Insurance Amazon & Insurance Google — Where are you?

Everybody talks about digitalization and insurance, insuretechs, disruptive changes and everybody waits for the next insurance GAFA (Google, Apple, Facebook, Amazon).

But — why does digitalization in insurance business happen so slowly in reality? Is there a fundamental difference between insurance business and retail, which has been changed by digital business dramatically during the last years?

How would an SME company answer these questions? What’s their view as a small or medium enterprise on insurance?

1. Insurance is a „one-timer“ for a SME company. They are thinking of insurance once a year (maximum). There is no pressure or need to change something. At the end of the day it’s a necessary evil. *
2. There is nothing really new in current digital insurance from the perpective of an SME company. Current digital offerings don’t give them a real new benefit like saving huge costs or managing risk in a new way. It’s exactly the same as in in the old analog world, just copied to a digital platform. No new products, no real innovation. **
3. Lack of trust in new digital players: SME business is based on personal business relationships. Transfering risk to an unknown insurtech where a company does not know to whom to speak to (eg. in case of a claim) would add even additional risk. ***

Customers who want to be left alone and established insurers who just do that. That’s insurance business for SME today.

But — I think that established insurers have the best chance to make a change and profit from new business digital business models — not insurtechs. Why? Established insurers have a huge asset (point 3) but have just not figured out how to change point 2 and/or point 1.

More info: http://insurance.mgm-tp.com

Footnotes:

* Survey show that the attitude of the customers is stable, it has hardly changed despite all digital progress. In the statement “I only care as much as absolutely necessary for insurance” the approval values are constantly at 80%- for more than 20 years. No rule without an expection: There might be a few businesses where insurance and transfering risk is tightly connected to their daily business. But for the majority of SME companies it’s simply not.

** The majority of the insured SME companies apparently are not looking for new vendors — the whole topic is not on their radar. This is one answer to the question why there has not yet been any major change in the industry.

*** Surveys show that many companies are searching for information on the internet, but in the end the descisions are taken in a face-to-face session with an insurance expert like an agent or a broker. These professions are generally not very well-off, but many companies still use their consulting services — because there is no real (digital) alternative.