). Hope is not lost though. There are some good things happening.
InsurTech startup Neos, the UK’s first smart home insurance provider, has doubled down on the technology to secure your house with protection, should you need it, as a byline. They have been acquired by Sky, Europe’s leading media and entertainment company, to further develop the software and hardware extending its capability beyond protecting the home to the people within it.
Retailers have always led the charge on not only customer centricity, but collaboration as well. They are able to recognise unmet needs and then work with insurers to deliver the products that they don’t have the skills to do alone. John Lewis home insurance is a great example of this: “Quality cover, from a name you can trust” — a bold brand statement yet all the policies are underwritten by an insurance company you probably love to hate.
Vitality and Apple is another example of great collaboration. One could argue that the success of the Apple Watch and the fact ‘step counting’ has become a day to day target for the masses is down to the genius of the health and life insurance provider Vitality rather than the most loved tech brand in the world, Apple. Vitality heavily discounts the Apple Watch in the hope it keeps you healthier making the gadget accessible to many more thousands than could have afforded it.
Others are collaborating with the communities they aim to serve. Laka, has reimagined the bike insurance model to give something back to the cycling community. Realising we see insurance as a necessary evil that no one is excited about, founder Tobias Taupitz started to consider a fairer way to do insurance by asking “can we put all the ingredients into one box, shake it good, and reassemble all of that for a much fairer and better outcome?”
Laka turns the existing insurance model on its head. It’s a collective-based insurance model for the cycling community: Laka are only paid by the collective when settling claims successfully. Instead of projecting what costs it may need to cover and charging inflated prices (like traditional models), it only charges customers based on the cost of actual claims taken out that month, and the fee is capped.
So just like Aslan in The Lion, The Witch and The Wardrobe, insurers will need to sacrifice themselves — well their own brands — for the greater good of the industry. As a related aside, I’ve often wondered why back in the 1300s it wasn’t called protection rather than insurance. Maybe it’s time for an overhaul?
Author: Jenny Burns, CEO Magnetic
Magnetic are a design and innovation company that helps design better futures. We’ve worked with global businesses to build capabilities, products, services and transform organisations. To find out more, get in touch: Jenny.Burns@wearemagnetic.com or sign up to our monthly newsletter to keep up to date.
